RBI Introduces Changes to FEMA to Facilitate Cross-Border Trade in INR

Current Context: The Reserve Bank of India (RBI) introduced changes to the Foreign Exchange Management Act (FEMA) on January 17, 2025, with the aim of promoting the use of the Indian Rupee (INR) in international trade.

• Here are some key changes:
• INR Accounts for Non-Residents: Overseas branches of Indian banks can now open INR accounts for non-residents. This allows them to settle permissible current and capital account transactions with residents in India using INR.
• Flexibility for Exporters: Indian exporters gain more flexibility as they can now open overseas accounts in any foreign currency to receive export proceeds and make import payments.
• Repatriable INR Accounts: Non-residents can utilize balances in Special Non-Resident Rupee (SNRR) and Special Rupee Vostro Accounts (SRVA) for settling transactions.
• FDI for NRIs: Non-Resident Indians (NRIs) can now use funds from repatriable INR accounts for investments, including Foreign Direct Investments (FDI).

Question:

1 Which accounts can non-residents utilize to settle transactions according to the revised FEMA guidelines?

• A) Special Non-Resident Rupee (SNRR) and Special Rupee Vostro Accounts (SRVA)
• B) Resident Foreign Currency Accounts (RFCA) and Special Domestic Accounts (SDA)
• C) NRI Savings Accounts and Overseas Rupee Accounts
• D) Exporter Foreign Currency Accounts and Importer Rupee Accounts

Answer: A) Non-residents can utilize balances in Special Non-Resident Rupee (SNRR) and Special Rupee Vostro Accounts (SRVA) for settling transactions, promoting the use of INR in international trade.