In a move aimed at tightening regulatory oversight, the Reserve Bank of India has notified new regulations under the Foreign Exchange Management Act for cross-border guarantees, introducing stricter compliance and reporting requirements.
Under the updated FEMA rules, entities issuing or receiving cross-border guarantees are now required to follow mandatory quarterly reporting. The change is intended to improve transparency and ensure closer monitoring of overseas financial exposures and obligations.
Alongside the new reporting timeline, the revised framework also introduces penalties for delayed or non-compliant disclosures. This marks a clear shift towards stricter enforcement, signalling that timely and accurate reporting will be a key compliance expectation going forward.
The new regulations apply to cross-border guarantees covered under FEMA and are expected to impact companies with overseas business operations, foreign subsidiaries, or international financing arrangements. Market participants will now need to strengthen internal tracking and reporting mechanisms to meet the quarterly disclosure requirements.
With these changes, the RBI aims to enhance regulatory discipline, reduce information gaps, and maintain better oversight of cross-border financial risks within the Indian financial system.
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