Reserve Bank of India amends non‑debt instrument payment and reporting rules
Designated Authorised Dealer Category I banks must enforce the substituted payment/remittance routes for NRI/OCI investments and submit Form LEC (IFI) for IFI equity purchases/transfers to the Reserve Bank of India
Change
On 13 June 2026, the Reserve Bank of India amended the Foreign Exchange Management (Mode of Payment and Reporting of Non‑Debt Instruments) Regulations, 2019 to substitute Schedule III and XI payment/remittance provisions and to require Designated Authorised Dealer Category I banks to report individual foreign investor (IFI) equity purchases/transfers in Form LEC (IFI); the amendments come into force from date of publication in the Official Gazette.
Why it matters
The amendment constrains allowable payment channels: investments by individuals resident outside India (including NRIs/OCIs) must be paid by inward remittance through banking channels or from repatriable deposit accounts or designated repatriable rupee accounts; NPS subscriptions by NRIs/OCIs are limited to inward remittance or specified repatriable/NRO accounts. Banks designated as Authorised Dealer Category I are bound to collect payment through those channels and to transmit purchase/transfer data in Form LEC (IFI), creating immediate reporting and payment‑route enforcement obligations.
Implications
- — Designated Authorised Dealer Category I banks must update compliance and reporting processes to capture and transmit Form LEC (IFI) for purchases/transfers of equity instruments by individual persons resident outside India — non‑submission will be non‑compliance with RBI reporting obligations.
- — Bank operations and broker‑dealer payments teams processing NRI/OCI investments must accept only inward remittances or funds from repatriable deposit accounts or a designated repatriable rupee account for purchases, NPS subscriptions and International Exchange transactions — accepting funds from non‑permitted accounts would breach the amended FEMA mode‑of‑payment rules.
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