RBI Streamlines Investment Pathways for NRIs and OCIs with New FEMA Amendments

• New FEMA amendments effective June 13, 2026.

• NRIs/OCIs can use repatriable rupee accounts for investments.

• Expanded payment options for NPS contributions.

• Clearer rules on repatriation of sale proceeds.

• Revised reporting norms for banks via Form LEC.

The Reserve Bank of India (RBI) has introduced significant changes to foreign exchange regulations governing investments by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other individuals residing outside the country. The revised framework, which came into force on June 13, 2026, aims to simplify cross-border investment processes and provide greater clarity on fund flows and reporting requirements.

The changes have been notified under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026, reflecting the central bank’s continued effort to modernise India’s investment landscape for global Indian investors.

Updated Payment Mechanisms for Investments

Under the amended rules, individuals residing outside India can finance their investments through two primary routes:

• Direct inward remittances via recognised banking channels, or

• Funds maintained in repatriable deposit accounts as permitted under the Foreign Exchange Management (Deposit) Regulations, 2016.

In addition, the RBI has introduced a provision allowing NRIs and OCIs to maintain a designated repatriable rupee account. This account can be used exclusively for making investments allowed under the applicable FEMA schedule, offering a more streamlined and transparent funding mechanism.

The move is expected to enhance ease of doing business for overseas investors of Indian origin by consolidating payment pathways under clearly defined accounts.

Expanded Options for National Pension System (NPS)

The RBI has also broadened the permissible modes of payment for NRIs and OCIs investing in the National Pension System (NPS). Contributions can now be made through:

• Inward remittances from overseas,

• Funds in a repatriable foreign currency account,

• A repatriable rupee account, or

• A Non-Resident Ordinary (NRO) account.

This expanded flexibility offers overseas Indians more avenues to participate in India’s pension framework while aligning with foreign exchange compliance norms.

Treatment of Sale Proceeds

The amended regulations provide greater clarity on how proceeds from the sale of investments can be handled.

For equity instruments:

• Net proceeds (after applicable taxes) may be repatriated outside India, or

• Credited to the investor’s designated repatriable rupee account.

  
  

In the case of mutual fund units and NPS investments:

• Sale proceeds, after tax deductions, may either be remitted abroad, or

• Credited to any account chosen by the NRI or OCI investor.

  
  

By outlining these options explicitly, the RBI has reduced ambiguity around repatriation and account crediting procedures.

Shares Listed on International Exchanges

The central bank has also clarified the payment and remittance structure for equity shares of Indian companies listed on overseas exchanges.

When subscribing to such shares, investors must either:

• Transfer funds to a bank account in India, or

• Deposit the subscription amount into the foreign currency account of the Indian company.

  
  

Upon sale, net proceeds—after tax obligations—can be:

• Remitted overseas, or

• Credited to a bank account maintained by the eligible holder.

  
  

These clarifications bring greater procedural consistency to cross-border share transactions involving Indian companies.

Revised Reporting Obligations

Beyond payment norms, the RBI has updated reporting requirements under Regulation 4. Authorised dealer banks are now required to submit reports to the central bank using Form LEC (Individual Foreign Investor – IFI).

This reporting will cover purchases and transfers of shares or equity instruments executed on Indian stock exchanges by individuals residing outside India, including NRIs and OCIs.

The revised reporting mechanism aims to improve regulatory oversight while maintaining transparency in foreign investment flows.

A Step Toward Greater Clarity and Efficiency

Taken together, the amendments reflect a broader regulatory intent: to simplify procedures for overseas investors of Indian origin while maintaining safeguards under the Foreign Exchange Management Act (FEMA).

By widening funding options, clarifying repatriation pathways, and tightening reporting standards, the RBI has created a more structured yet flexible framework for cross-border investments.

For NRIs and OCIs, the changes promise improved operational ease and clearer compliance guidelines. For the Indian financial system, they reinforce transparency and streamline the monitoring of non-debt foreign investments—ensuring that capital flows remain efficient, accountable and aligned with regulatory objectives.