The Reserve Bank of India (RBI) has notified the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026, introducing significant changes in the manner of payment, remittance of sale proceeds, and reporting requirements relating to investments by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other persons resident outside India.
The amendments have been made under Section 47 of the Foreign Exchange Management Act, 1999 (FEMA) and became effective from June 13, 2026.
The notification amends specific provisions under Schedule III and Schedule XI of the principal regulations and also revises the reporting mechanism for foreign investors transacting in equity instruments on Indian stock exchanges.
Key Changes for NRI and OCI Investments on Repatriation Basis
One of the major changes pertains to Schedule III, which governs investments by individuals resident outside India, including NRIs and OCIs, on a repatriation basis.
The amended regulations clarify that investment consideration must be paid either through inward remittance from abroad via banking channels or from funds maintained in repatriable deposit accounts in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. Further, a designated repatriable rupee account maintained by a non-resident investor must be used exclusively for investments permitted under the Schedule.
The amendment also specifically addresses contributions to the National Pension System (NPS) by NRIs and OCIs. Such contributions may now be made through inward remittances, repatriable foreign currency accounts, repatriable rupee accounts, or Non-Resident Ordinary (NRO) accounts maintained under FEMA Deposit Regulations, 2016.
Greater Flexibility in Remittance of Sale Proceeds
The RBI has also provided greater clarity regarding repatriation of sale proceeds arising from investments.
Sale proceeds of equity instruments, after deduction of applicable taxes, may either be remitted outside India or credited to the designated rupee account of the investor. Similarly, sale proceeds arising from mutual fund units and NPS investments by NRIs and OCIs may be remitted abroad or credited to any FEMA-compliant account maintained by the investor, at his or her option.
Changes for Shares of Indian Companies Listed on International Exchanges
The amendment also revises Schedule XI dealing with the purchase or subscription of equity shares of Indian companies listed on international exchanges by permissible holders.
Under the revised framework, payment for such shares can be made through:
- Banking channels to the foreign currency account of the Indian company maintained under FEMA regulations relating to foreign currency accounts by residents; or
- Inward remittance from abroad through banking channels or from funds held in repatriable foreign currency or rupee accounts maintained in accordance with FEMA Deposit Regulations, 2016.
The RBI has further clarified that proceeds from such purchase or subscription transactions must either be remitted to a bank account in India or deposited into the foreign currency account of the concerned Indian company maintained in accordance with FEMA regulations.
Additionally, sale proceeds from these equity shares, net of taxes, may be freely remitted outside India or credited to the permissible holder’s eligible bank account maintained under FEMA Deposit Regulations.
New Reporting Requirement Introduced
Another important amendment relates to Regulation 4 of the principal regulations.
The RBI has substituted the existing reporting provision and introduced the concept of Form LEC (IFI) – Individual Foreign Investor.
Under the revised rule, designated Authorised Dealer Category-I Banks will be required to report to the RBI all purchases and transfers of equity instruments undertaken on Indian stock exchanges by individual persons resident outside India, including NRIs and OCIs, through Form LEC (IFI).
The change is aimed at strengthening regulatory oversight and improving monitoring of foreign portfolio transactions executed by individual foreign investors in Indian markets.
Comparative Table: Key Amendments Introduced by RBI
| Area | Earlier Position | Amended Position (2026) |
| NRI/OCI Investments (Schedule III) | Payment permitted through prescribed banking channels and eligible accounts | Detailed recognition of inward remittance, repatriable deposit accounts and designated repatriable rupee accounts exclusively for permitted investments |
| NPS Contributions by NRIs/OCIs | Limited clarity under existing provisions | Explicitly permitted through inward remittance, repatriable foreign currency accounts, repatriable rupee accounts and NRO accounts |
| Remittance of Equity Sale Proceeds | General repatriation provisions | Specific provision allowing remittance abroad or credit to designated rupee account |
| Mutual Fund and NPS Sale Proceeds | Existing framework | Investor may choose remittance abroad or credit to any FEMA-compliant account |
| International Exchange Listed Indian Shares (Schedule XI) | Existing payment framework | Expanded payment routes through company foreign currency account or repatriable accounts |
| Sale Proceeds of Internationally Listed Indian Shares | Existing provisions | Explicit right to remit abroad or credit eligible FEMA-compliant bank account |
| Reporting to RBI | Existing reporting mechanism | New Form LEC (IFI) reporting by AD Category-I Banks for purchases/transfers by individual foreign investors |
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