Summary of this article
RBI issues unified rules for foreign exchange guarantees
Single quarterly reporting format introduced through Form GRN
Separate trade credit guarantee reporting ends March 2026
The Reserve Bank of India (RBI) has issued the Foreign Exchange Management (Guarantees) Regulations, 2026, which includes a new circular issued for authorised dealer Category I banks. The regulations consolidate all rules related to foreign exchange guarantees and replace several previous directions.
Scope of the New Regulations
The new rules apply to guarantees in which any party involved is a person residing outside of India or an NRI. These include financial and non-financial guarantees. Banks have been instructed to follow the regulations while issuing or facilitating such guarantees and to comply with other regulatory instructions issued by the central bank.
The regulations supersede a long list of A.P. (DIR Series) circulars that have been issued over the years. Transactions completed under the earlier rules will be valid and unaffected.
Standardised Process for Reporting
One of the important changes is the introduction of a single reporting format for all guarantees. Banks must now report the issuance, modification, or invocation of guarantees using Form GRN, which is annexed to the regulations.
The form has to be filled with the details of the reporting party, the surety, the principal debtor, and the creditor. It also includes registration of information on the amount of guarantee, validity period, and any changes made later. Separate sections have been included for reporting change, pre-closure, and invocation of guarantees.
Guarantees are to be reported on a quarterly basis within the prescribed time period to authorised dealer banks. RBI will separately inform banks about the methods and format of compilation and submission of such returns.
Trade Credit Reporting Withdrawn
The circular has also withdrawn the requirement of quarterly reporting of guarantees issued for trade credit. This change will come into effect from the quarter ending March 2026. In the past, such guarantees had to be reported separately.
With this step, trade credit guarantees will now come under the overall guarantee reporting structure.
Changes in Current Directions
To align existing rules with the new regulations, several master directions are being amended. These include directions regarding the external commercial borrowing, trade credits, export and import of goods and services, other remittance facilities, and reporting under the Foreign Exchange Management Act.
Authorised dealer banks have been requested to brief their customers about the new rules. The directions have been issued after the relevant provisions of the Foreign Exchange Management Act, and will take effect from their publication in the official gazette.
