The Reserve Bank of India (RBI) has issued a Gazette Notification amending the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, permitting Indian banks to lend in Indian Rupees to banks or individuals residing in Sri Lanka, Bhutan, and Nepal.
Under the new amendment, Indian banks and their overseas branches are now authorised to extend rupee-denominated loans to banks or persons resident in the three neighbouring countries.
The move is expected to enhance access to credit for businesses in Sri Lanka while reducing exchange rate risks. It will also help strengthen cross-border trade and financial linkages between India and the region.
