The Reserve Bank of India has issued a Gazette Notification regarding the amendment to the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 which permits Indian Banks to lend in Indian Rupees to a bank or individual resident in Sri Lanka, Bhutan and Nepal.
After the current amendment, Indian banks (as well as their overseas branches) can now lend in Indian Rupees to a bank or a person, resident in Bhutan, Nepal, or Sri Lanka.
“This development will make credit more accessible for businesses in Sri Lanka. The provision allowing such loans to be denominated in Indian Rupees will be particularly beneficial for Sri Lankan businesses, reducing exchange rate risks and strengthening cross-border trade and financial linkages between the two countries,” High Commission of India in Colombo said.