Stay Updated: Key FEMA & RBI Regulatory Updates – January 2025 Edition
Navigating the evolving landscape of foreign exchange and financial regulation is crucial for global investors, Indian businesses, and financial institutions. The January 2025 edition of CNK & Associates LLP’s FEMA and RBI Quarterly Insights highlights significant developments under the Foreign Exchange Management Act (FEMA) and directives from the Reserve Bank of India (RBI) that impact cross-border transactions, foreign investment classification, and banking operations.
Key Highlights:
- Non-resident guarantees: RBI has tightened compliance norms, directing Authorized Dealer (AD) banks to reject guarantees from non-residents that violate FEMA norms.
- FPI to FDI Reclassification Framework: A new operational framework requires FPIs breaching the 10% investment threshold to either divest or reclassify as FDI within a prescribed timeline, ensuring alignment with sectoral caps and FDI rules.
- CRR Reduction: The RBI announced a phased reduction of the Cash Reserve Ratio (CRR) to 4% by the end of December 2024, enhancing banking system liquidity.
