RBI Rationalizes Norms for Foreign Entities

Mumbai, Oct 3 (PTI) The Reserve Bank on Friday proposed to rationalise norms for establishment of a branch or office in the country by entities resident outside India.

In this regard, the central bank has issued 'Draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025'.

"The draft proposals offer greater operational freedom by shifting from prescriptive to a principle-based framework, which is expected to result in greater operational freedom," the RBI said.

Further, the eligibility criteria for establishment of a place of business in India, are proposed to be relaxed, it added.

Regarding opening a branch or office in India, the draft said an Entity Resident Outside India (EROI) should submit an application in a specified form to a bank, who may grant approval as per these proposed regulations.

Post approval and opening of an account for the branch or office, the bank would report establishment of such office to the Reserve Bank of India.

"The RBI shall allot a Unique Identification Number (UIN) to the branch or office on the basis of the data submitted by the designated bank," said the draft on which the RBI has sought stakeholders comments/feedback by October 24, 2025.

Further, an application for establishing a branch or office in India would require prior approval of Government of India if the EROI is a person resident in Pakistan, non-profit organisation, or is owned or controlled by the government of a foreign country.

Prior government's permission would also be required if the applicant EROI is a person resident in Afghanistan, Bangladesh, China, Hong Kong or Macau, or Sri Lanka and is intending to establish a branch or office in Jammu and Kashmir, Ladakh, North-East region and Andaman and Nicobar Islands.

The government's approval would also be required if the EROI's principal business falls in the sectors of defence, telecom, private security and information and broadcasting or in any other sector where foreign direct investment is either prohibited or is under the ‘approval route'.