Mohandas Pai on RBI FEMA rules: Are banks making it harder for Indians to receive foreign payments?

Why are banks asking for these documents?

Banks must follow foreign exchange regulations and verify export-related transactions. Depending on the nature of the transaction, they may ask customers for invoices, declarations and other supporting documents.

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However, the requirements can vary depending on whether the transaction involves goods, software or services. It is also important to distinguish between documents specifically required under Reserve Bank of India (RBI) rules and those requested as part of a bank’s internal compliance process.

For freelancers, consultants and small service exporters, unclear documentation requirements can create additional work and uncertainty. Many independent professionals do not have dedicated teams to handle banking formalities, making a straightforward payment more difficult to manage if the requirements are unclear.

What does the new FEMA framework say?

Effective October 1, 2026, the RBI’s new Foreign Exchange Management Act (FEMA) framework introduces a unified Export Declaration Form (EDF) for goods, software and services, replacing the earlier SOFTEX system for software exports.

Service and software exporters can file a consolidated monthly EDF within 30 days of the invoice month, while goods exporters’ declarations are triggered through shipping bill filing on ICEGATE.

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Invoices of up to ₹10 lakh generally qualify for simplified payment declarations or self-declarations for closure in the Export Data Processing and Monitoring System (EDPMS). Higher-value invoices require supporting documents, including invoices and payment evidence such as a Foreign Inward Remittance Advice (FIRA).

Export proceeds must generally be realised within nine months, or 12 months for exports invoiced and settled in Indian rupees.

The EDF must include exporter and buyer details, invoice values, HSN or SAC codes, contract references and the expected payment method.

For Indian professionals and businesses earning overseas income, the practical impact will depend on how these requirements are implemented by banks and applied to individual transactions.

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