The Indian government has amended the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, allowing Indian banks and their overseas branches to lend in Indian Rupees to banks or individuals residing in Bhutan, Nepal, and Sri Lanka, the Indian High Commission announced yesterday.
A spokesperson for the Indian High Commission in Colombo said this move will improve access to credit 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,” the spokesperson added.
This amendment is expected to enhance bilateral economic cooperation and support regional financial stability by providing a more predictable and cost-effective financing option for businesses across these neighboring countries.
