RBI Drops Prior Approval Requirement For Foreign Currency Note Write-Offs Exceeding USD 2,000

The Reserve Bank of India (RBI) has withdrawn the requirement for its prior approval before foreign currency notes exceeding USD 2,000 are written off and revised the reporting format for such write-offs.

The change forms part of a broader revision of reporting requirements for Authorised Persons under the Foreign Exchange Management Act, 1999. It has been notified through A.P. (DIR Series) Circular No. 17 dated June 24, 2026, issued pursuant to the Foreign Exchange Management (Authorised Persons) Regulations, 2026.

The revised FLM-8 return will now capture details relating to the write-off of foreign currency notes. Entities maintaining Nostro accounts and reporting the relevant transactions through FETERS will no longer be required to submit FLM-8 returns.

The RBI has also prescribed reporting formats for quarterly submissions of franchisee details by Authorised Persons and lists of sub-agents by Indian Agents operating under the Money Transfer Service Scheme (MTSS). Both must be submitted within 15 days from the end of each calendar quarter.

The circular also discontinues several existing reporting requirements. These include the prescribed formats of registers FLM-1 to FLM-7, the quarterly statement relating to foreign currency accounts opened from export proceeds of foreign currency notes or encashed travellers’ cheques, the separate reporting requirement for additional MTSS locations and quarterly confirmation of such lists, and the statement relating to collateral under MTSS.

However, Full Fledged Money Changers (FFMCs) and non-bank AD Category-II entities must continue to maintain complete and accurate records of all foreign exchange transactions and make those records available to the RBI for inspection whenever required. Indian Agents under MTSS must also continue to ensure adequate collateral in accordance with existing instructions.

The RBI has also prescribed reporting formats for Forex Correspondents, franchisee arrangements and a Fit and Proper declaration format for promoters, directors and key managerial personnel of Authorised Persons. It said the Master Direction on Money Changing Activities and the Master Direction on Reporting under FEMA are being updated separately to reflect these changes.

Circular: A.P. (DIR Series) Circular No. 17 dated June 24, 2026