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

Banks’ documentation requirements for receiving payments from overseas clients have come under scrutiny, raising questions about whether compliance procedures are making it harder for Indian freelancers, consultants and businesses to receive foreign payments.

The issue brings into focus the balance between regulatory compliance and ease of doing business, particularly as more Indians provide services to international clients. The discussion comes amid concerns about the compliance burden faced by Indians who provide services to overseas clients.

The issue came to light after entrepreneur Ramesh Srivats questioned the paperwork involved in receiving payments from overseas clients, highlighting an EDF-related communication from HDFC Bank. Mohandas Pai, entrepreneur and former Infosys director, stated that banking procedures need to be simplified. 

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.

MUST READ: IT and consulting firms face new 30-day EDF filing deadline for service exports under FEMA rules

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.

ALSO READ: RBI clears the air on new forex reporting rules: Framework does not apply to individuals

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.

DO READ: 'Fill a form for just being alive': Experts stunned at RBI's new EDF filing rule; here's why

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.