By CS Sapna Malpani, Practising Company Secretary, Bangalore · Last updated 30 August 2026
A Series B SaaS company in Bangalore signed a parent guarantee last year so its Singapore subsidiary could draw a USD 2 million working-capital line. Nobody thought about it again. Then the RBI rewrote the rulebook. Under the FEMA Guarantees Regulations 2026, that single guarantee now has to be reported to the Reserve Bank every three months in a new return called Form GRN, and a missed report exposes the Indian parent to a penalty of up to three times the guaranteed amount under Section 13 of FEMA. On a USD 2 million guarantee, that is a theoretical exposure north of ₹50 crore for a filing that takes an afternoon. This is the compliance most founders do not know they have already triggered.
- Deadline: Form GRN goes to your AD bank within 15 calendar days after each quarter end. The next live date is 15 October 2026 for the July–September 2026 quarter.
- Who must comply: Any person resident in India who is a party, as surety, principal debtor, or creditor, to a guarantee where the other party is a non-resident.
- Penalty: Section 13 of FEMA, up to 3x the sum involved where quantifiable, plus ₹5,000 per day for a continuing default.
- Key action: List every cross-border guarantee your company has given or received, then file Form GRN through your AD bank each quarter.
- Time to act: The Jul–Sep quarter closes 30 September 2026. Map your guarantees now, before the 15-day clock starts.
The problem: a guarantee you forgot about is now a quarterly return
On 6 January 2026 the Reserve Bank of India notified the Foreign Exchange Management (Guarantees) Regulations, 2026 vide Notification No. FEMA 8(R)/2026-RB. The regulations replaced the 26-year-old FEMA 8/2000-RB framework and changed the reporting model completely. The old regime treated a cross-border guarantee as a one-time event to be permitted or reported when created. The new regime treats it as a live position that has to be reported every quarter for as long as it stays open.
A guarantee is any arrangement where a resident in India promises to answer for the debt or obligation of a party outside India, or where a non-resident stands behind an Indian obligation. The regulations catch a resident acting in any of three roles: as surety (you back someone else's debt), as principal debtor (your obligation is backed by a foreign guarantor), or as creditor (you hold a guarantee from a non-resident). No resident may be a party to such a guarantee except in accordance with FEMA, the regulations framed under it, or with specific RBI permission.
For a funded startup, this is not an edge case. It is the standard shape of a cross-border structure. A parent guarantee for an overseas subsidiary's bank line, a corporate guarantee backing a foreign supplier contract, a guarantee given as part of an Overseas Direct Investment, or a performance guarantee for an export order, each of these can bring the company inside the reporting net. Many of these guarantees were signed one or two funding rounds ago and have never been looked at since. Under the 2026 regulations, each open guarantee is now a recurring compliance obligation, not a closed file.
How the reporting clock actually runs
The mechanism is deliberately simple, which is why missing it is careless rather than difficult. The resident files Form GRN with its Authorised Dealer (AD) bank within 15 calendar days from the end of each quarter. The AD bank then consolidates and forwards the returns to the RBI. Form GRN covers the full life of a guarantee: its issuance, any modification, an invocation if the beneficiary calls on it, and its closure. So a guarantee is reported when it is created, again if its terms change, again if it is invoked, and finally when it is released.
Form GRN Reporting Timeline, July to September 2026 Quarter
Miss the 15-day window and the delay is regularised through a Late Submission Fee, not automatic pardon.
What changed: FEMA 8(R)/2026-RB versus the 2000 regime
The shift is from a discretionary, approval-heavy model to a structured, compliance-based one. The RBI has traded case-by-case permissions for clearer definitions and a predictable reporting calendar. That sounds friendlier, and in design it is. The catch is that a predictable calendar only helps the companies that keep it. The table below sets out what actually moved.
| Feature | FEMA 8/2000-RB (old) | FEMA 8(R)/2026-RB (new) |
|---|---|---|
| Reporting model | Event based, tied to creation or specific permissions | Quarterly, for every open guarantee, in Form GRN |
| Return | No single standard quarterly return | Form GRN filed with the AD bank within 15 days of quarter end |
| Events captured | Largely issuance and invocation | Issuance, modification, invocation and closure |
| Late reporting | Often pushed into compounding | Regularised through a defined Late Submission Fee |
| Roles defined | Less explicit | Surety, principal debtor and creditor spelled out |
Two practical points sit inside that table. First, the reporting is continuous, so a guarantee created in 2023 that is still open in 2026 has to appear in this quarter's Form GRN even though nothing about it changed. Second, closure is now a reportable event, which means a company that quietly let a guarantee lapse still owes a filing to record the release. The regulations reward companies that keep a live register of their cross-border guarantees and quietly punish the ones that treat each guarantee as a signed-and-forgotten document.
FEMA Guarantees 2026, by the numbers
What you must do now: a seven-step Form GRN readiness plan
The work is front-loaded. Build the register once, and each quarter afterwards becomes a 15-minute update. Here is the sequence I take clients through.
- Inventory every cross-border guarantee. Pull all facility agreements, subsidiary loan documents, ODI records, and export or supply contracts. Any instrument where an Indian entity backs a foreign obligation, or a foreign party backs an Indian one, goes on the list. Do not stop at bank guarantees, corporate guarantees and performance guarantees count.
- Classify each guarantee by role. For every entry, record whether the resident is surety, principal debtor, or creditor. The role determines how the guarantee is described in Form GRN and whether it was permitted correctly at the outset.
- Confirm the guarantee was compliant when created. A guarantee given without the permission it needed under FEMA is a live contravention, and reporting it now does not cure the original breach. Where you find a gap, get it assessed for compounding before the reporting draws attention to it.
- Identify your AD bank and its Form GRN process. Reporting flows through your Authorised Dealer bank, not directly to the RBI. Ask your relationship manager which desk handles Form GRN and what documentation they expect with each quarterly submission.
- File Form GRN within 15 days of each quarter end. Report the opening position, plus any issuance, modification, invocation, or closure during the quarter. Diarise the four quarter-end dates, 30 June, 30 September, 31 December and 31 March, and set an internal cut-off five days before each 15-day deadline.
- Track events between quarters. If a guarantee amount is revised, a beneficiary invokes it, or it is released, log the date immediately. These are the entries companies forget, because they happen in the middle of a quarter and get buried in operational email.
- Use the Late Submission Fee route if you are already behind. A delayed Form GRN can be regularised through the LSF, calculated as ₹7,500 plus 0.025 per cent of the amount involved for each year of delay. Paying the LSF is far cheaper than letting a lapse harden into a Section 13 adjudication.
The penalty maths, in plain terms
Section 13 of FEMA is what gives this filing its teeth. The exposure is not a fixed fine; it scales with the size of the guarantee, which is exactly why a large parent guarantee turns a small paperwork slip into a serious number.
| Consequence | What the law provides |
|---|---|
| Quantifiable contravention | Penalty up to three times the sum involved in the contravention |
| Non-quantifiable contravention | Penalty up to ₹2,00,000 |
| Continuing default | Further penalty up to ₹5,000 for every day the default continues |
| Delayed reporting (relief) | Regularise through Late Submission Fee: ₹7,500 + 0.025% of the amount × years of delay |
The deeper implication for cross-border startups
According to CS Sapna Malpani, the FEMA Guarantees Regulations 2026 are part of a wider pattern in which the RBI is retiring one-time approvals and replacing them with continuous, self-reported returns filed through AD banks. FLA returns, Overseas Investment reporting under the 2022 framework, and now Form GRN all follow the same logic: fewer gatekeepers at the front, more accountability on the company to report accurately and on time. For a founder, the takeaway is that cross-border compliance is moving from a project you finish to a calendar you keep.
The prediction worth planning around is that guarantee data reported quarterly will start to be cross-checked against a company's ODI filings, its FLA return, and its subsidiary financials. A parent guarantee that shows up in a diligence data room but never in Form GRN will read as a live FEMA exposure to any acquirer or lead investor. Companies that build the guarantee register now will clear that check cleanly. Companies that wait will spend their next round explaining a reporting gap instead of their growth.
How Form GRN differs from the FEMA filings you already know
Founders often confuse the cross-border filings because they all route through an AD bank. They are not interchangeable. Form FC-GPR reports the issue of shares to a foreign investor after an equity raise, and is covered in our FDI reporting guide for Indian startups. The FLA return is an annual snapshot of foreign assets and liabilities. Reporting for money sent abroad by individuals sits under the LRS framework, explained in our note on overseas investment under the LRS. Form GRN is none of these, it is a quarterly return specific to guarantees, and filing FC-GPR or FLA does not discharge the GRN obligation. A company with a foreign subsidiary can easily owe all three at once, each on its own clock.
Key takeaways
- The FEMA Guarantees Regulations 2026 (Notification FEMA 8(R)/2026-RB, 6 January 2026) replace the 2000 regime and make cross-border guarantee reporting quarterly.
- Form GRN is due with your AD bank within 15 days of each quarter end; the next date is 15 October 2026 for the Jul–Sep quarter.
- Reporting covers four events per guarantee: issuance, modification, invocation and closure.
- A guarantee signed years ago and still open must appear in this quarter's return, there is no grandfathering.
- Section 13 penalties run up to 3x the sum involved, plus ₹5,000 per day for a continuing default.
- Late filings can be regularised through the Late Submission Fee of ₹7,500 plus 0.025% of the amount per year of delay.
- Form GRN is separate from FC-GPR and the FLA return; a company with a foreign subsidiary may owe all three.
Sources and references
- Reserve Bank of India, Notification No. FEMA 8(R)/2026-RB, Foreign Exchange Management (Guarantees) Regulations, 2026, dated 6 January 2026: rbi.org.in
- The Foreign Exchange Management Act, 1999, Section 13 (penalties): indiacode.nic.in
- Taxmann, RBI mandates quarterly reporting under FEM (Guarantees) Regulations 2026: taxmann.com
- EY India, RBI issues Foreign Exchange Management (Guarantees) Regulations, 2026: ey.com
- Lexology, FEMA (Guarantees) Regulations, 2026 Notified: lexology.com
- India Briefing, FEMA Guarantees Regulations 2026: RBI guide for investors: india-briefing.com
Map your cross-border guarantees before the quarter closes
Not sure which of your guarantees trigger Form GRN, or whether an old parent guarantee was reported correctly? Start with our FEMA Compliance Calculator to size your reporting position, then review the full scope of support on our FEMA compliance services page.
For a guarantee-by-guarantee review before 30 September, message CS Sapna Malpani directly on WhatsApp.
Frequently asked questions
What are the FEMA Guarantees Regulations 2026?
The FEMA Guarantees Regulations 2026 are a Reserve Bank of India framework notified vide Notification No. FEMA 8(R)/2026-RB on 6 January 2026, replacing the earlier FEMA 8/2000-RB regime. They govern guarantees between a person resident in India and a person resident outside India and, for the first time, require most such guarantees to be reported to the RBI every quarter in a return called Form GRN. Reporting flows through the company's Authorised Dealer bank.
What is Form GRN and when is it due?
Form GRN is the quarterly guarantee return introduced by the FEMA Guarantees Regulations 2026. A resident files it with its AD bank within 15 calendar days after the end of each quarter, and the AD bank forwards the consolidated data to the RBI. The return records the issuance, modification, invocation and closure of guarantees during the quarter. The next due date is 15 October 2026 for the July to September 2026 quarter.
Does a parent guarantee for my overseas subsidiary need Form GRN reporting?
Yes, in most cases. A guarantee given by an Indian parent to support a foreign subsidiary's borrowing is a cross-border guarantee where the Indian entity acts as surety, which falls squarely within the FEMA Guarantees Regulations 2026. It has to be reported in Form GRN while it stays open, even if it was signed in an earlier year, and again when it is modified or released. Confirm the exact treatment with your AD bank or your Company Secretary.
What is the penalty for not reporting a cross-border guarantee?
Non-reporting is a contravention under Section 13 of FEMA. Where the amount is quantifiable, the penalty can run up to three times the sum involved; where it is not, up to ₹2,00,000. A continuing default attracts a further penalty of up to ₹5,000 for each day it continues. Because the penalty scales with the guaranteed amount, a large parent guarantee creates outsized exposure from a small filing lapse.
I missed an earlier Form GRN filing. Can I still fix it?
Yes. The regulations extend the Late Submission Fee mechanism to guarantee reporting, so a delayed Form GRN can usually be regularised by paying an LSF rather than facing full adjudication. The LSF is calculated as ₹7,500 plus 0.025 per cent of the amount involved for each year of delay. If the underlying guarantee itself was given without the permission it required, that is a separate issue that may need compounding, so get it reviewed before you file.
How is Form GRN different from FC-GPR and the FLA return?
They report different things. FC-GPR reports the issue of shares to a foreign investor after a funding round. The FLA return is an annual statement of foreign assets and liabilities. Form GRN is a quarterly return specific to cross-border guarantees. Filing FC-GPR or the FLA does not discharge your Form GRN obligation, and a company with a foreign subsidiary can be liable for all three under separate deadlines.
Who inside the company should own Form GRN compliance?
Ownership usually sits with the Company Secretary or the finance controller, working with the treasury team that manages banking relationships. The practical requirement is a live register of every cross-border guarantee, updated whenever a guarantee is issued, changed, invoked or closed, and a quarterly cut-off five days before each 15-day deadline so the AD bank has time to process the return.
Need help with this in practice?
CS Sapna Malpani is a Practising Company Secretary in Bengaluru advising companies and startups on ROC and FEMA compliance, secretarial audit, incorporation and corporate governance. Book a consultation to discuss your specific requirement.