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Sale, Purchase, etc., of Immovable Property in India (As on September 1, 2001)

Introduction

Introduction

The Foreign Exchange Management Act, 1999 (FEMA), came in force with effect from June 1, 2000. Section 6(3)(i) of the Act empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons mainly residents outside India. The restrictions under this clause are not applicable to a lease of immovable property for a period not exceeding five years. The regulations made by the Reserve Bank are called Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations, 2000, and have been notified vide Notification FEMA No.21/2000-RB of May 3,2000. Full text of the Notification is available on the Bank's website www.fema.rbi.org.in. Synopsis of the said Regulations is as under:

All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.

A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office, or place of business in India( excluding a Laison Office), has general permission of Reserve Bank to acquire immovable property in India , which is necessary for, or incidental to, the activity. However, in such cases a declaration ,in prescribed form (IPI), is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.

An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/ plantation property or a farm house.

An Indian citizen resident outside India does not require any permission to transfer any immovable property, to a citizen of India who is resident in India.

An Indian citizen resident outside India does not require any permission to transfer any immovable property other than agricultural or plantation property or farm house, to a person who :-

is a citizen of India resident outside India , or

is a person of Indian origin resident outside India.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds:

received in India by way of inward remittance through banking channel from any place outside India, or

held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India other than agricultural land/farm house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer agricultural land/farm house/plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India.

A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.

Repatriation outside India, including credit to NRE or FCNR account, of sale proceeds of any immovable property situated in India, requires prior permission of the Reserve Bank except in circumstances stated in paragraph 13 below.

In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a person resident outside India, who is a citizen of India, or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied :-

the immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules /Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act,1999;

the sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final instalment of consideration for its acquisition, whichever is later;

the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and

in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.

The NRIs/ PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely repatriable outside India.

Notes:

A. For the purposes of transactions, i.e., transfer, sale, purchase, etc., dealing with immovable property in India, a person of Indian origin is defined as under:

" an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who:

( i) at any time, held Indian passport;

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). "

B. Queries on the subject can be transmitted by e-mail on rbecfidt@bol.net.in .

C. For further details please contact the nearest Regional Office of the Reserve Bank of India (Exchange Control Department).

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FOREX FACILITIES FOR RESIDENTS

Forex Facilities for Residents

If you are a Resident Indian, you can buy foreign exchange without permission from the Reserve Bank of India for :

Private Travel

You can avail of foreign exchange upto US$ 10,000 in any calendar year for tourism or private travel to any country other than Nepal and Bhutan on the basis of self-certification.

Endorsement on passport

There is no compulsion for you to get your passport endorsed with the foreign exchange purchased for travel outside India. Should you desire to get your passport endorsed, the bank/money changer releasing foreign exchange would do it.

Visit to Nepal and Bhutan

You can carry any amount of Indian currency while travelling to these countries, but you are not permitted to take Indian currency notes of denomination of Rs.500 and above or buy any foreign exchange for visit to these countries.

Study Abroad

You can buy foreign exchange upto US$ 30,000 or upto the estimate from the institution abroad, whichever is higher, per academic year on the basis of simple documentary evidence indicating the requirement.

Medical Treatment

You can buy foreign exchange on the basis of self-certification, upto US$ 50,000 to meet the expenses for medical treatment outside India. Banks are also permitted to release exchange required in excess of US$ 50,000, on the basis of estimate from a doctor or hospital in India or overseas.

You can also buy foreign exchange upto US$ 25,000 per person for meeting boarding/lodging/travel expenses of the patient and also the accompanying attendant on self-certification.

Employment Abroad

You can buy foreign exchange upto US$ 5,000 on production of letter of employment.

Emigration

You can buy foreign exchange upto US$ 5,000, or amount prescribed by country of emigration on the basis of emigration visa.

International Credit Cards

You can use your International Credit Cards/ ATM Cards/Debit Cards -

while on holidays outside India to meet your expenses.

when outside India for purchase of item of import.

when in India, for making payment in foreign exchange for purchase of books and other items through Internet.

The use of ICCs by residents while on visit abroad has been made free from all restrictions, without any item-wise limit within the overall ceiling of the credit card itself. The ICCs cannot be used for purchase of prohibited items e.g. lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment of call-back services etc.

Remittance for Miscellaneous Purposes upto US$ 500

You can remit foreign exchange outside India upto US$ 500, for miscellaneous purposes, without production of any document provided the rupee equivalent is paid by debit to your account, cheque or by demand draft.

Gifts and Donations

You can gift/donate upto US$ 5,000 every year on self-certification.

Foreign Exchange can be purchased :

from any bank which is authorised to deal in foreign exchange or full-fledged moneychangers. If the rupee equivalent exceeds Rs.50,000/-, the entire payment has to be made by way of a crossed cheque/banker's cheque/pay order/demand draft only.

60 days ahead of the journey date. In case it is not possible to use the foreign exchange within the period of 60 days, it should be surrendered to a bank/money changer.

Surrender of Foreign Exchange on Return

You can indefinitely retain foreign exchange upto US$ 2,000, in the form of foreign currency notes or travellers' cheques (TCs) for future use. Any foreign exchange in cash in excess of this sum, is required to be surrendered to a bank within 90 days and TCs within 180 days of return. Any amount in excess of US$ 2000 can be credited to RFC(D) account.

Resident Foreign Currency (Domestic) Account

You can open a Resident Foreign Currency (Domestic) Account with a bank in India and deposit foreign exchange earnings repatriated to India through banking channel. The earnings could be out of export of goods and/or services, royalty, honorarium etc.

You can also open/credit the RFC(D) account with currency notes, bank notes and travellers cheques (a) saved from your trip outside India, (b) received as honorarium during your trip outside India, (c) received as gift from persons on visit to India, and (d) received from a person on a visit to India for services rendered to him in India.

These accounts are NOT interest bearing and there is no ceiling on the balances that can be built up in these accounts.

The balances held in these accounts can be used for any purpose for which foreign exchange can be bought from a bank in India.

Retention of Foreign Coins

You can retain foreign coins indefinitely without any limit.

Bringing in Foreign Exchange

You can bring into India foreign exchange without any limit. If, however, the value of foreign currency in cash exceeds US$ 5,000 and/or the cash plus TCs exceed US$ 10,000 it should be declared to the customs authorities at the airport in the currency declaration form (CDF), on arrival in India.

Exchange Earners’ Foreign Currency (EEFC) Account

You can retain upto specified limits, your earnings in foreign exchange, in an Exchange Earners' Foreign Currency (EEFC) Account with a bank in India.

These accounts are NOT interest bearing and there is no ceiling on the balances that can be built up in these accounts.

Balances held in such accounts can be used for any purposes for which exchange can be otherwise purchased from authorised dealers in India.

For details of additional facilities available in EEFC account please contact your bank.

ESOP Scheme

A resident individual, who is an employee or a director of an Indian office or branch of a foreign company or of a subsidiary of a foreign company or of an Indian company in which the foreign equity holding is not less that 51 per cent, can make remittances for the acquisition of foreign securities under Employees Stock Option (ESOP) Scheme without any monetary limit. The scheme is subject to the condition that the shares are offered at the concessional price. (The facility will be subject to review in June 2003).

Portfolio Investment - Overseas

Resident individuals can invest without any monetary limit in overseas companies listed on a recognised stock exchange which have the shareholding of at least 10 per cent in an Indian company listed on a recognised stock exchange in India (as on 1^st January of the year of the investment). (The facility will be subject to review in June 2003).

Receipt of dis-investment proceeds/Sponsored ADRs/GDRs

Resident shareholders of Indian companies, who offer their shares for conversion to ADRs/GDRs under the Scheme of Sponsored ADRs/GDRs can receive the sale proceeds in foreign currency or credit it to their EEFC/RFC (D) or Rupee accounts in India at their option.

N.B. All the above facilities are available under general permission, i.e., foreign exchange can be availed of from authorised dealers and does not require Reserve Bank's approval.

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Local Area Banks were set up in the year 1996 with a view to ensuring provision of efficient and competitive financial services in their area of operations. Local Area Bank Scheme has now been in operation for the last six years. To undertake a review of the operation of the scheme it has been decided to constitute a review group.

The review group will make appropriate recommendations in the matter and submit its Report to the Reserve Bank by September 2002.

We invite your comments/suggestions/feedback which may be sent to Shri A.V. Sardesai, Member Secretary at cgmincrpcd@rbi.org.in or helprpcd@rbi.org.in

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Introduction

Introduction

All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.

A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office, or place of business in India( excluding a Laison Office), has general permission of Reserve Bank to acquire immovable property in India , which is necessary for, or incidental to, the activity. However, in such cases a declaration ,in prescribed form (IPI), is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property.

An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/ plantation property or a farm house.

An Indian citizen resident outside India does not require any permission to transfer any immovable property, to a citizen of India who is resident in India.

An Indian citizen resident outside India does not require any permission to transfer any immovable property other than agricultural or plantation property or farm house, to a person who :-

is a citizen of India resident outside India , or

is a person of Indian origin resident outside India.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds:

received in India by way of inward remittance through banking channel from any place outside India, or

held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India other than agricultural land/farm house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer agricultural land/farm house/plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India.

A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.

Repatriation outside India , including credit to RFC, NRE or FCNR account, of sale proceeds of any immovable property situated in India, requires prior permission of the Reserve Bank except in circumstances stated in paragraph 13 below.

In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a person resident outside India, who is a citizen of India, or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied :-

the immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules /Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act,1999;

the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and

in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

Authorised Dealers have been permitted to allow the facility of repatriation of funds by NRIs/PIOs in their Non-Resident Ordinary Rupee (NRO) account upto USD One Million per year representing sale proceeds of immovable property held by them for a period of not less than 10 years subject to payment of applicable taxes.

All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.

The NRIs/ PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely repatriable outside India.

Notes:

A. For the purposes of transactions, i.e., transfer, sale, purchase, etc., dealing with immovable property in India, a person of Indian origin is defined as under:

" an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who:

( i) at any time, held Indian passport;

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). "

B. Queries on the subject can be transmitted by e-mail on rbecfidt@bol.net.in .

C. For further details please contact the nearest Regional Office of the Reserve Bank of India (Exchange Control Department).

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The Foreign Exchange Management Act, 1999, (FEMA) has came in force with effect from 1^st June 2000. Section 6(3)(i) of the Act empowers the Reserve Bank to frame regulations to prohibit, restrict or regulate the acquisition or transfer of immovable property in India by certain persons mainly resident outside India. The restrictions under this clause are not applicable to a lease of immovable property for a period not exceeding five years. The regulations made by the Reserve Bank are called Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations 2000 and have been notified vide Notification FEMA No.21/2000-RB of May 3,2000.

A synopsis of the Regulations is given in the following paragraphs.

All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.

A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office or place of business in India( excluding a Laison Office), has general permission of Reserve Bank to acquire immovable property in India , which is necessary for or incidental to the activity. However, in such cases only a declaration ,in prescribed form (IPI), is required to be filed, within 90 days of the acquisition of immovable property, with the Reserve Bank.

An Indian Citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/ plantation land or a farm house.

An Indian Citizen resident outside India does not require any permission to transfer any immovable property, to a Citizen of India who is resident in India.

An Indian Citizen resident outside India does not require any permission to transfer any immovable property other than agricultural or plantation property or farm house, to a person who :-

is a citizen of India resident outside India , or

is a person of Indian origin resident outside India.

A person of Indian origin resident outside India does not require any permission to acquire any immovable property other than agricultural land/farm house/plantation property in India by purchase, from out of funds:

received in India by way of inward remittance through banking channel from any place outside India, or

held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act;

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India other than agricultural land/form house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India;

A person of Indian origin resident outside India does not require any permission to acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer any immovable property in India other than agricultural land/farm house/plantation property, by way of sale to a person resident in India.

A person of Indian origin resident outside India does not require any permission to transfer agricultural land/farm house/plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India.

A person of Indian origin resident outside India does not require any permission to transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India.

12.Repatriation outside India , including credit to RFC, NRE or FCNR account, of sale proceeds of any immovable property situated in India requires prior permission of the Reserve Bank except in circumstances given in paragraph 13 below.

In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a person resident outside India who is a citizen of India or a person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied :-

the immovable property was acquired by the seller in accordance with the provisions of the exchange control Rules /regulations/law in force at the time of acquisition or the provisions of the Regulations framed under Foreign Exchange Management Act,1999;

the sale takes place after three years from the date of acquisition of such immovable property or from the date of payment of final instalment of consideration for its acquisition, whichever is later; and;

the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency Non-Resident Account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property;

in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

All requests for acquisition of agricultural land/plantation property/ farm house by any person resident outside India or foreign nationals may be made to The Chief General Manager, Exchange Control Department, Foreign Investment Division (III), Central Office, Mumbai 400 001.

The NRIs/ PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely repatriable outside India.

Notes:

A. For the purposes of transactions i.e. transfer . sale, purchase etc., dealing with immovable property in India, a person of Indian origin is defined as follows:

" an individual (not being a citizen or Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan). Who:

( i) at any time, held Indian passport;

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). "

B. Queries on the subject can be sent by e-mail on rbecfidt@bol.net.in .

C. For further details please contact the nearest Regional Office of the Reserve Bank of India (Exchange Control Department).

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1	Tower Capital & Securities Pvt.Ltd.
	ABAN House,
	25/31, RopeWalk Lane,
	Off Rampart Row,
	Fort,Mumbai-400 001
	Tel: 204 5844, 287 5054
	Fax: 204 5765

2	Dil Vikas Finance Co.Ltd.
	1513, Maker Chambers V,
	221, Nariman Point,
	Mumbai-400 021
	Tel: 287 1377, 287 1378, 288 2654-55
	Fax: 284 6010

3	Birla Global Finance Co.Ltd.
	Apeejay 2nd Floor,
	Shahid Bhagat Singh Road,
	Fort, Mumbai-400 021
	Tel: 288 0660, 288 0041
	Fax: 288 1088

4	SREI International Securities Ltd.
	812, Embassy Centre,
	Nariman Point,
	Mumbai-400 066
	Tel: 204 2241, 204 2245
	Fax: 204 2550
	Email: sreisec@vsnl.net

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Types of Deposit Schemes
Particulars	FCNR a/c [Foreign Currency (Non-Resident) a/c]	NRE a/c [Non-Resident (External) Rupee a/c]	NRO (Non-Resident Ordinary Rupee a/c)
1.	2.	3.	4.
Who can open an account	NRIs and OCBs	NRIs and OCBS	Any person resident outside India
Joint account of two or more NRIs	Permitted	Permitted	Permitted
Joint account with another person resident in India	Not permitted	Not permitted	permitted
Currency in which account denominated	Pound Sterling US Dollar, Jap. Yen, or Euro	Indian Rupees	Indian Rupees
Repatriability: Principal Interest	Freely repatriable Freely repatriable	Freely repatriable Freely repatriable	Not repatriable Freely repatriable
Foreign Currency Risk	Account holder is protected against changes in INR value vis-à-vis the currency in which the account is denominated	Account holder is exposed to the fluctuations in the value of INR	Account holder is exposed to the fluctuations, in the value of INR to the extent of interest amount
Type of accounts	Term deposits only	Current Savings Recurring Fixed Deposits	Current Savings Recurring Fixed Deposits
Period for fixed deposits	For terms not less than 1 year and not exceeding 3 years	For the periods as announced by the deposit taking bank	For the periods as announced by the deposit taking bank
Rate of interest	Banks are free to determine interest rates within the ceiling, if any, prescribed by the Reserve Bank	Banks are free to determine interest rates.	Banks are free to determine interest rates.

Rupees Loans in India against Security of the funds held in the account to:
1.	2.	3.	4.
1) a/c holders	Permitted	Permitted	Permitted
2) third party	Permitted	Permitted	Permitted
Foreign currency loans outside India against Security of the funds held in the account to:
1) a/c holders	Permitted	Permitted	Not permitted
2) third party	Permitted	Permitted	Not permitted

Foot Note:-

Proceeds of NRNR deposits maturing on or after 1-4-2002 may be credited to NRE A/c/NRO A/c at the option of the account holder.

No new NRNR account to be opened after March 31, 2002.
NRNR account may be closed or proceeds transferred to NRO account, as desired by the account holder, on September 30, 2002.
The account holder may choose to credit the maturity proceeds to the NRE saving bank account or current account or open a fresh NRE term deposit account.
No new NRSR account to be opened after March 31, 2002. The existing NRSR term deposit accounts may be continued till maturity and the maturity proceeds may be credited to NRO A/c of the Account holder.
The existing NRSR account other than term deposit not to continue after September 30, 2002. On the closure of the account the balance to be credited to/transferred to NRO A/c of the account holder.
The existing NRSR account other than term deposit not to continue after September 30, 2002. At the option of the account holder it may be closed or balance thereof may be credited to his NRO account on or before that date.

Notes:

Nomination facilities, for nominating either a resident or a non-resident are available, in all types of accounts maintained in the name of individuals only.

For details of tax benefits available against each account please refer to the current income Tax rules.

For the purposes of maintaining an account in India

NRI is a person resident outside India who:

is citizen of India, or

is a citizen of any country other than Bangladesh or Pakistan if

he at any time held Indian passport, or

he or either his parents or any of his grand parents were citizen of India by virtue of the constitution of India or the Citizenship Act, 1955 (57 of 1955), or

a person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b) above

OCB is defined as:

"a company, partnership, firm, society or any other corporate body owned directly or indirectly to the extent of at least 60% by non-resident Indian and includes overseas Trust in which not less than 60% beneficial interest is held by non-resident Indians directly or indirectly but irrevocably".

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1. State Bank of India (SBI) 2. State Bank of Bikaner & Jaipur (SBJ) 3. State Bank of Hyderabad (SBH) 4. State Bank of Indore (SBN) 5. State Bank of Mysore (SBM) 6. State Bank of Patiala (SBP) 7. State Bank of Saurashtra (SBS) 8. State Bank of Travancore (SBT) 9. Allahabad Bank (ALB) 10. Andhra Bank (ANB) 11. Anz Grindlays Bank 12. Bank of America (BOA) 13. Bank of Baroda (BOB) 14. Bank of India (BOI) 15. Bank of Madura Ltd.(MDR) 16. Bank of Maharashtra (BOM) 17. Bank of Rajasthan Ltd.(BOR) 18. Banque Nationale De Paris (BNP) 19. Bassein Catholic Coop. Bank Ltd (BCH) 20. Canara Bank (CAB) 21. Central Bank Of India (CBI) 22. Citi Bank (CIT) 23. Citizen Co-op. Bank Ltd. (CCB) 24. Corporation Bank (COB) 25. Cosmos Co-op. Bank Ltd. (CSM) 26. Credit Agricol Indosuez (CAI) 27. Dena Bank (DEB) 28. Deutsche Bank (DTB) 29. Development Credit Bank Ltd.(DCB) 30. Federal Bank Ltd.(FBL) 31. Global Trust Bank Ltd. 32. Greater Bombay Co-op. Bank Ltd. (GBC) 33. ICICI Banking Corporation Limited 34. Indian Bank (INB) 35. Indian Overseas Bank (IOB) 36. Janata Sahakari Bank Ltd. Pune (JSB) 37. Karnataka Bank Ltd.(KBL) 38. Karur Vysya Bank Ltd.(KVB) 39. Lakshmi Vilas Bank Ltd.(LVB) 40. Lord Krishna Bank Ltd. (LKR) 41. N.K.G.S.B.Co-op. Bank Ltd.(NKC) 42. Oriental Bank of Commerce (OBC) 43. Punjab & Sind Bank (PSB) 44. Punjab National Bank (PNB) 45. Ratnakar Bank Ltd.(RTN) 46. Saraswat Co-op. Bank Ltd.(SRC) 47. South Indian Bank Ltd.(SIB) 48. Standard Chartered Bank (CHB) 49. Syndicate Bank (SYB) 50. UCO Bank (UCO) 51. Union Bank Of India (UBI) 52. United Bank Of India (UNI) 53. United Western Bank Ltd.(UWB) 54. UTI Bank Ltd.(UTI) 55. Vijaya Bank (VJB) 56. Vysya Bank Ltd.(VBL) 57. Hongkong & Shanghai Banking Corporation (HON) 58. Punjab & Maharashtra Co-operative Bank Limited (PMB) 59. IndusInd Bank Limited (IDS) 60. Sangli Bank Limited (SAN) 61. The Shamrao Vithal Co-operative Bank Limited (SVC) 62. The Kalupur Commercial Co-operative Bank Limited (KCC) 63. Oman International Bank S.A.O.G. (OIB) 64. The Maharashtra State Co-operative Bank Limited (MSC)

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FOREX FACILITIES FOR NRIS/PIOS

Forex Facilities for NRIs/PIOs

If you are a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO), you can avail of the following facilities without permission from the Reserve Bank :

Deposits

You can open, hold and maintain following types of accounts with an authorised dealer in India i.e. a bank authorised to deal in foreign exchange.

Non-Resident (Ordinary) Rupee Account – NRO Account

Non-Resident (External) Rupee Account – NRE Account

Foreign Currency Non Resident (Bank) Account – FCNR (B) Account

Salient features of the above accounts are as under :

Particulars	FCNR (B) Account	NRE Account	NRO Account
Joint account of two or more NRIs	Permitted	Permitted	Permitted
Joint account with another person resident in India	Not permitted	Not permitted	Permitted
Currency in which account is denominated	Pound Sterling/ US Dollar/Jap.Yen/Euro	Indian Rupees	Indian Rupees
Repatriability – Principal	Freely repatriable	Freely repatriable	Not repatriable (except current income like rent, dividend, pension etc. and remittances indicated under "Repatriation of NRO Funds")
Interest	Freely repatriable	Freely repatriable	Freely repatriable
Foreign currency risk	Account holder is protected against changes in INR value vis-à-vis the currency in which the account is denominated.	Account holder is exposed to the fluctuations in the value of INR.	Account holder is exposed to the fluctuations, in the value of INR to the extent of interest amount.
Type of accounts	Term deposits only.	Current, Savings, Recurring, Fixed Deposits.	Current, Savings, Recurring, Fixed Deposits.
Period of fixed deposits	For terms not less than 1 year and not exceeding 3 years	For the periods as announced by the deposit taking bank.	For the periods as announced by the deposit taking bank.
Rate of interest	Banks are free to determine interest rates within the ceiling, if any, prescribed by the Reserve Bank	Banks are free to determine interest rates.	Banks are free to determine interest rates.
Rupee Loans in India against Security of the funds held in the account to : Account holder Third Party	Permitted Permitted	Permitted Permitted	Permitted Permitted
Foreign currency loans outside India against security of the funds held in the account to : Account holder Third Party	Permitted Permitted	Permitted Permitted	Not permitted Not permitted

Only account holders can avail of foreign currency loans in India against the security held in FCNR(B) Deposit Account.

Repatriation of NRO funds

Authorised Dealers can allow remittance/s upto USD 1 million, of balances in NRO accounts/of sale proceeds of assets on production of an undertaking by the remitter togetherwith a certificate issued by a Chartered Accountant in Annexure A and B as prescribed by the Central Board of Direct axes (CBDT). In the case of repatriation of sale proceeds of immovable property by NRIs/PIOs, ADs can allow repatriation thereof even if the immovable property was held by the NRIs/PIOs for less than 10 years provided the cumulative period of holding of the immovable property in India and retention of the sale proceeds of the property in the NRO Account is not less than 10 years.

Investment in India :

You can invest in :

Government Securities/Units with repatriation rights.

Company shares/Debentures with repatriation rights.

Shares/debentures of Indian companies through stock exchange under port-folio investment scheme with repatriation rights.

Indian companies without any limit on non-repatriation basis, freely.

For details please refer to Reserve Bank’s Notifications No.FEMA.20/RB-2000 and No.FEMA.24/RB-2000 dated May 3, 2000 as amended from time to time.

Immovable property

You can acquire –

immovable property in India other than agricultural/plantation property or a farm house, if you are an NRI.

immovable property other than agricultural land/farm house/plantation property in India out of repatriable funds, if you are a PIO.

You can repatriate –

sale proceeds of immovable property acquired in India out of your repatriable funds, without any lock-in period.

refund of application/earnest money/purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots/cancellation of booking/deals for purchase of residential/commercial properties, togetherwith interest, net of taxes, provided original payment is made out of NRE/FCNR(B) account/inward remittances.

N.B. - All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India.

On return to India

If you decide to return to India :

You may continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when you were resident outside India.

You may open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to keep your foreign currency assets. Assets held outside India at the time of return can be credited to RFC account. The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.

N.B. All the above facilities are available under general permission, i.e., foreign exchange can be availed of from authorised dealers and does not require Reserve Bank’s approval.

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Types of Deposit Schemes
Particulars	(Foreign Currency Non-Resident Account (FCNR A/c)	Non-Resident External Rupee Account (NRE A/c)	(Non-Resident Ordinary Account (NRO A/c)
Who can open an account	NRIs or OCBs (Individuals/entities of Bangadesh/ Pakistan nationality /ownership require approval of RBI)	NRIs or OCBs (Individuals/entities of Bangadesh/ Pakistan nationality /ownership require approval of RBI)	Any person resident outside India (Individuals/entities of Bangadesh/ Pakistan nationality /ownership require approval of RBI)
Joint account	In the names of two or more non-resident individuals	In the names of two or more non-resident individuals	May be held jointly with residents
Nomination	Permitted	Permitted	Permitted
Currency in which account denominated	Pound Sterling, US Dollar, Jap. Yen, or Euro.	Indian Rupees	Indian Rupees
Repatriability	Repatriable	Repatriable	Not repatriable except for the following in the account:- Current income and interest Upto US$ 1 million per calendar year for any bonafide purposes out of NRO balances/ sales proceeds of assets
Type of Account	Term Deposits only	Savings, Current, Recurring, Fixed Deposit	Savings, Current, Recurring, Fixed Deposit
Period for fixed deposits	For terms not less than 1 year and more than 3 years	No restriction	No restriction
Rate of Interest	Subject to cap: LIBOR - 250 basis points	Subject to cap: LIBOR/SWAP+ 100 basis points	Banks are free to determine interest rates.
LOANS & OVERDRAFTS
IN INDIA
(i) to the Account holder	Permitted	Permitted	Permitted
(ii) to third parties	Permitted	Permitted	Permitted
b) OUTSIDE INDIA
(i) to the Account holder	Permitted	Permitted	Not Permitted
(ii) to third parties	Permitted	Permitted	Not Permitted
b. FOREIGN CURRENCY LOANS IN INDIA
(i) to the Account holder	Permitted	Not Permitted	Not Permitted
(ii) to third parties	Not Permitted	Not Permitted	Not Permitted
PURPOSE OF LOAN
IN INDIA
(i) to the Account holder	i)Personal purposes or for carrying on business activities. * ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms/ companies iii) Acquisition of flat/ house in India for his own residential use	i)Personal purposes or for carrying on business activities ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms/ companies iii) Acquisition of flat/ house in India for his own residential use	Personal requirement and /or business purpose. *
In India (ii) to third party	Fund based and/or non-fund based facilities for personal purposes or for carrying on business activities . *	Fund based and/or non-fund based facilities for personal purposes or for carrying on business activities . *	Personal requirement and / or business purpose*
b) OUTSIDE INDIA
To the Account holder and to third party	Fund based and/or non-fund based facilities for bonafide purposes.	Fund based and/or non-fund based facilities for bonafide purposes.	Not permitted

* The loans cannot be utilized for the purpose of relending, or carrying on agriculture or plantation activities or for investment in real estate business.

Features of various foreign currency deposit schemes available to Resident Indians

Particulars	Resident Foreign Currency Account (RFC Account)	Resident Foreign Currency (Domestic ) Account (RFC(D) Account)	Exchange Earner’s Foreign Currency Account(EEFC Account)
Who can open an account	Any person resident in India.	Resident Individuals	Any person resident in India
Sources of Funds	Foreign exchange received as pension/ superannuation /other benefits from employer abroad Reaslisation of assets held abroad Foreign exchange acquired as gift or inheritance from person who was NRI	Foreign exchange acquired : while on a visit abroad from any person on visit to India or honorarium or gift or for services or settlement of any lawful obligation by way of honorarium or gift while on a visit abroad representing unspent foreign exchange acquired during travel abroad as gift from a close relative by way of earning through export of goods/services or as royalty honorarium or by any other lawful means. representing the disinvestment proceeds received by the resident a/c holder on conversion of shares held by him to ADRs/GDRs under the sponsored ADR/GDR scheme approved by the FIPB of Govt. of India.	A 100% Export Oriented Unit or a unit in (a) Export processing zone or (b) Sortware technology park or (c)Electronic hardware technology park may credit upto 100% and any other person resident may credit upto 50% of their foreign exchange earnings. (d) Professional like scientists, professors of Indian Universities, economists, lawyers, doctors, artists, architects, engineers, consultants, Cost/ Chartered Accountants, Directors of Boards of overseas companies etc. who render services in their individual capacities outside India, may credit upto 100% of their earnings.
Joint account of two or more residents	Not permitted	Not permitted	Not permitted
Joint account with NRI	Not permitted	Not permitted	Not permitted
Types of account	Savings Current Fixed Deposit	Current Account	Current Account
Period for fixed deposits	Like any resident accounts banks may fix the period	N.A.	N.A.
Rate of interest	The banks are free to determine interest rates.	No interest is payable	No interest is payable.
End Use	No restrictions, including investments overseas	For permissible current and capital account transactions	For bonafide purposes as per Notification No. FEMA 10/2000-RB dt. 3.5.2000
LOANS & OVERDRAFTS In India	Foreign currency loans permitted	Not permitted	Not permitted

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Department of Banking Operations & Development
Central Office

Index

Department of Banking Operations & Development
Central Office
Index

I. Domestic Deposits

II. NRI Deposits

III. Advances

IV. Advances against shares and debentures

V. Donations

VI. Premises Loan

VII. Service charges

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1. Whether banks can accept interest free deposits ? +

Banks cannot accept interest free deposits other than in current account.

The Government of India issues securities in order to borrow money from the market. One way in which the securities are offered to investors is through auctions. The government notifies the date on which it will borrow a notified amount through an auction. The investors bid either in terms of the rate of interest (coupon) for a new security or the price for an existing security being reissued. Since the process of bidding is somewhat technical, only the large and informed investors, such as, banks, primary dealers, financial institutions, mutual funds, insurance companies, etc generally participate in the auctions. This left out a large section of medium and small investors from the primary market for government securities which is not only safe and secure but also give market related rates of return. The Reserve Bank of India has announced a facility of non-competitive bidding in dated government securities on December 7th 2001 for small investors.

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1. Who can participate in the Scheme ? +

Participation in the Scheme of non-competitive bidding is open to individuals, HUFs, firms, companies, corporate bodies, institutions, provident funds, trusts and any other entity prescribed by RBI. As the focus is on the small investors lacking market expertise, the Scheme will be open to those whodo not have current account (CA) or Subsidiary General Ledger (SGL) account with the Reserve Bank of Indiado not require more than Rs.one crore (face value) of securities per auctionAs an exception, Regional Rural Banks (RRBs), Urban Cooperative Banks (UCBs) and Non-banking Financial Companies (NBFCs) can also apply under this Scheme in view of their statutory obligations. However, the restriction in regarding the maximum amount of Rs. one crore per auction per investor will remain applicable.

1. What is the Banking Ombudsman Scheme ? +

The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995. Presently the Banking Ombudsman Scheme 2006 (As amended upto July 1, 2017) is in operation.

1. What is Electronic Clearing Service (ECS)? +

ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess / tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa. ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI).

The Reserve Bank of India has introduced an Ombudsman Scheme for Digital Transactions, 2019 (the Scheme). It is an expeditious and cost-free apex level mechanism for resolution of complaints regarding digital transactions undertaken by customers of the System Participants as defined in the Scheme. The Scheme is being introduced under Section 18 Payment and Settlement Systems Act, 2007, with effect from January 31, 2019.

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1. Who is the Ombudsman for Digital Transactions ? +

The Ombudsman for Digital Transactions is a senior official appointed by the Reserve Bank of India to redress customer complaints against System Participants as defined in the Scheme for deficiency in certain services covered under the grounds of complaint specified under Clause 8 of the Scheme.

1 Semi-closed System PPIs: These PPIs are issued by banks (approved by RBI) and non-banks (authorized by RBI) for purchase of goods and services, including financial services, remittance facilities, etc., at a group of clearly identified merchant locations / establishments which have a specific contract with the issuer (or contract through a payment aggregator / payment gateway) to accept the PPIs as payment instruments. These instruments do not permit cash withdrawal, irrespective of whether they are issued by banks or non-banks.

Q1: The MD-TLE has various clauses incorporating the term ‘time of transfer’. What is to be taken as the ‘time of transfer’? +

Ans: It is clarified that ‘time of transfer’ would mean when the associated risks and rewards, to the extent of economic interest transferred and as documented in the loan participation, assignment or novation contract, becomes binding on the transferor and transferee.

Frequently Asked Questions (FAQs) on circular dated September 25, 2023 on ‘Display of information - Secured assets possessed under the SARFAESI Act, 2002’

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1. Does the circular cover display of assets possessed before the circular date?

Ans: Secured assets possessed by Regulated Entities (REs) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 on or after the date of the circular should be disclosed on their website.

1. Para 3(viii) of the circular specifies that in the case of existing loans, the switchover to new penal charges regime shall be ensured on next review or renewal date or six months from the effective date of the circular, whichever is earlier. Whether such date of next review or renewal can be counted only after the effective date or even before the effective date if the accounts are subjected to review/ renewal?

In case of existing loans as well, the instructions shall come into effect from April 1, 2024 and the switchover to new penal charges regime shall be ensured on the next review / renewal date falling on or after April 1, 2024, but not later than June 30, 2024.

Introduction

The legal framework for administration of exchange control in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. However, the Central Government has been vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account transactions. Accordingly, the Government has issued Notifications GSR.381(E) dated May 3, 2000, and S.O. 301(E) dated March 30, 2001, imposing certain restrictions on current account transactions in public interest.

These details are available on the Bank’s website besides with the authorised dealers and regional offices of the Foreign Exchange Department. Our experience so far has been that the residents like to get information on several matters relating to various current account transactions and other incidental issues. This pamphlet attempts to answer to all such questions in simple language. While preparing replies to questions, special care has been taken to ensure that the replies are drafted in simple words and reference to technical details are avoided.

The Foreign Exchange Management Act,1999 (FEMA), has come into force with effect from June 1, 2000. With introduction of the new Act (in place of FERA), certain structural changes have been introduced and now all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification No.G.S.R.381(E) dated May 3, 2000 (as amended from time to time). Full text of the said Notification is available in the Official Gazette. It is also available as annexure to our Master Circular on Miscellaneous remittances available at our website /en/web/rbi/notifications/master-circulars .Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.

Some of the commonly or frequently asked questions by residents in connection with foreign exchange facilities or restrictions have been answered in the following paragraphs.

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1. Who is a resident? +

In terms of Section 2(v) of FEMA, 1999, a "person resident in India" means – a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include – (A) a person who has gone out of India or who stays outside India, in either case - for or on taking up employment outside India, or for carrying on outside India a business or vocation outside India, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than – for or on taking up employment in India, or for carrying on in India a business or vocation in India, or for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; any person or body corporate registered or incorporated in India, an office, branch or agency in India owned or controlled by a person resident outside India, an office, branch or agency outside India owned or controlled by a person resident in India;

General Information

For further details/guidance, please approach any bank authorised to deal in foreign exchange or contact Regional Offices of the Foreign Exchange Department of the Reserve Bank.

FAQ-as on July 1, 2004

Introduction

The legal framework for administration of exchange control in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. However, the Central Government has been vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account transactions. Accordingly, the Government has issued Notifications GSR.381(E) dated May 3, 2000, and S.O. 301(E) dated March30, 2001, imposing certain restrictions on current account transactions in public interest.

These details are available on the Bank’s website besides with the authorised dealers and regional offices of the Exchange control Department. Our experience so far has been that the residents like to get information on several matters relating to various current account transactions and other incidental issues. This pamphlet contains answers to all such questions in simple language. While preparing replies to questions, special care has been taken to ensure that the replies are drafted in simple words and reference to technical details are avoided.

The Foreign Exchange Management Act,1999 (FEMA), has come into force with effect from June 1, 2000. With introduction of the new Act (in place of FERA) certain structural changes have been introduced and now all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification No.G.S.R.381(E) dated May 3, 2000 (as amended from time to time). Full text of the said Notification is available in the Official Gazette. Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.

Some of the commonly or frequently asked questions by residents in connection with foreign exchange facilities or restrictions have been answered in following paragraphs.

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1. How much exchange is available for a business trip?
+

Authorised dealers can release foreign exchange up to US$25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding US$25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from Reserve Bank. Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Visit abroad for medical treatment and/or check up also falls within this category.

Q.1 What is direct investment outside India ? +

Direct investment outside India means investment by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity but does not include portfolio investment.

EXCHANGE CONTROL DEPARTMENT NON RESIDENT FOREIGN ACCOUNTS DIVISION

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1. Can foreign tourists open a bank account in India during their short visit ? +

Yes, foreign tourists during their short visit to India can open a Non-Resident (Ordinary) Rupee (NRO) account with any bank dealing in foreign exchange .

1. Does QA 22 Account continue under Foreign Exchange Management Act, 1999 ? +

No. With the introduction of Foreign Exchange Management Act, 1999, the accounts opened by foreign nationals who are resident in India are treated as resident accounts. Such accounts are at par with other resident Rupee accounts.

Who is eligible to advertise on Foreign Satellite Channels? +

Exporters whose export earnings are Rs.10 lakhs or more during each of the preceding two years, or where the payment is to be made out of funds held in RFC or EEFC account of the remitter, are permitted by authorised dealers to make remittance for advertisement on foreign television, in terms of Foreign Exchange Management (Current Account Transactions) Rules, 2000 made by Government of India, vide Notification G.S.R.381(E) dated May 3, 2000. All other cases need to be referred by the authorised dealer to the Reserve Bank of India, for prior approval, before effecting any remittance.

Q.1. What is an NBFC-Infrastructure Finance Company (NBFC-IFC)?

Ans. An NBFC-IFC is a non-deposit taking NBFC which has a minimum of 75% of its total assets deployed towards infrastructure lending. For this purpose, the term ‘infrastructure lending’ means a credit facility extended by an NBFC to a borrower, by way of term loan, project loan subscription to bonds/ debentures/ preference shares/ equity shares in a project company acquired as a part of the project finance package such that subscription amount to be “in the nature of advance” or any other form of long term funded facility for exposure in the infrastructure sub-sectors as notified by the Department of Economic Affairs, Ministry of Finance, Government of India, from time to time.

1. What is the ATS ? +

The ATS is an Application Tracking System, hosted on the public website of the Reserve Bank of India (RBI), which has been developed for members of the public to submit any individual application to RBI and keep track of the status of its disposal thereafter.

Circular dated April 11, 2023 on ‘Framework for acceptance of Green Deposits’

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1. Is it mandatory for the regulated entities (REs) to raise green deposits?

It is not mandatory but in case REs intend to raise green deposits from their customers they should follow the framework prescribed therein.

Q1. What is the Asian Clearing Union (ACU)? +

Ans. The Asian Clearing Union (ACU) was established with its head-quarters at Tehran, Iran, on December 9, 1974 at the initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), for promoting regional co-operation. The main objective of the clearing union is to facilitate payments among member countries for eligible transactions on a multilateral basis, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade among the participating countries.

Q.1. What is RBI-EFT System? +

Ans RBI EFT is a Scheme introduced by Reserve Bank of India (RBI) to help banks offering their customers money transfer service from account to account of any bank branch to any other bank branch in places where EFT services are offered.

1. “বেসিক সেভিং ব্যাঙ্ক অ্যাকাউন্টের” (বিএসবিডিএ) সংজ্ঞা কি?

বৰ্তমান সমস্ত ‘নো ফ্ৰিল’ অ্যাকাউন্ট যেগুলো ডিবিওডি.নং.এলইজি.বিসি.44/09.07.005/2005-06 11 নভেম্বর 2005 সালের সাৰ্কুলারে থাকা নিৰ্দেশ অনুযায়ী খোলা হয়েছে, সেই সমস্ত অ্যাকাউণ্ট ডিবিওডি.নং.এলইজি.বিচি.35/09.07.005/20012-13 10 আগষ্ট 2012 সালের সাৰ্কুলার অনুযায়ী বিএসবিডিএ অ্যাকাউন্টে পরিবৰ্তিত করা হবে সঙ্গে এই সাৰ্কুলার মতে নতুন করে খোলা সমস্ত অ্যাকাউন্ট বিএসবিডিএ হিসাবে গণ্য করা হবে। উচিত মূল্যে যে অ্যাকাউন্টগুলোতে অতিরিক্ত সুবিধা উপলব্ধ রয়েছে, বিশেষ করে বিএসবিডিএ অ্যাকাউন্টের গ্ৰাহকের জন্য, সেই অ্যাকাউন্টগুলো বিএসবিডিএ হিসাবে গণ্য করা হবে।

Q1: Will banks be required to maintain specified securities for the amount received in TLTRO in HTM book at all times? +

Ans: Yes. The banks will have to maintain amount of specified securities for the amount received in TLTRO in its HTM book at all times till maturity of TLTRO.

1. What are various types of cards? +

Ans: Cards can be classified on the basis of their issuance, usage and payment by the card holder. There are three types of cards (a) debit, (b) credit, and (c) prepaid.

The Reserve Bank of India has introduced an Ombudsman Scheme for customers of Non-Banking Financial Companies (NBFCs). The Ombudsman Scheme for Non-Banking Financial Companies, 2018 (the Scheme), is an expeditious and cost free apex level mechanism for resolution of complaints of customers of NBFCs, relating to certain services rendered by NBFCs. The Scheme is being introduced under Section 45 L of the Reserve Bank of India Act, 1934, with effect from February 23, 2018.

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1. Who is the NBFC Ombudsman ? +

The NBFC Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against NBFCs for deficiency in certain services covered under the grounds of complaint specified under Clause 8 of the Scheme.

Que - “Please provide the details of Exchange Rate value of INR against USD dollar from the year 1947 till date”. +

Ans – Information regarding USD-INR rates for the period 1945-46 – 1970-71 is available at the following link: Exchange Rate – 1945-1971

2. Information regarding USD-INR rate for the period 1970-71 to 2013-14 is available on:
http://dbie.rbi.org.in/DBIE/dbie.rbi?site=publications -> Handbook of Statistics on the Indian Economy -> Part I -> Annual Series -> Trade & Balance of Payments -> Table 147 - EXCHANGE RATE OF THE INDIAN RUPEE VIS-À-VIS THE SDR, US DOLLAR, POUND STERLING, D. M. /EURO AND JAPANESE YEN (calendar Year – Annual Average)

3. Information for the year 2015 onwards is available on
/en/web/rbi/exchange-rate-archive

1. Why are ₹2000 denomination banknotes being withdrawn? +

The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of ₹2000 banknotes was stopped in 2018-19. A majority of the ₹2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.

In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the ₹2000 denomination banknotes from circulation.

1. What is The Depositor Education and Awareness (DEA) Fund Scheme, 2014, the Depositor Education and Awareness (DEA) Fund and when did this Scheme come into effect?

ANS: “The Depositor Education and Awareness Fund (DEA Fund) Scheme, 2014” was formulated by the Reserve Bank of India in exercise of the powers conferred upon it under Section 26A of the Banking Regulation (BR) Act, 1949 and all the powers enabling it in this behalf. Under the provisions of this Section, RBI has established the Depositor Education and Awareness Fund (Fund). The Scheme has come into effect from May 24, 2014, i.e., the date of notification of the Scheme in the Official Gazette of India.

Q.1 Does the circular apply to all loan products or only to Personal Loans?

Ans: The circular is applicable to all equated periodic instalment based personal loans only. The circular is not applicable to other types of loans. The Reserve Bank circular DBR.No.BP.BC.99/08.13.100/2017-18 on “XBRL Returns – Harmonization of Banking Statistics” dated January 04, 2018 may be referred for the definition of personal loans.

(Usage of e₹ is currently being pilot tested in the form of some studies in the country. The pilot is being tried in the Retail (public) and Wholesale (bank and other institutions) segments.

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A. Retail CBDC

1. What is Digital Rupee?

Ans: Digital Rupee or e₹, is India’s Central Bank Digital Currency (CBDC). It is the digital form of India’s physical currency, the Rupee (₹). e₹ is issued by the Reserve Bank of India (RBI) in digital form and offers features similar to physical cash like convenience of use, guarantee of RBI, finality of settlement, etc. e₹ is stored in the user’s digital wallet and can be used to receive / send money, and / or make payment for transactions, just like any physical ₹ note.

The logo and tagline for India’s CBDC is as under:

Q 1. Whether banks can accept interest-free deposits?

Ans. Banks can accept interest free deposits only in current account in terms of paragraph 29.5 of Master Direction- Reserve Bank of India (Interest Rate on Deposits) Directions, 2025.

Reserve Bank of India (RBI) integrated its three erstwhile Ombudsman Schemes viz. (i) the Banking Ombudsman Scheme, 2006, (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018, and (iii) the Ombudsman Scheme for Digital Transactions, 2019, into one Scheme - ‘The Reserve Bank - Integrated Ombudsman Scheme, 2021 (the Scheme / RB-IOS, 2021)’ with effect from November 12, 2021. The Scheme simplifies the grievance redress process at RBI by enabling the customers of Regulated Entities (REs) like banks, Non-Banking Financial Companies (NBFCs), Payment System Participants (PSPs) and Credit Information Companies to register their complaints at one centralised reference point. The objective of the Scheme is to resolve the customer grievances involving ‘deficiency in service’ on part of REs in a speedy, cost-effective and satisfactory manner. These FAQs provide information on RB-IOS, 2021 and related aspects.

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1. What is RB-IOS, 2021? +

The Reserve Bank - Integrated Ombudsman Scheme, 2021 (RB-IOS, 2021/ the Scheme) was launched on November 12, 2021. It integrates the erstwhile three Ombudsman schemes of RBI namely, (i) the Banking Ombudsman Scheme, 2006; (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019. These schemes had limited and different grounds of complaints and limited coverage of REs, apart from jurisdiction related restrictions. RB-IOS, 2021 provides for cost-free redress of customer complaints involving deficiency in services rendered by entities regulated by RBI, if not resolved to the satisfaction of the customers or not replied to within a period of 30 days by the RE.

In addition to integrating the three existing schemes, the Scheme also includes under its ambit additional REs, namely, Non-Scheduled Primary (Urban) Co-operative Banks with a deposit size of ₹50 crore and above and Credit Information Companies. The Scheme adopts ‘One Nation One Ombudsman’ approach by making the RBI’s Ombudsman mechanism jurisdiction neutral.

[Master Directions on Fraud Risk Management in REs were issued on July 15, 2024]

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Q.1 The Master Directions on Fraud Risk Management inter alia require Regulated Entities (REs) to constitute a Special Committee of the ‘Board for Monitoring and Follow-up of cases of Frauds’ (SCBMF) or a ‘Committee of the Executives’ (CoE), as the case may be. What should be the threshold amount of fraud for placing the cases before such Committee?

Ans: As mentioned under Chapter II of the Master Directions, the coverage and periodicity of reviews conducted by SCBMF / CoE shall be decided by the Board of the REs. Accordingly, the threshold amount of fraud cases to be placed before the SCBMF / CoE shall be decided by the Board of the REs, after duly taking into account the scale and complexity of their operations.

Scheme for Payment of Pension to Central Government Pensioners by Authorised Banks

Payment of pension to retired government employees, including payment of basic pension, increased dearness relief (DR), and other benefits as and when announced by the governments, is governed by the relevant schemes prepared by concerned Ministries/Departments of the Government of India and State Governments. RBI has issued certain instructions in this regard which is available in the Master Circular – Disbursement of Government Pension by Agency Banks dated April 01, 2025. Clarifications, in the form of questions and answers, on certain issues related to the instructions issued by RBI is given below.

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1. Whether a Joint Account can be continued for family pension after death of a pensioner?

Yes, the banks should not insist on opening of a new account in case of Central Government pensioner if the spouse in whose favour an authorization for family pension exists in the Pension Payment Order (PPO) is the survivor. The family pension should be credited to the existing account without opening a new account by the family pensioner for this purpose.

1. What is TReDS ? +

Ans. TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs).

These FAQs attempt to put in place the common queries that users have on the subject in easy to understand language. However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the Regulations made or directions issued thereunder may be referred to. The relevant principal regulations are the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 issued vide Notification No. FEMA 13 (R)/2016-RB dated April 01, 2016. The directions issued are consolidated in the Master Direction No 13 on Remittance of Assets.

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1. What is meant by Remittance of Assets? +

Answer: ‘Remittance of assets' means remittance outside India of funds representing

a deposit with a bank or a firm or a company of:

provident fund balance
superannuation benefits
amount of claim or maturity proceeds of Insurance policy
sale proceeds of shares, securities, immovable property or any other asset held in India

1. When did Payment and Settlement Systems Act, 2007 (PSS Act, 2007) came into effect? +

Ans. The PSS Act, 2007 received the assent of the President on 20th December 2007 and it came into force with effect from 12th August 2008.

1. What is the inflation index to which inflation rate will be linked? +

Inflation rate will be based on the final combined Consumer Price Index [(CPI) base: 2010=100].
The final combined CPI will be used as reference CPI with a lag of three months. For example, the final combined CPI for September 2013 will be used as reference CPI for whole of December 2013.

These FAQs attempt to put in place the common queries that users have on the subject in easy to understand language. However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the Regulations made or directions issued thereunder may be referred to. The relevant principal regulations are the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 issued vide Notification No. FEMA 10(R)/2015-RB dated January 21, 2016. The directions issued are consolidated in Part I of the Master Direction No 14 on Deposits and Accounts. Amendments, if any, to the principal regulations are appended.

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1. Who is a person resident in India?

Sec 2(v) of the Foreign Exchange Management Act, 1999 (FEMA) defines a person resident in India as:

(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include-

(A) a person who has gone out of India or who stays outside India, in either case-

for or on taking up employment outside India, or
for carrying on outside India a business or vocation outside India, or
for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than-

for or on taking up employment in India, or
for carrying on in India a business or vocation in India, or
for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(ii) any person or body corporate registered or incorporated in India,

(iii) an office, branch or agency in India owned or controlled by a person resident outside India,

(iv) an office, branch or agency outside India owned or controlled by a person resident in India;

1. Why was the Scheme of Withdrawal of Legal Tender Character of the old Bank Notes in the denominations of ₹ 500 and ₹ 1000 introduced ? +

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw legal tender character of the old Bank Notes in the denominations of ₹ 500 and ₹ 1000 was introduced.

Disclaimer:

These FAQs are for general guidance purpose only. In case of any inconsistency(ies) between FAQ and FEMA, 1999, Rules/Regulations/Directions/Permissions issued thereunder, the latter shall prevail.

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Q 1: How is the Special Rupee Vostro Account (SRVA) different from the already existing Rupee Vostro Account provided for under Foreign Exchange Management (Deposit) Regulations, 2016?

Answer: The settlement of International trade through Indian Rupees (INR) is an additional arrangement to the existing system of settlement. SRVA requires prior approval before opening unlike Rupee Vostro account.

1. What is Indo-Nepal Remittance Facility Scheme under NEFT ecosystem? +

Ans: The Indo-Nepal Remittance Facility (INRF, Scheme) is a cross-border remittance scheme to transfer funds from India to Nepal (one-way only), enabled under the NEFT ecosystem. The scheme was launched by the Reserve Bank of India (RBI) in May 2008 to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal.

In August 2021, the Scheme was enhanced to boost the trade payments between the two countries, and to facilitate payments relating to retirement, pension, etc., to our ex-servicemen who have settled / relocated in Nepal.

1. What are the pre-conditions for the FCNR (B) deposits mobilised by a bank for being eligible to be swapped with RBI under the swap window ? +

Only fresh FCNR (B) deposits mobilized in any of the permitted currencies after September 6, 2013 with a minimum three years maturity and having a lock in period of one year are permissible deposits under the swap window.

Banks are free to mobilise other types of permitted FCNR (B) deposits as specified in the RBI Master Circular on Interest Rates on FCNR (B) Deposits dated July 1, 2013 read with Circular DBOD.Dir.BC. 38/13.03.00/2013-14 dated August 14, 2013. However, such deposits will not qualify as eligible deposit for the purpose of swap with RBI. Banks are advised to maintain separate ledgers for FCNR (B) deposits mobilised under both the schemes along with proper audit trail of transactions.

These FAQs attempt to put in place the common queries that users have on the subject in easy to understand language. However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the Regulations made or directions issued thereunder may be referred to. The relevant Principal Regulations are the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 issued vide Notification No. FEMA 22(R)/2016-RB dated March 31, 2016. The directions issued are consolidated in Master Direction on Establishment of Branch Office (BO)/ Liaison Office (LO)/ Project Office (PO) or any other place of business in India by foreign entities.

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Q.1. What action the AD is required to take in case of any adverse reporting in Annual Activity Certificate (AAC) of LO/BO or non-submission of AACs? +

Ans. In case the designated AD Category I bank notices any adverse findings by the auditor in respect of LO/BO or the LO/BO is defaulting in submission of AACs, then the same should be immediately reported to the Reserve Bank.

Disclaimer:

These FAQs are for general guidance purpose only. In case of any inconsistency(ies) between FAQs and FEMA, 1999 and Rules/Regulations/Directions/Permissions issued thereunder, the latter shall prevail.

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Q1. Can a resident person undertake forex transaction? +

Answer: Resident persons are permitted to undertake forex transactions only with authorised persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA).

Resident persons undertaking forex transactions with unauthorised persons and for purposes other than those permitted under FEMA shall render themselves liable for penal action under the Act.

1. What is Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 +

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 is a scheme notified by the Government of India on December 16, 2016 which is applicable to every declarant under the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.

1. RTGS এর পুরো নাম কি ?

উত্তর. সংক্ষেপে 'RTGS' এর পুরা নাম হচ্ছে রিয়েল টাইম গ্রস সেটেলমেন্ট, যাকে এই ভাবে বর্ণনা করা যায় একটি ব্যবস্থা হিসেবে যেখানে নিয়ত এবং ঠিক ঐ সময়েই নিধি স্থানান্তর করার কথা বলা হয়, একটি-একটি করে লেনদেনের পর লেনদেন হিসেবে (কোন নেটিং ছাড়াই) । ‘রিয়েল টাইম’ অর্থ ঐ সময়ের লেনদেন পালন করা যখন এটি পাওয়া যায় । ‘গ্রস সেটেলমেন্ট’ অর্থ নিধি স্থানান্তরের নিষ্পত্তির য নির্দেশ আছে সেটি স্বতন্ত্রভাবে হয় ।

1. What is Sovereign Gold Bond (SGB)? Who is the issuer? +

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

1. কি ক্ষমতার অধীনে ভরতীয় রিজার্ভ ব্যাংক (আরবিআই) প্রধান নির্দেশ (মাস্টার ডিরেকশন MD ) জারি করে প্রিপেড পেমেন্ট ইন্সট্রুমেন্ট (PPIs ) এর ব্যবহারের বিষয়ে বিশদভাবে জানায় ? +

উত্তর. ধারা 18 যা উল্লেখিত আছে ধারা 10(2) এর PSS আইন 2007, আরবিআই এর অধীনে ব্যাংক এই নির্দেশগুলি জারি করেছে ।

1. What is LEI and what is its purpose ? +

Ans. The Legal Entity Identifier (LEI) is a 20-character alpha-numeric code used to uniquely identify parties to financial transactions worldwide. It has been implemented to improve the quality and accuracy of financial data reporting systems for better risk management. It is used to create a global reference data system that uniquely identifies every legal entity in any jurisdiction that is party to a financial transaction. It can be obtained from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI. In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL) (https://www.ccilindia-lei.co.in/), which is also recognised as an issuer of LEI by the Reserve Bank of India (RBI).

Government securities offer the benefit of safety, liquidity and attractive returns to investors. With the enactment of the Government Securities Act, 2006 Government securities, including the Relief/Savings Bonds issued by the Government of India, have become more investor friendly. Investors of such bonds will particularly benefit from such changes in the Act. To create public awareness in this regard and as a customer friendly measure, the following Frequently Asked Questions (FAQs) along with the answers have been released by the Reserve Bank of India (RBI).

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1. What does one mean by Government security? +

Government security (G-Sec) means a security created and issued by the Government for the purpose of raising a public loan or any other purpose as notified by the Government in the Official Gazette and having one of the following forms.

a Government Promissory Note (GPN) payable to or to the order of a certain person; or
a bearer bond payable to a bearer; or
a stock; or
a bond held in a Bond Ledger Account (BLA).

1. Query What is the definition of 'Basic Savings Bank Deposit Account' (BSBDA)?

Response

All the existing ‘No-frills’ accounts opened pursuant to guidelines issued vide circular RPCD.RF.BC.54/07.38.01/2005-06 dated December 13, 2005 and RPCD.CO.No.RRB.BC.58/ 03.05.33(F) / 2005-06 dated December 27, 2005 and converted into BSBDA in compliance with the guidelines issued in circular RPCD.CO.RRB.RCB.BC.No.24/07.38.01/2012-13 dated August 22, 2012 as well as fresh accounts opened under the said circular should be treated as BSBDA. Accounts enjoying additional facilities under the reasonable pricing structure for value added services, exclusively for BSBDA customers should not be treated as BSBDAs.

The legal framework for administration of foreign exchange transactions in India is provided by the Foreign Exchange Management Act, 1999. Under the Foreign Exchange Management Act, 1999 (FEMA), which came into force with effect from June 1, 2000, all transactions involving foreign exchange have been classified either as capital or current account transactions. All transactions undertaken by a resident that do not alter his / her assets or liabilities, including contingent liabilities, outside India are current account transactions.

In terms of Section 5 of the FEMA, persons resident in India ¹ are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government, such as remittance out of lottery winnings; remittance of income from racing/riding, etc., or any other hobby; remittance for purchase of lottery tickets, banned / proscribed magazines, football pools, sweepstakes, etc.; remittance of dividend by any company to which the requirement of dividend balancing is applicable; payment of commission on exports under Rupee State Credit Route except commission up to 10% of invoice value of exports of tea and tobacco; payment of commission on exports made towards equity investment in Joint Ventures / Wholly Owned Subsidiaries abroad of Indian companies; remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme and payment related to “call back services” of telephones.

Foreign Exchange Management (Current Account Transactions) Rules, 2000 - Notification [GSR No. 381(E)] dated May 3, 2000 and the revised Schedule III to the Rules as given in the Notification G.S.R. 426(E) dated May 26, 2015 is available in the Official Gazette as well as, as an Annex to our Master Direction on ‘Other Remittance Facilities’ available on our website www.rbi.org.in.

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Q 1. Who is an Authorized Dealer (AD)? +

Ans. An Authorised Dealer (AD) is any person specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on www.rbi.org.in) and normally includes banks.

These FAQs attempt to put in place the common queries that users have on the subject in an easy to understand language. The directions relating to the subject of money changing activities including authorisation and functioning of FFMCs, non-bank ADs Category II, and franchisees of Authorised Persons as well as the conduct of foreign exchange transactions with their customers/constituents is laid down in Master Direction on Money Changing Activities as updated from time to time.

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1. Who are Authorised Persons under Foreign Exchange Management Act, 1999 (“FEMA”)? What are the different categories of authorisation/licence granted under Section 10(1) of FEMA 1999? +

Reserve Bank, currently, issues authorisation under Section 10(1) of the Foreign Exchange Management Act, 1999, to

select banks (as Authorised Dealers Category-I) to carry out all permissible current and capital account transactions as per directions issued from time-to-time
select entities (as Authorised Dealers Category-II) to carry out specified non-trade related current account transactions, all the activities permitted to Full Fledged Money Changers and any other activity as decided by the Reserve Bank
select financial and other institutions (as Authorised Dealers Category-III) to carry out specific foreign exchange transactions incidental to their business / activities
select registered companies as Full Fledged Money Changers (FFMC) to undertake purchase of foreign exchange and sale of foreign exchange for specificied purposes viz. private and business travel abroad.

Note: a) Since SNRR account has been allowed to be used for specified transactions in trade, foreign investments, External Commercial Borrowings, etc., in lieu of sending inward/outward remittances by a person resident outside India in a convertible foreign currency for each transaction with a resident or vice-versa, all precautions need to be taken by Authorized Dealer (AD) banks to ensure identification of the counterparty of such transactions. Some of such precautions are listed out in FAQs below. The onus of ensuring the use and identification of SNRR transactions as per guidelines falls on the AD banks.

b) The provisions of these FAQs will not apply to the SNRR accounts of FPIs, FVCIs and Depository Receipt / FCCB conversion accounts which are operated by a custodian and fall under para 7.1 (i) of Part II of the Master Directions on Deposits and Accounts.

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1. What are the processes to be adopted for transactions undertaken through SNRR A/c? +

Payments initiated to the debit of SNRR Accounts: While handling INR payments to the debit of SNRR A/c favouring a person resident in India, AD Bank shall ensure that the transaction is communicated as SNRR transaction (including purpose code and country details, if applicable) to the recipient bank, either through electronic means or manually.
Payments received for credit to SNRR Accounts: AD Bank holding SNRR account shall ensure that any domestic inward remittance received for credit to SNRR account should be confirmed as SNRR transaction as at A above.
AD banks shall ensure compliance with various FEMA provisions as contained in the FEMA or the Rules or Regulations framed thereunder or directions issued thereunder in respect of all such transactions involving SNRR accounts.

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Q 1. What is the Liberalised Remittance Scheme (LRS) of USD 2,50,000 ?

Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of USD 2,50,000 only.

The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions.

In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.

(Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 April 27, 2021)

The Circular dated April 27, 2021 on ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs), has been issued by RBI with the basic objectives of putting in place ownership-neutral regulations, ensuring independence of auditors, avoiding conflict of interest in auditor’s appointments and to improve the quality and standards of audit in RBI Regulated Entities. These guidelines will also help in streamlining the procedure for appointment of Statutory Auditors across all the Regulated Entities and ensure that appointments are made in a timely, transparent and effective manner.

In view of certain clarifications being sought in the matter, it has been decided to publish Frequently Asked Questions (FAQs) and the necessary clarifications, as given below:

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1. As per Para 6.4, whether the time gap of one year between any non-audit works by the SCAs/SAs for the Entities or any audit/non-audit works for its Group Entities has to be ensured for all the Entities in the Group or the RBI Regulated Entities in the Group ? +

The Group Entities refer to the RBI Regulated Entities in the Group, which fulfill the definition of Group Entity, as provided in the Circular¹. However, if an audit firm engaged with audit/non-audit works for the Group Entities (which are not regulated by RBI) is being considered by any of the RBI Regulated Entities in the Group for appointment as SCAs/SAs, it would be the responsibility of the Board/ACB/LMC of the concerned RBI Regulated Entity to ensure that there is no conflict of interest and independence of auditors is ensured, and this should be suitably recorded in the minutes of the meetings of Board/ACB/LMC.

Q.1. What is the definition of MSME ? +

In terms of Government of India Gazette Notification S.O. 2119 (E) dated June 26, 2020 the definition of micro, small and medium enterprises is as under:

(i) A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹1 crore and turnover does not exceed ₹5 crore;

(ii) A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹10 crore and turnover does not exceed ₹50 crore; and

(iii) A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.

All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’. (Refer circulars FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 dated July 2, 2020, FIDD.MSME & NFS. BC. No.4/06.02.31/2020-21 dated August 21, 2020 FIDD.MSME & NFS.BC.No.13/06.02.31/2021-22 dated July 07, 2021)

1. What is National Electronic Funds Transfer (NEFT) system?

Ans: National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). The set of procedures to be followed by various stakeholders participating in the system is available on the RBI website under the following link: https://website.rbi.org.in/documents/87730/39711381/NEFTPROCEDURALJANUARY2024DBA95372B2454F9F8B767824B0B6E86F.pdf.

1. What is NDS-OM? +

NDS-OM is a screen based electronic anonymous order matching system for secondary market trading in Government securities owned by RBI. Presently the membership of the system is open to entities like Banks, Primary Dealers, Insurance Companies, Mutual Funds etc. i.e entities who maintain SGL accounts with RBI. These are Primary Members (PM) of NDS and are permitted by RBI to become members of NDS-OM. Gilt Account Holders which have gilt account with the PMs are permitted to have indirect access to the NDS-OM system i.e they can request their Primary Members to place orders on their behalf on the NDS-OM system.

Q 1. Certain aspects of Master Direction on Regulatory Framework for Microfinance Loans may require additional time for drafting of new policies, getting board-level approvals, making changes in technology systems, training of staff, etc. Whether the timeline for complete rollout of these directions may be extended, while keeping the effective date as April 1, 2022? +

Ans. The effective date of these directions is April 1, 2022. However, in view of implementation related difficulties expressed by some regulated entities (REs), REs are advised to implement these directions completely at the earliest on best effort basis, but not later than October 1, 2022.

1. Query: Are banks required to obtain RBI approval to participate in the Gold Monetization Scheme, 2015?

Response: No. However, banks should submit to RBI the implementation details including names of the Collection and Purity Testing Centres (CPTCs) and refiners with whom they have entered into tripartite agreement and the branches operating the scheme. Banks should also report the amount of gold mobilised under the scheme by all branches in a consolidated manner on a monthly basis in the prescribed format.

1. একটি অটোমেটেড টেলার মেশিন কি (এটিএম)?

উত্তর. এটিএম হচ্ছে একটি কম্পিউটারকৃত মেশিন যেটি ব্যাংকের গ্রাহকদের নিজেদের খাতা ব্যবহার করে টাকা বিতরণ বা অন্যান্য আর্থিক বা অনার্থিক লেনদেনের সুবিধা করে দেয় ব্যাংকের শাখায় না গিয়েই ।

1. Which types of cards are allowed for withdrawing cash at PoS terminals? +

Ans. Under the facility of cash withdrawal at PoS terminals, cardholders can withdraw cash using their debit cards and full KYC prepaid cards issued by banks and non-banks in India. However, credit cards cannot be used under this facility. Cash can also be withdrawn at PoS terminals through Unified Payments Interface (UPI) as well as through use of electronic cards that are linked with overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.

1. What are the different CPS operated by the Reserve Bank? +

Ans. The Reserve Bank owns and operates following CPS:

i. Real Time Gross Settlement (RTGS) System – It is the country’s Large Value Payment System and was introduced in March 2004. It was subsequently enhanced to Next Generation-RTGS (NG-RTGS) built on the ISO 20022 standard with advanced features such as hybrid functionality, liquidity management functions, future date functionality, scalability, etc. The transactions settle real-time on a gross basis in the books of RBI and have a floor value of Rs. 2 lakh. RTGS also settles Multilateral Net Settlement Batch (MNSB) files emanating from ancillary payment systems such as CCIL and NPCI. It is available round the clock on all days of the year with effect from December 14, 2020.

ii. National Electronic Fund Transfer (NEFT) system – It is a retail payment system and was introduced in November 2005. NEFT has a straight through process which operates in 48 half-hourly batches 24x7x365 with effect from December 16, 2019. There is no floor or ceiling for the amount that can be transferred in a single transaction, because of which NEFT has emerged as a popular hybrid payment system.

1. What are the RBI guidelines on education loans?

RBI issued circular RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 on ‘Educational Loan Scheme’ advising all Scheduled Commercial Banks to adopt the Model Education Loan Scheme, formulated by Indian Banks’ Association (IBA). The Scheme has been revised by IBA from time to time and its latest revision is Model Education Loan Scheme (MELS), 2021.

For detailed information on guidelines to banks on education loan, please refer to MELS, 2021 and its related circulars. Copy of the aforesaid Scheme is available on the IBA website.

It is to be noted that the MELS, 2021 provides broad guidelines to the banks for operationalizing the educational loan scheme and implementing banks will have the discretion to make changes as deemed fit.

(i) If a borrower has aggregate sanctioned credit limit of Rs.25,000 crore on or before March 31, 2016, will it still qualify as a ‘Specified Borrower’? +

In all such cases, the borrower will deemed to be a ‘Specified borrower’ from April 1, 2016 and the disincentive mechanism will be applicable from April 1, 2017 if the borrower borrows from the banking system beyond the NPLL.

Q1: The MD-TLE has various clauses incorporating the term ‘time of transfer’. What is to be taken as the ‘time of transfer’?

General Instructions

The Reserve Bank conducts the survey on Computer Software & Information Technology Enabled Services (ITES) Exports annually. The survey collects information from software and ITES/BPO/LLPs exporting companies on their computer software and IT enabled services exports as at end-March of the latest Financial Year (FY). .

The survey results are released in the public domain to raise the confidence of the international financial system in the country's economy besides being used for compilation of related external sector statistics which provide comprehensive account of the country’s international financial transactions and exposures, in a globally comparable statistical framework.

Confidentiality Clause: The company-wise information provided will be kept confidential and only consolidated aggregates will be released by the Reserve Bank.

Note: The respondent companies/LLPs/proprietorship firm should fill-up the survey schedule in excel format (*.xls format), which is available on RBI website. Respondents are requested to read the Instruction sheet (available in survey schedule) carefully before filling the survey schedule..

Important Points: The respondent companies/LLPs/proprietorship firm should follow the below-mentioned points for filling and submitting the survey schedule:

(i) (i) The company must use the latest survey schedule, which is in .xls format, without incorporating any macros.

(ii) (ii) The company is required to save the survey schedule in Excel 97-2003 workbook, i.e., in .xls format by following the below-mentioned steps:

Go to Office Button / File → Save As → Save As type
Select “Excel 97-2003 Workbook” and Save the survey schedule in .xls format.

(iii) The company is requested not to incorporate any macro in the survey schedule while submitting the same.

(iv) Survey schedule submitted in any other format (other than .xls format) will be rejected by the system.

(v) Ensure that all information furnished in the survey schedule are complete and no information is missed out.

(vi) After filling Part - A to D, the company has to fill the declaration sheet, which helps in validating that the information entered by the company are reconfirmed before submission to RBI. This helps to avoid data entry errors, missed data and other errors.

(vii) Respondents are requested to not use any special characters i.e., [!@#$%^&*_()] and comma while data filing in Question 3 to 9.

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1. In which month of the year, the ITES survey is launched by the RBI ?

Ans.: The RBI launches the ITES survey during the month of June every year with the previous financial year end-March as the reference date.

Q 1: Whether a lending transaction would fall under the definition of digital lending only if all the processes in the life cycle of a loan, viz., customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service, are carried out digitally or some of the aforesaid processes can be carried out in physical mode also? +

Ans: The phrase ‘largely by use of seamless digital technologies’ has been used in the Digital Lending definition to accord operational flexibility to REs in ‘Digital Lending’. Therefore, even if some physical interface with customer is present, the lending will still fall under the definition of Digital Lending. However, while doing so, the REs should ensure that the intent behind the Guidelines is adhered to.

1. What is tokenisation? +

Ans. Tokenisation refers to replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and device (referred hereafter as “identified device”).