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Overseas Direct Investments

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