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Foreign Exchange Management (Deposit) Regulations 2016

FEMA - 67/2015-16 [(1)/5(R)] - Dated:- 5-5-2016 - RBI/2015-16/390 A.P. (DIR Series) Circular No. 67/2015-16 [(1)/5(R)] May 05, 2016 To All Category - I Authorised Dealers and Authorised Banks Madam/Sir Attention of Authorised Dealers (ADs) is invited to (a) A.D. (M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act) and .....

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dated April 1, 2016), hereinafter referred to as Deposit Regulations. 2. These regulations seek to regulate deposits between a person resident in India and a person resident outside India: 3. Some of the key definitions under the regulations are given below: (i) Deposit includes deposit of money with a bank, company, proprietary concern, partnership firm, corporate body, trust or any other person. (ii) A Non-resident Indian (NRI) is a person resident outside India who is a citizen of India. (iii .....

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grandchild of a citizen of India or of a person referred to in clause (a) or (b); or (d) Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c) Explanation: PIO will include an Overseas Citizen of India cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. (iv) Permissible currency means a foreign currency which is freely convertible. 4. In terms of Regulation 4 of the Deposit Regulations, no r .....

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ned by any multilateral organization, of which India is a member nation, and the subsidiary/ affiliate bodies and officials of such organizations in India. 5. In terms of Regulations 5 and 6 of the Deposit Regulations, a person resident outside India may open deposit accounts with Authorized Dealer/ authorized bank/Indian company under various schemes. Details of the schemes have been specified in the respective schedules. The major features are highlighted below: A) Non-Resident (External) Acco .....

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ccounts to the account holder/ third party in India, without any limits, subject to the usual margin requirements. The loan sanctioned to the account holder can be repaid either by adjusting the deposits or through inward remittances from outside India through banking channels or out of balances held in the NRO account of the account holder. The loan shall be used for the purpose laid down in the regulations and cannot be repatriated outside India. iv) Authorised Dealers may allow their branches .....

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balances are exempt from wealth tax. viii) Current income like rent, dividend, pension, interest, etc. of NRIs and PIOs will be construed as a permissible credit to their NRE account provided the Authorised Dealer is satisfied that the credit represents current income of the NRI/ PIO account holder and income tax thereon has been deducted/ paid/ provided for, as the case may be. ix) AD Category - I banks and authorized banks may credit proceeds of demand drafts / bankers' cheques/ account p .....

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any permissible foreign currency with Authorized Dealers subject to the conditions specified in Schedule 2 of the Deposit Regulations. ii) These accounts can only be maintained in the form of term deposit. iii) Other terms and conditions applicable to NRE accounts (cf. Schedule 1 of the Deposit Regulations) in respect of joint accounts, repatriation of funds, loans/ overdrafts applies mutatis mutandis to FCNR(B) accounts. iv) Form A2 is not required to be filled while remitting funds at the time .....

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oad except for current income of the account holder and up to USD 1 million per financial year by NRIs and PIOs, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can be transferred to the NRE account within the USD 1 million facility. iv) Loans may be granted in India to the account holder or third party subject to usual norms and margin requirement. v) Transfers from other NRO accounts is a permissible credit for the account. Similar .....

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a for any purpose indicating his intention to stay in India for an uncertain period. ix) Authorized Dealer Banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per proforma at annex. x) Opening of accounts by individuals of Pakistan nationality and entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India. xi) Individuals of Bangladesh nationality can open an NRO account provided they ho .....

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t shall carry the nomenclature of the specific business for which it is opened and shall not earn any interest. iii) The debits/ credits and the balances in the account shall be incidental and commensurate with the business operations of the account holder. iv) The tenure of the account should be concurrent to the tenure of the contract/ period of operation/ the business of the account holder and shall in no case exceed seven years. v) The balances in the SNRR account shall be eligible for repat .....

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er or Issue of Security by a person resident Outside India) Regulations, 2000 and regulations of the Securities and Exchange Board of India (SEBI), as applicable. iii) The accounts shall be non-interest bearing. iv) No fund/ non-fund based facility would be permitted against the balances in the account. F) Acceptance of deposit by a company in India from NRIs and PIOs on repatriation basis A company incorporated in India including a Non-Banking Financial Company (NBFC) registered with the Reserv .....

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non-repatriation basis subject to the terms and conditions specified in Schedule 7 of these Regulations. 6. Other deposits (subject to Regulations 6 and 7 of the Deposit Regulations) i) General permission has been granted to Indian companies to accept deposits from NRIs and PIOs by issue of Commercial Papers subject to conditions. ii) A deposit made by an Authorised Dealer with its branch, head office or correspondent outside India, and a deposit made by a branch or correspondent outside India .....

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hannels from its office outside India. iv) An Authorised Dealer may allow unincorporated joint ventures (UJV) of foreign companies/ entities, with Indian entities, executing a contract in India, to open and maintain non-interest bearing foreign currency account and an SNRR account as specified in Schedule 4 of the Deposit Regulations for the purpose of undertaking transactions in the ordinary course of its business. The debits and credits in these accounts should be incidental to the business re .....

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ised Dealer in India for the purpose of routing counter-trade transactions would require approval of Reserve Bank. 7. To facilitate the foreign nationals to collect their pending dues in India, ADs may permit such foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to the bank satisfying itself that the credit of amounts are bonafide dues of the acc .....

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iated as per the declaration made by the account holder when the account was designated as an NRO account. 8. Maturity proceeds of term deposits, if any, under the erstwhile Non-Resident (Special) rupee Account Scheme (NRSR Account) which was discontinued with effect from April 1, 2002, may be credited to the NRO account of the account holder. 9. Balances in the Exchange Earner s Foreign Currency (EEFC) Account and Resident Foreign Currency (Domestic) [RFC(D)] Account may be credited to NRE/ FCN .....

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ounts are subject to the limits for repatriation of balances held in NRO accounts specified in regulation 4(2) of Foreign Exchange Management (Remittance of Assets) Regulations, 2016. 11. Authorised Dealers can allow the following operations on non-resident accounts in terms of Power of Attorney granted in favour of a resident by the non-resident account holder: (a) The operations in NRE/ FCNR(B) Accounts are restricted to: (i) Withdrawal for local payments; and (ii) Remittance of funds through .....

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