RBI/ 2010-11/1
Master Circular No.01/2010-11
July 1, 2010
To,
All Authorised Persons in Foreign Exchange
Madam / Sir,
Master Circular on Miscellaneous Remittances from
India – Facilities for Residents
Miscellaneous remittance facilities for residents are allowed in terms of
section 5 of the Foreign Exchange Management Act, 1999, read with Government of
India Notification No. G.S.R 381(E) dated May 3, 2000, as amended from time to
time.
2. This Master Circular consolidates the existing instructions on the subject
of ';Miscellaneous Remittances from India - Facilities for Residents'; at one place. The list of underlying circulars/notifications
consolidated in this Master Circular is furnished in Appendix-1.
3. This Master Circular is being issued with a sunset clause of one year.
This circular will stand withdrawn on July 1, 2011 and be replaced with an
updated Master Circular on the subject.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge
Release of Foreign Exchange by Authorised Dealers
A.1 General
1.1 For release of foreign exchange to persons resident in India for
various current account transactions, Authorised Dealer banks are to be guided
by the Rules made by the Government of India under Section 5 of the Foreign
Exchange Management Act, 1999 (as indicated in item 1 of Appendix 2)which
are detailed in the Foreign Exchange Management (Current Account Transactions)
Rules, 2000 (Annex-1) notified by the Government of India vide
Notification No. G.S.R.381 (E) dated 3rd May 2000 (Rules). In terms of the said
Rules, drawal of foreign exchange for certain categories of transactions as
listed in Schedule I is expressly prohibited. Exchange facilities for
transactions included in Schedule II to the Rules may be permitted by the
Authorised Dealer banks provided the applicant has secured the approval from the
Ministry/Department of the Government of India as specified therein. In respect
of transactions included in Schedule III, prior approval of the Reserve Bank
would be required for remittance exceeding the specified limits. The release of
foreign exchange up to the threshold ceilings specified in Schedule III stands
delegated to the Authorised Dealer banks. All applications for release of
foreign exchange exceeding the limits as prescribed in Schedule III to the Rules
should be referred to the Regional Office concerned of the Foreign Exchange
Department of the Reserve Bank, under whose jurisdiction the applicant is
functioning / residing.
1.2 “Drawal” of foreign exchange also includes use of International Credit
Cards (ICC), International Debit Cards (IDC), ATM cards, etc. “Currency”,
interalia, includes ICC, IDC and ATM Cards. Accordingly, all Rules,
Regulations made and Directions issued under the Act apply to the use of ICC,
IDC and ATM Cards.
1.3 In order to provide adequate foreign exchange facilities and
efficient customer service, the Reserve Bank has decided to grant licences to
certain entities by authorising them as Authorised Dealer – Category II to
undertake a range of non-trade current account transactions. Accordingly,
Authorised Dealer – Category II are authorised to release / remit foreign
exchange for the following non-trade current account transactions:
(a) Private visits,
(b) Remittance by tour operators / travel agents to overseas agents / principals
/ hotels,
(c) Business travel,
(d) Fee for participation in global conferences and specialized training,
(e) Remittance for participation in international events / competitions (towards
training, sponsorship and prize money),
(f) Film shooting,
(g) Medical treatment abroad,
(h) Disbursement of crew wages,
(i) Overseas education,
(j) Remittance under educational tie up arrangements with universities abroad,
(k) Remittance towards fees for examinations held in India and abroad and
additional score sheets for GRE, TOEFL, etc.
(l) Employment and processing, assessment fees for overseas job applications,
(m) Emigration and emigration consultancy fees,
(n) Skills / credential assessment fees for intending migrants,
(o) Visa fees,
(p) Processing fees for registration of documents as required by the Portuguese
/ other Governments, registration / subscription / membership fees to
International Organisations.
1.4 Release of foreign exchange is not admissible for travel to and
transaction with residents of Nepal and Bhutan. (cf. Clause (b) of Rule 3 of the
Rules (as indicated in item 2 of Appendix 2).
A.2 Sale of Exchange
2.1 Authorised Persons may release foreign exchange
for travel purposes on the basis of a declaration given by the
traveller regarding the amount of foreign exchange availed of during the
financial year.
2.2 In case of issue of travellers cheques, the traveller should sign the
cheques in the presence of an authorised official and the purchaser’s
acknowledgement for receipt of the travellers cheques should be held on record.
2.3 Out of the overall foreign exchange being sold to a traveller, exchange
in the form of foreign currency notes and coins may be sold up to the limit
indicated below:
(i) Travellers proceeding to countries other than Iraq, Libya,
Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth
of Independent States - not exceeding USD 3000 or its equivalent.
((ii) Travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its
equivalent
(iii) ravellers proceeding to Islamic Republic of Iran, Russian Federation
and other Republics of Commonwealth of Independent States - full exchange may be
released.
2.4 The form A2 relating to sale of foreign exchange should be retained for a
period of one year by the Authorised Persons, together with the related
documents, for the purpose of verification by their Internal Auditors. However,
in respect of remittance applications for miscellaneous non-trade current
account transactions of amount not exceeding USD 5,000, Authorised Dealers may
obtain simplified Application-cum-Declaration form (Form A2) as
shown at Annex -2.
2.5 In cases where the remittances are allowed on the basis of self
declaration, the onus of furnishing the correct details in the application will
remain with the applicant who has certified the details relating to the purpose
of such remittance.
A.3 Medical Treatment
3.1 With a view to enable residents to avail of foreign exchange for medical
treatment abroad without any hassles and any loss of time, Authorised Dealers
may release foreign exchange up to an amount of USD 100,000 or its equivalent,
on the basis of self declaration that the applicant is buying exchange for
medical treatment outside India, without insisting on any estimate from a
hospital/doctor.
3.2 For amount exceeding the above limit, estimate from the doctor in India
or hospital/ doctor abroad, is required to be submitted to the Authorised
Dealers.
3.3 A person who has fallen sick after proceeding abroad may also be released
foreign exchange by an Authorised Dealer for medical treatment outside India.
A.4 Cultural Tours
Dance troupes, artistes, etc., who wish to undertake tours abroad for
cultural purposes should apply to the Ministry of Human Resources Development
(Department of Education and Culture), Government of India, for their foreign
exchange requirements. Authorised Dealers may release foreign exchange, on the
strength of the sanction from the Ministry concerned, to the extent and subject
to conditions indicated therein.
A.5 Private Visits
Foreign exchange for private visit can also be released to a person who is
availing of foreign exchange for travel outside India for any purpose up to the
limits specified in Schedule III to the Rules.
A.6 Business Visits
Foreign exchange may be released for undertaking business travel or attending
a conference or specialised training or for maintenance expenses of a patient
going abroad for medical treatment or check up abroad or for accompanying as
attendant to a patient going abroad for medical treatment / check up to the
limits specified in Schedule III to the Rules.
A.7 Period of surrender of foreign exchange
7.1 In case the foreign exchange purchased for a specific purpose is not
utilized for that purpose, it could be utilized for any other eligible purpose
for which drawal of foreign exchange is permitted under the relevant Rules /
Regulation.
7.2 General permission is available to any resident individual to surrender
received / realised / unspent / unused foreign exchange to an Authorised Person
within a period of 180 days from the date of receipt / realisation / purchase /
acquisition / date of return of the traveller, as the case may be.
7.3 The liberalized uniform time limit of 180 days is applicable only to
resident individuals and that too in areas other than export of goods and
services.
7.4 In all other cases, the regulations / directions on surrender requirement
shall remain unchanged. (cf. Notification No. FEMA 9/2000-RB dated May 3, 2000,
as amended from time to time).
A.8 Unspent Foreign Exchange
8.1 As stated above, unspent foreign exchange brought back to India by a
resident individual should be surrendered to an Authorised Person within 180
days from the date of return of the traveller. Exchange so brought back can be
utilized by the individual for his/her subsequent visit abroad.
8.2 However, a returning traveller is permitted to retain with him, foreign
currency travellers cheques and currency notes up to an aggregate amount of USD
2000 and foreign coins without any ceiling beyond 180 days. (cf. Notification
No. FEMA 11/2000-RB dated May 3, 2000). Foreign exchange so retained, can be
utilized by the traveller for his subsequent visit abroad.
8.3 A person resident in India can open, hold and maintain with an Authorised
Dealer in India, a Resident Foreign Currency (Domestic) Account,
out of foreign exchange acquired in the form of currency notes, bank notes and
travellers cheques from any of the sources like, payment for services rendered
abroad, as honorarium, gift, services rendered or in settlement of any lawful
obligation from any person not resident in India.
8.4 The account may also be opened / credited with foreign exchange earned
abroad, including proceeds of export of goods and/or services, royalty,
honorarium, etc., and/or gifts received from close relatives (as defined in the
Companies Act) and repatriated to India through normal banking channels by
resident individuals.
88.5 The eligible credits to the Resident Foreign Currency (Domestic) Account,
out of foreign exchange acquired in the form of currency notes, bank notes and
travellers cheques, are as under :-
(i) acquired by him from an Authorised Person for travel abroad and
represents the unspent amount thereof or
(ii) acquired by him, while on a visit to any place outside India, by
way of payment for services not arising from any business in or anything done in
India and by way of honorarium or gift or/p>
(iii) acquired by him, from any person not resident in India, and who is on a
visit to India, as honorarium, gift, for services rendered or in settlement of
any lawful obligation.
Note: Where a person approaches an Authorised Person for
surrender of unspent/ unutilized foreign exchange after the prescribed period of
180 days, Authorised Person should not refuse to purchase the foreign exchange
merely on the ground that the prescribed period has expired.
A.9 Remittances for Tour Arrangements, etc.
9.1 Authorised Dealers may remit foreign exchange up to a reasonable limit,
at the request of a traveller towards his hotel accommodation, tour
arrangements, etc., in the countries proposed to be visited by him or for making
other tour arrangements for travellers from India, provided in each case the
Authorised Dealer is satisfied that the remittance is being made out of the
foreign exchange purchased by the traveller concerned from an Authorised Person
(including exchange drawn for private travel abroad), in accordance with the
Rules, Regulations and Directions in force.
9.2 Authorised Dealers may effect remittances at the request of agents in
India who have tie-up arrangements with hotels / agents, etc., abroad for
providing hotel accommodation or making other tour arrangements for travel from
India, provided the Authorised Dealer is satisfied that the remittance is
being made out of the foreign exchange purchased by the traveller concerned
from an Authorised Person (including exchange drawn for private travel abroad)
in accordance with the Rules, Regulations and Directions in force.
9.3 Authorised Dealer may open foreign currency accounts in the name of
agents in India who have tie up arrangements with hotels / agents, etc., abroad
for providing hotel accommodation or making other tour arrangements for
travellers from India provided:-
a) the credits to the account are by way of depositing
i) collections made in foreign exchange from travellers; and
ii) refunds received from outside India on account of cancellation of bookings /
tour arrangements, etc., and
b) the debits in foreign exchange are for making payments towards hotel
accommodation, tour arrangements, etc., outside India, in accordance with
paragraph 9.2 above.
9.4 Authorised Dealer may allow tour operators to remit the cost of rail/
road/ water / transportation charges outside India without any prior approval
from the Reserve Bank, net of commission/mark up due to the agent. The sale of
passes/ticket in India can be made either against the payment in Indian Rupees
or in foreign exchange released for visits abroad. The cost of passes/tickets
collected in Indian Rupees need not be adjusted in the travellers’ entitlement
of foreign exchange for private visit.
9.5 In respect of consolidated tours arranged by travel agents in India for
foreign tourists visiting India and neighbouring countries like Nepal,
Bangladesh, Sri Lanka, etc., against advance payments / reimbursement through an
Authorised Dealer, part of the foreign exchange received in India against
such consolidated tour arrangement, may require to be remitted from India to
these neighbouring countries for services rendered by travel agents and
hoteliers in these countries. Authorised Dealer may allow such remittances after
verifying that the amount being remitted to the neighbouring countries
(inclusive of remittances, if any, already made against the tour) does not
exceed the amount actually remitted to India and the country of residence of the
beneficiary is not Pakistan.
A.10 Payment in Rupees
Authorised Dealers may accept payment in cash up to Rs. 50,000 (Rupees fifty
thousand only) against sale of foreign exchange for travel abroad (for private
visit or for any other purpose). Wherever the sale of foreign exchange exceeds
the amount equivalent to Rs.50,000, the payment must be received only by
- a crossed cheque drawn on the applicant’s bank account, or
- crossed cheque drawn on the bank account of the firm/company sponsoring
the visit of the applicant, or
- Banker’s Cheque / Pay Order / Demand Draft or
- Debit / credit / prepaid cards provided
a) KYC/AML guidelines are complied with
b) sale of foreign currency / issue of foreign currency TCs is within the limits
(credit / prepaid cards) prescribed by the bank and
c) the purchaser of foreign currency / foreign currency TCs and the
credit/debit/prepaid card holder is one and the same person.
Note: Where the rupee equivalent of foreign exchange
drawn exceeds Rs 50,000 either for any single drawal or more than one drawal
reckoned together for a single journey/visit, it should be paid by cheque or
draft.
A.11 Advance Remittance – Import of services
Authorised Dealers (Category-I banks) may allow advance remittance for import
of services. However, where the amount exceeds USD 500,000 or its equivalent, a
guarantee from a bank of International repute situated outside India or a
guarantee from an Authorised Dealer in India, if such a guarantee is issued
against the counter-guarantee of a bank of International repute situated outside
India, should be obtained from the overseas beneficiary. The Authorised Dealer
should also follow up to ensure that the beneficiary of the advance remittance
has fulfilled his obligations under the contract or agreement with the remitter
in India.
In the case of a Public Sector Company or a Department /Undertaking of the
Government of India /State Governments, approval from the Ministry of
Finance, Government of India for advance remittance for import of services
without bank guarantee for an amount exceeding USD 100,000 (US Dollars one
hundred thousand only) or its equivalent is required.
A.12 Issue of Guarantee- Import of services
Authorised Dealer may issue guarantee on behalf of their customers importing
services, provided :
a. the guarantee amount does not exceed USD 500,000
b. the AD Category –I Bank is satisfied about the bonafides of the transaction.
c. the AD Category –I Bank ensures submission of documentary evidence for
import of services in the normal course.
d. the guarantee is to secure a direct contractual liability arising out of a
contract between a resident and a non-resident.
In the case of a Public Sector Company or a Department /Undertaking of the
Government of India /State Governments, approval from the Ministry of
Finance, Government of India for issue of guarantee for an amount exceeding USD
100,000 (US Dollars one hundred thousand only) or its equivalent is required.
In case of invocation of the guarantee, the Authorised Dealer is required to
submit to the Chief General Manager-in-Charge, Foreign Exchange Department,
Foreign Investments Division (EPD), Reserve Bank of India, Central Office,
Mumbai- 400001 a report on the circumstances leading to the invocation of the
guarantee.
A.13 Liberalised Remittance Scheme of USD 200,000 for Resident
Individuals
13.1 Under this Scheme, Authorised Dealers may freely allow remittances by
resident individuals up to USD 200,000 per financial year (April-March) for any
permitted current or capital account transactions or a combination of both.
13.2 The facility is available to all resident individuals including
minors.
13.3 Remittances under the facility can be consolidated in
respect of family members subject to individual family members complying with
the terms and conditions of the Scheme.
13.4 Remittances under the Scheme are allowed only in respect of
permissible current or capital account transactions or a combination of both.
All other transactions which are otherwise not permissible under FEMA and those
in the nature of remittance for margins or margin calls to overseas exchanges /
overseas counterparty are not allowed under the Scheme.
13.5 Resident individuals are free to acquire and hold immovable
property or shares (of listed companies or otherwise) or debt instruments or any
other asset outside India without prior approval of the Reserve Bank.
13.6 The limit of USD 200,000 under the Scheme also include
remittances towards gift and donation by a resident individual.
13.7 Remittances under the Scheme can be used for purchasing
objects of art subject to the provisions of other applicable laws such as the
extant Foreign Trade Policy of the Government of India.
13.8 The Scheme can also be used for remittance of funds for
acquisition of ESOPs. The Scheme is in addition to acquisition of ESOPs linked
to ADR / GDR and acquisition of qualification shares.
13.9 A resident individual can invest in units of Mutual Funds,
Venture Capital Funds, unrated debt securities, promissory notes, etc. under
this Scheme. Further, the resident can invest in such securities out of the bank
account opened abroad under the Scheme (see 13.12).
13.10 An individual who has availed of a loan abroad while as a non resident
can repay the same on return to India under the Scheme as a resident.
13.11 The Scheme can be used for outward remittance in the form of a DD
either in the resident individual’s own name or in the name of beneficiary with
whom he intends putting through the permissible transactions at the time of
private visit abroad, against self declaration of the remitter in the format
prescribed.
13.12 Individuals can also open, maintain and hold foreign currency
accounts with a bank outside India for making remittances under the Scheme
without prior approval of the Reserve Bank. The foreign currency accounts may be
used for putting through all transactions connected with or arising from
remittances eligible under this Scheme.
13.13 Banks should not extend any kind of credit facilities to resident
individuals to facilitate remittances under the Scheme.
13.14 The scheme is not available for remittances for any purpose
specifically prohibited under Schedule I or any item restricted under Schedule
II of Foreign Exchange Management (Current Account Transaction) Rules, 2000.
13.15 The facility is not available for making remittances directly or
indirectly to Bhutan, Nepal, Mauritius and Pakistan.
13.16 The Scheme is not available for remittance to countries
identified by Financial Action Task Force (FATF) as non co-operative countries
and territories as available on FATF website
www.fatf-gafi.org. or as notified by the
Reserve Bank.
13.17 For undertaking transactions under the Scheme, resident
individuals may use the application-cum-Declaration Form as at Annex-3
and it is mandatory to have PAN number to make remittances under the Scheme.
13.18 AD Category – I banks are required to furnish the information on
remittances made under this scheme on a monthly basis, in the revised format as
at Annex-8, tto the Chief General Manager-in-Charge, Foreign
Exchange Department, (FID-EPD), Reserve Bank of India, Central Office, 11th
Floor, Central Office Building, Mumbai - 400 001, on or before fifth of the
following month to which it relates. A soft copy of the statement (in Excel
format) may also be sent by email
. This statement in the revised format should be forwarded through Online
Returns Filing System (ORFS) for which purpose all the AD Category – I Banks
have been given user ID and password by the Reserve Bank./p>
A.14 Documentation
14.1 The Reserve Bank will not, generally, prescribe the
documents which should be verified by the Authorised Dealers while releasing
foreign exchange. In this connection, attention of authorized dealers is drawn
to sub-section (5) of Section 10 of the FEMA, 1999 (as indicated in
item 3 of Appendix 2) which provides that an authorised person
shall require any person wanting to transact in foreign exchange to make such a
declaration and to give such information as will reasonably satisfy him that the
transaction will not involve and is not designed for the purpose of any
contravention or evasion of the provisions of the FEMA or any rule, regulation,
notification, direction or order issued there under.
14.2 Authorised Dealers are also required to keep on record any
information / documentation, on the basis of which the transaction was
undertaken, for verification by the Reserve Bank. In case the applicant refuses
to comply with any such requirement or makes unsatisfactory compliance
therewith, the Authorised Dealer shall refuse, in writing, to undertake
the transaction and shall, if he has reasons to believe that any contravention /
evasion is contemplated by the person, report the matter to the Reserve Bank.
14.3 Authorised Dealers have specifically been advised that they
may release foreign exchange up to USD 100,000 each for employment, emigration,
maintenance of close relatives, education and medical treatment abroad without
insisting on any supporting documents but on the basis of self declaration
incorporating certain basic details of the transactions and submission of Form
A2. In addition, the existing facility of release of exchange by Authorised
Persons up to USD 10,000 or its equivalent in one financial year for one or more
private visits to any country (except Nepal and Bhutan) will continue to be
available on a self declaration basis.
A.15 Endorsement on Passport
It is not mandatory for Authorised Dealers to endorse the amount of foreign
exchange sold for travel abroad on the passport of the traveller. However, if
requested by the traveller, they may record under their stamp, date, signature
and details of foreign exchange sold for travel.
A.16 International Credit Cards
16.1 The restrictions contained in Rule 5 of the Foreign Exchange
Management (Current Account Transactions) Rules, 2000 will not be applicable for
use of International Credit Cards (ICCs) by residents for making payment towards
expenses, while on a visit outside India.
16.2 Residents can use ICCs on internet for any purpose for which
exchange can be purchased from an Authorised Dealer in India, e.g. for import of
books, purchase of downloadable software or import of any other item
permissible under Foreign Trade Policy (FTP).
16.3 ICCs cannot be used on internet or otherwise for purchase of
prohibited items, like lottery tickets, banned or proscribed magazines,
participation in sweepstakes, payment for call-back services, etc., since no
drawal of foreign exchange is permitted for such items/activities.
16.4 There is no aggregate monetary ceiling separately prescribed for
use of ICCs through internet.
16.5 Resident individuals maintaining foreign currency accounts with an
Authorised Dealer in India or a bank abroad, as permissible under extant Foreign
Exchange Regulations, are free to obtain ICCs issued by overseas banks and other
reputed agencies. The charges incurred against the card either in India or
abroad, can be met out of funds held in such foreign currency account/s of the
card holder or through remittances, if any, from India only through a bank where
the card holder has a current or savings account. The remittance for this
purpose should also be made directly to the card issuing agency abroad, and not
to a third party.
16.6 The applicable limit will be the credit limit fixed by the card
issuing banks. There is no monetary ceiling fixed by the Reserve Bank for
remittances, if any, under this facility.
16.7 Use of ICC for payment in foreign exchange in Nepal and
Bhutan is not permitted.
A.17 International Debit Cards
17.1 Banks authorised to deal in foreign exchange are issuing
International Debit Cards (IDCs) which can be used by a resident for drawing
cash or making payment to a merchant establishment overseas during his visit
abroad. It is clarified that IDCs can be used only for permissible current
account transactions and the item-wise limits as mentioned in the Schedules to
the Rules, as amended from time to time, are equally applicable to payments made
through use of these cards.
17.2 The IDCs cannot be used on internet for purchase of prohibited items
like lottery tickets, banned or proscribed magazines, participation in
sweepstakes, payment for call-back services, etc., i.e. for such
items/activities for which drawal of foreign exchange is not permitted.
17.3 The International Banking Divisions/Foreign Exchange Departments
of AD banks may submit a statement as on December 31, each year (as per proforma
at Annex-5) in case the aggregate forex utilization by the IDC holders exceeds
USD 100,000 in a calendar year. The statement should reach the Chief General
Manager-in-Charge, Foreign Exchange Department, External Payments Division,
Central Office, Mumbai- 400 001 on or before 20th January of the succeeding
year.
A.18 Store Value Cards/Charge Cards/Smart Cards, etc.
Certain Authorised Dealer banks are also issuing Store Value Card/Charge
Card/Smart Card to residents traveling on private/business visit abroad which
are used for making payments at overseas merchant establishments and also for
drawing cash from ATM terminals. No prior permission from the Reserve Bank is
required for issue of such cards. However, the use of such cards is limited to
permissible current account transactions and subject to the prescribed limits
under the Rules, as amended from time to time.
A.19 Acquisition of foreign securities under Employees Stock Option
Plan (ESOP)
Resident individuals who are either employees or director of an Indian office
or branch of a foreign company in which foreign holding is not less than 51 per
cent are permitted to acquire foreign securities under ESOP Scheme without
any monetary limit. They are also permitted to freely sell the shares provided
the proceeds thereof are repatriated to India.
A.20 Income- tax clearance
Remittances to non-residents will be allowed to be made by the Authorised
Dealers on production of an undertaking by the remitter and a Certificate from a
Chartered Accountant in the formats (Annex - 4) prescribed by
the Central Board of Direct Taxes, Ministry of Finance, Government of India in
their Circular No.10/2002 dated October 9, 2002. [cf. A. P. (DIR Series)
Circular No.56 dated November 26, 2002].