RBI/2010-11/460
A.P. (DIR Series) Circular No. 48
April 05, 2011
To
All Category - I Authorised Dealer Banks
Acquisition of credit card/debit card transactions in India
by overseas banks - payments for airline tickets
Attention of the Authorised Dealers Category-I (AD Category-I) banks is invited
to Regulation 6 of the Foreign Exchange Management (Foreign currency accounts by
a person resident in India) Regulations, 2000, notified vide
Notification No.
FEMA 10/2000-RB, dated May 3, 2000, read with para 7(v) of Annexure I to the
A.D. (M.A. Series) Circular No. 11 dated May 16, 2000, in terms of which airline
companies incorporated outside India are permitted to repatriate the surplus
arising from sale of air tickets through their agents in India after payment of
the local expenses and applicable taxes in India.
- It has come to our notice that in certain cases where the payment for the
tickets are made by the residents using credit /debit card, Card Companies have
been providing arrangements to the foreign airlines operating in India to select
the country and currency of their choice, in respect of transactions arising
from the sale of the air tickets in India in Indian Rupees (INR). In such
transactions, the overseas bank as the acquiring bank receives the funds from
Card Issuing Company in its Vostro account maintained with an Authorised Dealer
bank in India or in its foreign currency account maintained abroad and makes the
payment in foreign currency overseas to the foreign airline.
- It is clarified that the practice adopted by foreign airlines, as mentioned
above, is not in conformity with the extant provisions of the Foreign Exchange
Management Act, 1999. AD Category- I banks may, therefore, advise the foreign
airlines to discontinue immediately the practice of using overseas banks for
settlement of INR transactions on account of sale of air tickets in India.
- AD Category -I banks may bring the contents of this circular to the notice of
their constituents / customers concerned (foreign airlines).
- The directions contained in this circular have been issued under sections
10(4) & 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are
without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully,
(Dr. Sujatha Elizabeth Prasad)
Chief General Manager