RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
Mumbai 400 001
Notification No. FEMA 5(R)/2016-RB
April 01, 2016
Foreign Exchange Management (Deposit) Regulations, 2016
In exercise of the powers conferred by clause (f) of sub-section (3) of
section 6, sub-section (2) of section 47 of the Foreign Exchange Management Act,
1999 (42 of 1999) and in supersession of
Notification No. FEMA 5/2000-RB dated
May 3, 2000, as amended from time to time, the Reserve Bank makes the following
regulations relating to deposits between a person resident in India and a person
resident outside India, namely:
1. Short title and commencement:-
- These regulations may be called the Foreign Exchange Management
(Deposit) Regulations, 2016.
- These regulations shall come into force from the date of their
publication in the Official Gazette except sub-regulation (2) of Regulation
7. Sub-regulation (2) of Regulation 7 is deemed to have come into force with
effect from 21st January, 2016.
2. Definitions:-
In these Regulations, unless the context otherwise requires, -
- 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
- 'Authorised bank' means a bank including a co-operative bank (other than an
authorised dealer) authorised by the Reserve Bank to maintain an account of a
person resident outside India;
- 'Authorised dealer' means a person authorised as an authorised dealer under
subsection (1) of section 10 of the Act;
- 'Deposit' includes deposit of money with a bank, company, proprietary
concern, partnership firm, corporate body, trust or any other person;
- 'FCNR (B) account' means a Foreign Currency Non-Resident (Bank) account
referred to in clause (ii) of sub-regulation (1) of Regulation 5;
- 'Non-Resident Indian (NRI)' means a person resident outside India who is a
citizen of India.
- 'NRE account' means a Non-Resident External account referred to in clause (i)
of sub-regulation (1) of Regulation 5;
- 'NRO account' means a Non-Resident Ordinary account referred to in clause
(iii) of sub-regulation (1) of Regulation 5;
- ‘Permissible currency’ means a foreign currency which is freely convertible;
- ‘Person of Indian Origin (PIO)’ means a person resident outside India who is
a citizen of any country other than Bangladesh or Pakistan or such other country
as may be specified by the Central Government, satisfying the following
conditions:
Who was a citizen of India by virtue of the Constitution of India or the
Citizenship Act, 1955 (57 of 1955); or
Who belonged to a territory that became part of India after the 15th day of
August, 1947; or
Who is a child or a grandchild or a great grandchild of a citizen of India or of
a person referred to in clause (a) or (b); or
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: for the purpose of this sub-regulation, the expression ‘Person of
Indian Origin’ includes an ‘Overseas Citizen of India’ cardholder within the
meaning of Section 7(A) of the Citizenship Act, 1955.
- 'Schedule' means schedule to these Regulations;
- 'SNRR account' means a Special Non-Resident Rupee account referred to in
sub-regulation (4) of Regulation 5;
- The words and expressions used but not defined in these Regulations shall
have the same meanings respectively assigned to them in the Act.
3. Restrictions on deposits between a person resident in India and a person
resident outside India:-
Save as otherwise provided in the Act or Regulations or in rules, directions and
orders made or issued under the Act, no person resident in India shall accept
any deposit from, or make any deposit with, a person resident outside India:
Provided that the Reserve Bank may, on an application made to it and on being
satisfied that it is necessary so to do, allow a person resident in India to
accept or make deposit from or with a person resident outside India.
4. Exemptions:-
Nothing contained in these Regulations shall apply to the following:
1) Deposits held in rupee accounts maintained by foreign diplomatic missions and
diplomatic personnel and their family members in India with an authorised
dealer.
2) Deposits held by diplomatic missions and diplomatic personnel in special
rupee accounts namely Diplomatic Bond Stores Account to facilitate purchases of
bonded stocks from firms and companies who have been granted special facilities
by customs authorities for import of stores into bond, subject to following
conditions:
Credits to the account shall be only by way of proceeds of inward remittances
received from outside India through banking channels or by a transfer from a
foreign currency account in India of the account holder maintained with an
authorised dealer in accordance with clause 3 of this Regulation ;
All cheque leaves issued to the account holder shall be superscribed as
“Diplomatic Bond Stores Account No.”;
Debits to the accounts shall be for local disbursements, or for payments for
purchases of bonded stocks to firms and companies who have been granted special
facilities by customs authorities for import of stores into bond;
The funds in the account may be repatriated outside India without the approval
of Reserve Bank.
3) Deposits held in accounts maintained in foreign currency by diplomatic
missions, diplomatic personnel and non-diplomatic staff, who are the nationals
of the concerned foreign countries and hold official passport of foreign
embassies in India subject to the following conditions:
- Credits to the account shall be only by way of:-
proceeds of inward remittances received from outside India through banking
channels; and
transfer of funds, from the rupee account of the diplomatic mission in India,
which are collected in India as visa fees and credited to such account;
- Funds held in such account if converted in rupees shall not be converted back
into foreign currency;
- The account may be held in the form of current or term deposit account, and
in the case of diplomatic personnel and non-diplomatic staff, may also be held
in the form of savings account;
- The rate of interest on savings or term deposits shall be such as may be
determined by the authorised dealer maintaining the account;
- The funds in the account may be repatriated outside India without the
approval of Reserve Bank.
4) Deposits held in accounts maintained in rupees with an authorised dealer by
persons resident in Nepal and Bhutan.
5) Deposits held in accounts maintained with an authorised dealer by any
multilateral organization and its subsidiary/ affiliate bodies and officials in
India of such multilateral organisations, of which India is a member nation.
5. Acceptance of deposits by an authorised dealer/ authorised bank from persons
resident outside India:-
- An authorised dealer in India may accept deposit
under the Non-Resident (External) Account Scheme (NRE account), specified in
Schedule 1, from a non-resident Indian;
under the Foreign Currency (Non-Resident) Account Banks Scheme, (FCNR(B)
account), specified in Schedule 2, from a non-resident Indian;
under the Non-Resident (Ordinary) Account Scheme, (NRO account), specified in
Schedule 3, from any person resident outside India;
- Without prejudice to sub-regulation (1), deposits under NRE and NRO Account
Schemes referred to in clauses (i) and (iii) of that sub-regulation, may also be
accepted by an authorised bank, in accordance with the provisions contained in
the respective Schedules, subject to the conditions prescribed by Reserve Bank
in this regard.
- Without prejudice to sub-regulation (1), deposits under FCNR(B) Account
Schemes referred to in clause (ii) of that sub-regulation, may also be accepted
by a Regional Rural Bank, in accordance with the provisions contained in the
Schedule, subject to the conditions prescribed by Reserve Bank in this regard.
- Any person resident outside India having a business interest in India may
open, hold and maintain with an authorised dealer in India, a Special
Non-Resident Rupee Account (SNRR account), specified in Schedule 4.
- Resident or non-resident acquirers may, subject to the terms and conditions
specified in Schedule 5, open, hold and maintain Escrow Account with Authorised
Dealers in India
6. Acceptance of deposits by persons other than authorised dealer/ authorised
bank:-
1) A company registered under Companies Act, 2013 or a body corporate created
under an Act of Parliament or State Legislature shall not accept deposits on
repatriation basis from a non-resident Indian or a person of Indian origin. The
company may, however, renew the deposits which had been accepted on repatriation
basis from an NRI or a PIO subject to terms and conditions mentioned in Schedule
6.
2) A company registered under Companies Act, 2013 or a body corporate, a
proprietary concern or a firm in India may accept deposits from a non-resident
Indian or a person of Indian origin on non-repatriation basis, subject to the
terms and conditions mentioned in Schedule 7.
3) An Indian company may accept deposits by issue of Commercial Paper to a
non-resident Indian or a person of Indian origin or a foreign portfolio investor
registered with the Securities and Exchange Board of India subject to the
following conditions, namely:
- the issue is in due compliance with the Non-Banking Companies (Acceptance of
Deposits through Commercial Paper) Directions, 1989 issued by the Reserve Bank
as also any other law, rule, directions, orders issued by the Government or any
other regulatory authority, in regard to acceptance of deposits by issue of
Commercial Paper;
- payment for issue of Commercial Paper is received by the issuing company by
inward remittance from outside India through banking channels or out of funds
held in a deposit account maintained by a Non-Resident Indian or a Person of
Indian Origin in accordance with the Regulations made by Reserve Bank in that
regard;
- the amount invested in Commercial Paper shall not be eligible for repatriation
outside India; and
- the Commercial Paper shall not be transferable.
7. Other deposits made or held by authorised dealer:-
- 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 of an authorised dealer, and held in its books in India, shall be
governed by the directions issued by the Reserve Bank in this regard from time
to time.
- A shipping or airline company incorporated outside India, may open, hold and
maintain a Foreign Currency Account with an authorized dealer for meeting the
local expenses in India of such airline or shipping company:
Provided that the credits to such accounts are only by way of freight or passage
fare collections in India or by inward remittances through banking channels from
its office outside India.
- An authorised dealer in India, may subject to the directions issued by the
Reserve Bank, 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 a SNRR account as
specified in schedule 4 for the purpose of undertaking transactions in the
ordinary course of its business. The debits and credits in these accounts shall
be incidental to the business requirement of the UJV.
Provided that the tenure of the account is concurrent to the tenure of the
contract/ period of operation of the UJV.
Provided further that all operations in the account shall be in accordance with
the provisions of the Act or the rules or regulations made or the directions
issued thereunder.
Note: Opening of accounts by companies/ entities of Pakistan/ Bangladesh
ownership/ nationality would require the prior approval of the Reserve Bank
- An authorised dealer in India, with the prior approval of Reserve Bank, may
open an account expressed in foreign currency in the name of a person resident
outside India for the purpose of adjustment of value of goods imported into
India against the value of goods exported from India in terms of an arrangement
voluntarily entered into by such person with a person resident in India.
8. Nomination:-
Authorised dealers may provide nomination facility in respect of the
deposits/ accounts in these regulations maintained by individual account
holders.
(Shekhar Bhatnagar)
Chief General Manager-in-charge
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