ForeWord

Volume 1

Volume 2

Volume 3

Volume 4 CHAPTER 2

Volume 5

Volume 6

Foreign Exchange Operations RUPEE ACCOUNTS OF NON-RESIDENTS OTHER THAN BANKS

SECTION A Residential Status: 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 casea)for taking up employment outside India, or b)for carrying on a business or vocation outside India, or 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 stay in India, in either case, otherwise thana.for or on taking up employment in India, or b.for carrying on a business or vocation in India, or c.for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; i.any person or body corporate registered or incorporated in India ii.an office, branch or agency in India owned or controlled by a person resident outside India iii.an office, branch or agency outside India owned or controlled by a person resident in India DEFINITION OF NRI In terms of Section 2 (w) of FEMA " Person resident outside India" means a person who is not resident in India. Person includes an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals whether incorporated or not.

1.An Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Persons going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs. Educational and other loans availed of by them as residents in India will continue to be available as per FEMA regulations. 1.1.Persons posted in U.N.Organisations and officials deputed abroad by Central/State Government and Public Sector undertakings on temporary assignments are also treated as non-residents. 1.2.Non-resident foreign citizens of Indian Origin are treated on par with nonresident Indian for opening and maintaining accounts and for making investment. Person of Indian Origin means a citizen of any country other than Bangladesh or Pakistan, if a)he at any time held Indian passport; or b)he or either of his parents or any of his grand- parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or c)the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or (b); 1.3.Overseas Corporate Bodies (OCBs) have been derecognized as an eligible class of investor under various routes/schemes available under extant Foreign Exchange Management Regulations. 1.4.In case of doubts/clarifications regarding the NRI status of individuals approaching branches to open accounts, branches should take up with D & A Section, Foreign Exchange Department, Central Office. Further, FAQ on various entitlements of NRI/PIO published in the website of the Reserve Bank is also made available in the home page of our TREASURY (FOREIGN) and branches may refer to the same. ACCOUNTS OF CERTAIN NON-RESIDENTS TREATED AS RESIDENT ACCOUNTS : 2.Although the under noted categories of persons, firms, companies, etc., are treated as resident outside India under FEMA, their rupee accounts with ADs in India are

regarded as resident accounts and hence branches may open such accounts and allow free operation of accounts, provided the requirements under FEMA 1999 are complied with. (i)Indians, Nepalese or Bhutanese resident in Nepal or Bhutan. (ii)Offices and branches situated in Nepal or Bhutan of any business carried on by a company or a Corporation incorporated or established under any Law in force in India, Nepal or Bhutan. (iii)Offices and branches in Nepal or Bhutan of any business carried on as a partnership firm or otherwise by Indians, Nepalese or Bhutanese. 3.For opening accounts in the names of Pakistani and Bangladesh nationals, branches should obtain prior approval of Reserve Bank of India and the approval details should be recorded in the relative account opening forms and Ledger/Register folios/ system records. 4.All the Indian branches of our Bank can open and maintain the following categories of Rupee Accounts in the names of Non-Resident Indians (NRIs) and Person of Indian Origin. i)Ordinary Non-Resident Rupee Accounts (NRO Accounts) ii)Non-Resident (External) Rupee Accounts (NRE Accounts) A comparative chart containing the salient features and conditions governing credit/debit transactions of the above four types of accounts are furnished as Annexure-I. Before opening accounts under these schemes, branches should ensure that the applicants satisfy the criteria laid down for the residential status under FEMA 1999. 5.Branches should be guided by instructions contained in the following while opening and allowing operations in non-resident rupee accounts: i)Foreign Exchange Management (Deposit) Regulations, 2000 issued under FEMA 1999 and Notification No. FEMA 5 /2000-RB dated 3rd May 2000 . ii) Master circulars and AP (DIR) Circulars issued by Reserve Bank of India iii) Circulars issued by Central Office.

(Regulations governing maintenance of and operations on non-resident rupee accounts by authorised Co-operative/Commercial banks have been given separately by Reserve Bank of India in Memorandum ABM). 6.OPENING OF ACCOUNTS IN THE NAMES OF NRIs: 6.1.Any Non-Resident of Indian Origin or Nationality who desires to open account with the branch, may send the prescribed application duly completed and signed verified by his/her Bank/Indian Embassy/Notary Public/our Banks Account holder along with remittance to the branch. 6.2.Alternatively, photocopies of passport giving passport number, signature, photographs and date of issue/expiry date of passport may be sent by the prospective account holder. 6.3.Branches are permitted to open NRE accounts for Indians before proceeding abroad with zero balance in the account after verifying Passport, Visa and Air ticket for the journey and give them the Account Number. 6.4.Branches opening rupee accounts in the names of minors, joint accounts should ensure observance of the usual precautions for opening of accounts, issue of pass book/statement of accounts, issue and despatch of cheque books, operation of accounts, standing instructions, etc. In this connection, attention of branches is invited to Chapter 1 (on Constituents Accounts - General) of Volume I of Book of Instructions. 6.5.Branches should choose the correct type of non-resident account in the CBS package, for different categories of non-resident accounts opened/maintained by them. 6.6.Details such as names of NRIs, their nationality, Indian contact address, overseas address, passport particulars, name and address of the introducer/identifying overseas bank/branch, operational/payment instructions like E or S, F or S, A or S, nominations etc., should be recorded in the account master in CBS packages authenticated properly by the authorised official. 6.7Branch should send the deposit receipt through registered post to the NRI depositor at the address given in the application/account opening form. The deposit

receipt should not be handed over to agents/middlemen/third parties. The branch should ensure that complete postal address of the NRI depositor has been furnished in the account opening form and should exercise special care, if the address is incomplete or only post box number has been furnished. 6.8.The Account opening forms, specimen signature cards, should be properly filed, preserved and produced for verification by our Internal Inspectors/Reserve Bank of India Inspectors/External Auditors when required. 6.9.In terms of Policy Document on KYC-AML, Nonresident customers are placed under RIP Three (high risk) category in the Risk Perception Matrix. Hence branches should apply due diligence with the available information provided by the customer and the estimation arrived on the additional information gathered through interaction with the customer. Suitable STTL (Single Transaction Threshold Limit) may be fixed as applicable to the risk level. REMITTANCES: 7.1.Branches handling inward remittances received for opening/credit to nonresident accounts and outward remittances made to the debit of non-resident accounts should ensure that the remittances received/made are in conformity with the permitted methods prescribed under FEMA 1999. 7.2.Branches should ensure that each inward remittance is promptly acknowledged to the NRI and relative credit is made to the account without delay, observing procedural guidelines for handling inward remittances. Similarly, the requests for foreign outward remittances should be promptly attended to by branches. 7.3. NAD branches opening/maintaining accounts should note to handle purchase transactions under prior report to the designated AD branch. For sale of foreign exchange on account of NRI customers, the NAD branch should take up with the designated AD branch, which will arrange for release of exchange in the form of draft, mail transfer, telegraphic transfer, foreign currency TCs/Notes, etc. In this connection, branches are advised to ensure compliance of procedural aspects contained in relevant chapters of this volume. 7.4. While handling foreign currency notes/coins on account of NRIs, branches should be guided by the general instructions regarding purchase/encashment of

foreign currency notes contained in Chapter on Foreign Travels of the volume. 7.5. The purchase/sale transactions (in foreign exchange) in opening/maintaining non-resident accounts in the names of NRIs by both AD branches and NAD branches shall be reported to TREASURY (FOREIGN) only by AD branches, in accordance with the procedure laid down for such reporting. (Refer Chapter 1 of this volume). 7.6. Branches should properly record and promptly execute the various standing/special instructions of NRIs for local disbursements under advice to account holders. While executing the instructions of the customers, branches should ensure that debits/credits made to these accounts are permitted debits/credits under FEMA 1999. LOANS AND OVERDRAFTS 8.1.1.Branches granting loans/overdrafts to NRIs against the security of NRO/NRE deposits should ensure compliance of guidelines contained in Notification No. FEMA 5/2000-RB dated 3rd May 2000 read with subsequent amendments and Volume II of Book of Instructions as well as circulars issued by Central Office, regarding maximum amount of loan, interest rate, margin, purpose etc. 8.1.2.Advances against FCNR/NRE deposit to the depositor himself or to a third party should be granted up to a maximum of Rs.100.00 lacs only, only under his specific request/mandate and after verifying the authenticity of the signature of the depositor. If the NRI availing the loan is on a visit to India, the loan documentation could be completed at the branch, where he proposes to avail of the facility. If the NRI seeks to avail of loan from the branch in India, when he is abroad, the loan document (60 H) should be sent to the NRI abroad with a request to execute the documents at an Overseas Branch or at the branch office of the Correspondent of our Bank and arrange to forward the documents along with the deposit receipt (carrying the undated discharge of the depositor/s) through the overseas branch/office of the correspondent bank where the documents were executed. A copy of the passport of NRI should also be called for along with the application and discharged deposit receipt. 8.1.3.The covering letter of the overseas branch/Correspondent bank forwarding the documents should confirm that the depositor had called on them and executed the documents in their presence. On receipt of documents, branch can affix and effectively cancel the revenue stamp on the reverse of deposit receipt where the undated

discharge of the depositor/s appears and proceed to grant the loan. The proceeds of loans so granted could be credited to the NRO account only of the NRI availing the loan. Under no circumstances, the loan proceeds should be credited to NRE/FCNR accounts of NRIs or repatriated abroad. 8.2.1.Branches have to propose to their Regional Office for sanction of loan against NRE deposits to third parties. 8.2.2.Branches should not grant advances to third parties against NRE/FCNR B deposits on the basis of Power of Attorney. 8.2.3.In case of any loan / overdraft availed by a resident and who subsequently became a person resident outside India, in terms of Reserve Bank guidelines under FEMA 1999, it is left to the discretion and commercial judgement of the authorised dealer / branch to allow continuance of such facilities. In such cases, payment of interest and repayment of loan may be made by inward remittance or out of legitimate resources in India of the person concerned. As per Reserve Bank guidelines, authorised dealers at their discretion / commercial judgement, are permitted to allow overdrawing in NRE SB account for a period not more than two weeks, up to a limit of Rs.50,000 subject to the condition that such overdrawing together with the interest payable thereon are cleared/repaid within the said period of two weeks, out of inward remittance through normal banking channels or by transfer of funds from other NRE/FCNR accounts. However, branches should be guided by our Banks discretionary powers for various branches communicated from time to time, before considering such requests from their NRI customers. 8.3.Branches should note that the loan/overdraft facilities granted to NRIs in India against the security of NRO/NRE/FCNR B deposits could be adjusted (a)by foreign inward remittance, or (b)from the proceeds of deposits held as security, or (c)to the debit of the NRO/NRE account of the borrower. When a loan granted to a NRI against the security of his/her NRE/FCNR deposit is adjusted out of the rupee resources held in NRO account, branches should note to recover interest as laid down by Central Office in Interest Rate on Advances circulars. 8.4At the time of sanctioning credit facility against the NRE/FCNR deposits, branch

should necessarily obtain instructions from the depositor, well before the due date, for adjustment/roll over of the facility on the due date. Branch should send deposit maturity notice along with details of the facility outstanding and the instructions already in place. If any change in instructions is given by the depositor, branch should take note of the same. As any interest rate movement/exchange rate movement will result in complaints from customers, branches should take adequate care on this issue 9.BLOCKED ACCOUNTS 9.1.The Reserve Bank of India has powers to block accounts in India of any person, whether an individual, firm or company resident outside India and to direct that payment of any sums due to that person shall be made to such blocked account. A blocked account means an account opened as a blocked account at any branch or office in India of a bank authorised in this behalf by Reserve Bank of India. No blocked account may be opened by a branch or an existing free account blocked, except under directions of Reserve Bank of India. No blocked account should be un blocked by a branch except under specific direction from Reserve Bank of India. 9.2. The Reserve Bank of India will issue special directions regarding operations on individual blocked accounts at the time of authorising opening of such blocked accounts. 9.3.Submission of STAT 2 return to the Reserve Bank for blocked accounts has been dispensed with. Annexures: I Comparative chart showing the salient features of NRO and NRE deposit schemes. II Account Opening Form for NRE Account. ANNEXURE I RUPEE ACCOUNT OF NON-RESIDENTS OTHER THAN BANKS

NON-RESIDENT (ORDINARY) NRO NON-RESIDENT (EXTERNAL) NRE

1.WHO CAN OPEN:

Any person resident outside India (other than a person resident in Nepal and Bhutan) (Opening of accounts of individuals / entities of Pakistan / well as erstwhile OCBs require prior approval of Reserve Bank of India). 2. SOURCE OF FUNDS : Proceeds of remittances received in any permitted currency tendered by the account holder during his temporary visit to India or transfers from rupee accounts of Non-Resident Banks. Legitimate dues in rupees of account holder in India. Transfer from NRE/FCNR accounts. Designating existing account as NRO, of a person proceeding abroad (other than Nepal or Bhutan) which would give him the status of a NRI.

Non-Resident individuals of Indian Nationality or origin (Opening of NRE accounts in the names of Pakistani / Bangladeshi individuals / entities require

Bangladesh nationality / ownership as prior approval of Reserve Bank of India).

Remittances received from abroad in an currency, Transfer from NRE/FCNR accounts. Accounts may be opened in the name of any eligible NRI during his temporary visit to India against tender of foreign currency, TCs issued in his own name or notes and coins tendered provided the branch is satisfied that the status of the person continues to be a non-resident. Branches should ensure that TCs and currency notes tendered by the account holder have in fact been brought by him from abroad and not acquired locally. Transfers from NRO account to NRE account

any permitted currency from abroad or approved manner in freely convertible

are permitted subject to the ceiling of USD 1 millionalready available for repatriation from NRO accounts
3. TYPE OF DEPOSIT: SB, CD, Term Deposit 4. GL CODE : Same as ordinary deposit. SB NRE CD NRE 1301 1501 SB, CD, Term Deposit

NRE TD (S) 1101 TD NRE (L) 1151 5. PERIOD OF DEPOSIT :

TD - 15 days to 120 months 6. INTEREST : SB & TDAs applicable to domestic deposits.

TD 12 months to less than 60 months SB - 3.5 % p.a. TD-BASED ON LIBOR Depending on period of deposit (For current rates refer circular issued by Central Office). No additional interest is payable on deposit accounts of staff members.

7. JOINT ACCOUNT : Allowed with resident. - Joint NRE accounts in the names of two or more non-resident individuals is permitted provided all the account holders are persons of Indian Nationality or Origin. If the spouse of an NRI is a foreign national, the status of such a person will be that of a Person of Indian Origin. However, such persons are permitted to have only joint bank accounts along with the spouse. Residents can also be joint account holders in NRE accounts on a former or survivor

basis.
8. REPATRIATION : Not repatriable except for the following in the account 1) Current income. 2) Up to USD 1 million per financial year for any bonafide purpose out of the balances in NRO account/sale proceeds of assets in India acquired by way of inheritance/ legacy inclusive of assets acquired out of settlement subject to certain conditions. 9. NOMINATION : Nominee can be a person resident in India or a person resident outside India. In the case of Non-resident nominee, the amount entitled to him Nominee can be a person resident in India or a person resident outside India. In the case of Non-resident nominee, authorised dealers are allowed to remit funds lying in Freely repatriable.

from the account(s)/deposit(s) of a NRO account and the repatriation will be subject to the overall ceiling of USD 1 million per financial year, subject to taxes. 10. TAX :

the account of the deceased account

deceased person will be credited to his holder.

Tax at the rate of 30 % on the interest Income from interest on monies standing income is to be deducted at source andto the credit of NRE accounts is exempt remitted to Government. If the NonResident is from any of the countries Agreement is entered into, the applicable rate will be deducted. from Income Tax. Balances held in the accounts are exempt from Wealth Tax. Gifts balances in such accounts are also free from Gift Tax. (These Tax exemptions are available only in respect of NRE accounts maintained by NRIs and any fresh directive issued will prevail) 11. PREMATURE CLOSURE : If the deposit is up to Rs. 5 lakhs, applicable interest for the period run prevailing on the date of deposit is payable without foreclosure charges. 1% less than the applicable interest for the period the deposit remained with the bank prevailing on the date of deposit. Additional

with whom Double Taxation Avoidance made to close relatives in India from out of

1% less than the rate applicable for the interest, if any, payable on bulk deposit of period the deposit has run prevailing Rs.15 lakhs and above is not payable. on the date of deposit, additional interest for bulk deposits of Rs.15 lakhs If an overdue deposit renewed with interest payment for the overdue period, is closed and above, is not payable on foreclosure. prematurely before completing the In case of an overdue deposit renewed minimum period for which such deposits are accepted from the date of renewal, no with overdue interest, is closed prematurely before completing the minimum period for which such interest is payable on the deposit and the interest already paid for the overdue period

deposits are accepted from the date of should also be recovered. renewal, no interest is payable on the renewed deposit and the interest paid for the overdue period should also be recovered.

12. RENEWAL OF DEPOSIT : Can be done as per Rules as applicable Renewal of deposit can be done as longas to domestic deposits. the depositors status is NRI. Renewal must be made within 14 days from the due date to get retrospective effect and must be renewed for the minimum period prescribed. If the overdue period is less than one year, the interest rate for one year prevailing on date of maturity or renewal, whichever is lower, is to be applied. 13. CHANGE OF STATUS : as resident accounts on the return of account holder to India, provided the branch is satisfied that the account up employment, business or vocation intention to stay in India for an uncertain period. Where the account holder is on a temporary visit to India, the account should continue to be treated as Non-resident even during such visits. Where the account holder is only on a short visit to India, the account may continue to be treated as NRE account even during his stay in this country. In respect of funds held in fixed deposits in NRE accounts, interest will be payable at the rate originally fixed, provided the deposit is held for the full term even after conversion into resident account. 14. OPERATIONS IN THE ACCOUNT : Branches may allow transactions in NRO accounts complying with instructions contained in FEMA 3rd May 2000. 14. OPERATIONS IN THE ACCOUNT : Branches may allow transactions in NRE accounts complying with instructions contained in FEMA Notification No. FEMA 5/2000-RB dated 3rd May 2000. account holders should give an undertaking NRE accounts should be redesignated as (if eligible) at the option of account holder immediately upon the return of account holder to India provided the branch is taking up employment or for carrying on a purpose with an intention of residing in India for an uncertain period. NRO accounts should be redesignated resident rupee accounts or as RFC accounts

holder has returned to India for taking satisfied that he has returned to India for or for any other purpose indicating his business or vocation or for any other

Notification No. FEMA 5/2000-RB dated At the time of opening of the accounts, the At the time of opening of the accounts, that in cases of debits to the accounts for

the account holders should give an undertaking that in cases of debits to the accounts for the purpose of investment in India and credits representing sale proceeds of investments, they would ensure that such investments/ disinvestments would be covered by the general or India. Credits: Proceeds of remittances in any permitted currency from outside

the purpose of investment in India and credits representing sale proceeds of investments, they would ensure that such investments/ disinvestments would be covered by the general or special permission of Reserve Bank of India. Credits: Proceeds of remittances in any permitted currency from outside India permitted currency tendered by the account holder during his temporary visit to India or transfers from rupee accounts of

special permission of Reserve Bank of through normal banking channels or any

India through normal banking channels non-resident banks. Other legitimate dues or any permitted currency tendered by in India of the account holder. the account holder during his temporary visit to India or transfers from rupee accounts of non-resident the account holder. Debits: All local payments in rupees including payments for investments Debits: All local payments in rupees including payments for investments subject to compliance with the relevant regulations outside India of current income in India of the account holder net of applicable tax. A resident can be authorised by the NRI by

banks. Other legitimate dues in India of made by the Reserve Bank and remittance

subject to compliance with the relevant way of Power of Attorney or Mandate Letter regulations made by the Reserve Bank to operate the NRE accounts. The and remittance outside India of current withdrawals are restricted to local income in India of the account holder net of applicable tax. A resident can be authorised by the NRI by way of Power of Attorney or Mandate Letter to operate the NRO accounts. The withdrawals are restricted to local payments only by the mandate holder. Operations on the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. payments only by the mandate holder. Operations on the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels.

SUBMISSION OF STATEMENTS Treasury dept. with the assistance of ITD, CO has developed a programme to cull out the data from the core server and the same is being successfully transmitted to Reserve Bank of India. In view of the above branches and Regional offices need not submit NRD CSR data. However, the updation with regard to country codes and transaction codes will have to be continued (Ref.Treasury(Foreign) Perm.Cir. 87 dated 19.03.2010)

ANNEXURE II INDIAN OVERSEAS BANK ACCOUNT OPENING FORM (A LATEST ACCOUNT OPENING FORM IS AVAILABLE IN http://www.iob.in) ANNEXURE III SECTION B FOREIGN CURRENCY ACCOUNTS IN INDIA 1.Branches should be guided by instructions contained in Notification No. FEMA 5/2000-RB dated 3rd May 2000, master circulars issued by RBI and circulars issued by Central Office from time to time, with regard to opening and maintaining Foreign Currency accounts in India. 2.Non Resident individuals of Indian nationality or origin (NRIs) are permitted to maintain foreign currency accounts/deposits in India under special schemes. Nonresident Indians returning to India are also permitted to open foreign currency accounts with designated branches under different schemes. Overseas Corporate Bodies have been de recognised as a class of investor, under FEMA, w.e.f. 16.09.2003. The guidelines relating to the following type of accounts are furnished in this chapter. (i) Foreign Currency (Non-Resident) Accounts (Banks) Scheme FCNR(B) (ii) Resident Foreign Currency (RFC) Accounts. (iii) Resident Foreign Currency (Domestic) Accounts The guidelines relating to Exchange Earners Foreign Currency Accounts are

furnished in Chapter 1 of this volume of Book of Instructions. 3. Branches should extract balances in SB accounts in foreign currency every month and tally with GL. In respect of term deposits maintained in foreign currency, branches should extract balances every half-year end and tally with GL. 4. Branches should ensure that correspondence from account holders maintaining foreign currency accounts are properly attended to without giving room for any complaints. Account Opening forms and all correspondence relating to such deposits must be properly filed and kept. FOREIGN CURRENCY NON-RESIDENT (BANKS) ACCOUNTS - FCNR (B) 1.Under FCNR(B) Scheme, the exchange risk is borne by the respective Banks which maintain the accounts. 2. The accounts are maintained in designated foreign currencies and the account holder is not exposed to any exchange risk. 3. DESIGNATED BRANCHES Only branches which are designated by Central Office to maintain FCNR (B) deposits should handle such deposits. Other branches are not permitted to maintain FCNR (B) deposits. Such restriction is made to ensure prompt reporting system and efficient management of funds. The list of authorised branches is displayed in the TREASURY (FOREIGN) intranet site. 4. ELIGIBILITY : Individuals of Indian nationality or origin (NRIs) as defined under NRE Accounts Scheme are eligible to open deposit accounts under the captioned scheme. 5.DESIGNATED CURRENCIES : Deposits can be opened only in the following designated currencies viz., US Dollar, Pound Sterling, EURO, Japanese Yen, Canadian Dollar Swiss Franc,New Zealand

Dollar and Australian Dollar 6.TYPE OF ACCOUNT, PERIOD AND RATE OF INTEREST : 6.1. Accounts are permitted to be opened only in the form of term deposits. Our Bank permits opening of term deposits as RDP only for the following

maturities:
(a)One year and above but less than two years (b)Two years and above but less than three years (c)Three years and above but less than four years (d)Four years and above but less than five years (e)Five years only GL CODE : FCNR-B (S) 1108 FCNR-B (L) 1158 6.2.Our Foreign Exchange Department, Central Office advises the interest rates and it must be updated every month on the first working day irrespective of whether any operation is there or not for all currencies in FCNRB. Interest should be calculated on the basis of 360 days per year as per International practice. 6.3. No additional interest is payable on deposit accounts of staff members. 7.JOINT ACCOUNT: The account may be held singly or jointly only in the names of eligible persons. 8.OPENING OF ACCOUNTS: 8.1.FCNR(B) should be opened only after citing the credit in our Nostro account. The eligible person should submit application in the form prescribed (Annexure - I) for opening FCNR(B) - RDP account, duly filled in and signed, supported by required documents. 8.2. The account may be opened in the name of the eligible person by fresh remittance from abroad through normal banking channel or by transfer from their NRE/FCNR account. 8.3.The account may be opened by Non-Residents during their visits to India with foreign currency travellers cheques in his/her own name or foreign currency notes. While doing so, branches should be satisfied that he/she is still a Non-Resident Indian. Branches should call for Currency Declaration Form (CDF) - wherever

applicable - for endorsement and keep a photocopy of the same on record. 8.4. Remittances from abroad for opening/crediting to FCNR (B) accounts would ordinarily be made only in the designated currency in which the account is desired to be opened/maintained. If, however, remittance is received in a currency other than the designated currency (including funds received in rupees by debit to the account of a non-resident bank) it will be converted into the designated currency at the prevailing rate by the branch at the risk and cost of the remitter and the account opened/maintained in the designated currency. 8.5. MINIMUM AMOUNT OF DEPOSITS: Branches should accept deposits with minimum size stipulations as advised by Treasury (Foreign), Central Office from time to time. CURRENCY AMOUNT GBP USD EURO JPY CAD AUD MINIMUM 1000 1000 1000 100000 1000 1000

8.6. As a rule, branches should pass account opening entries only after receipt of funds in our Nostro Account. Hence opening of FCNR(B) deposit by purchasing relevant instrument by debit to DBP(F) is prohibited. 9. RENEWAL OF DEPOSITS : 9.1.If the depositor has given automatic renewal instruction, the matured deposit could be renewed on maturity without reference to the account holder. 9.2. In the absence of automatic renewal instruction, if the deposit is not renewed on the date of maturity and renewed subsequently, then overdue interest for the broken period will be paid at the RFC SB rate (simple) prevailing on the date of maturity. Back dated renewal of deposit is not permitted 10. PREMATURE CLOSURE: Reserve Bank has stipulated that while Banks should permit premature withdrawal

of deposits under the scheme, they are free to levy penalty for such premature withdrawal at their discretion. Banks may also, at their discretion, levy penalty to recover the swap cost in the case of premature withdrawal of FCNR (B) deposits. The components of penalty should be clearly brought to the notice of the depositors at the time of acceptance of deposits and if it is not done, the exchange loss arising out of premature withdrawal will have to be borne by the Banks. Our Banks present guidelines on premature closure of FCNR(B) deposit are as under (a)No interest is payable if the deposit is closed before one year. Interest is paid at the eligible rate for the period the deposit has run minusa penalty of 1% on premature closure of the deposit for payment. Interest is paid at the eligible rate for the period the deposit has run without any penalty, if such closure is for renewal. (b) Overdue interest, paid if any, at the time of renewal of the deposit which is now closed before maturity, will be recovered if the deposit has run for a period of less than 6 months and need not be recovered if such foreclosure takes place after 6 months. 11.PAYMENT OF DEPOSITS: Maturity proceeds of FCNR (B) accounts or premature withdrawal thereof for the purpose of meeting local disbursements in India should be converted into rupees at TT buying rate for the relative currency ruling on the date of withdrawal and should be routed through the account of the depositor. Branches should exercise utmost caution and care when they receive instruction for closure (on maturity or foreclosure) and repatriation by Fax or e-mail. They should verify its authenticity and seek confirmation from the depositor before acting upon such messages 12.Any inland movement of funds for the purpose of operating FCNR (B) accounts as well as for repatriation abroad for balances held in FCNR (B) accounts would be free of inland exchange or commission, for non-resident depositors. 13. WHEN THE DEPOSITOR BECOMES RESIDENT: When the NRI returns to India for permanent settlement, the following options are available to him regarding treatment of FCNR(B) deposit with unexpired maturity: (a)Retain the FCNR(B) deposit as per the original terms till maturity, i.e., the original contracted rate of interest on FCNR(B) deposit will be paid till maturity for the contracted period. On maturity, convert the FCNR(B) deposit as RFC Deposit (if

eligible) or as a Rupee deposit at TT buying rate prevailing on the date of conversion. (b)If the depositor requests for premature closure of FCNR(B) deposit and conversion to RFC deposit, penal provisions shall not be applicable. However, if the depositor requests for premature closure and conversion to rupee deposit, penal provisions shall apply. 14 NOMINATIONS: 14.1. Nomination facility is available to FCNR(B) depositors as in any other deposit accounts. 14.2. Resident nominees may be allowed funds (From out of their share of proceeds of Non-Resident Indians deposits) towards liquidation of liabilities of the deceased NRI depositor at the overseas centre, before settling the claim. 14.3. INTEREST PAYABLE ON FCNR(B) DEPOSIT OF A DECEASED DEPOSITOR/S: Branches should note the following guidelines while settling claims in the case of a deposit standing in the name/s of (i)a deceased individual depositor, or (ii)two or more joint depositors, where one of the depositors had died. Interest on such FCNR(B) deposit/s of the deceased depositor, shall be paid as indicated below : I. At the contracted rate on maturity of the deposit. II.In the event of the heir/s, legal representative/s or nominee/s claiming the

payment of the deposit before maturity date, branches will pay interest at the rate as applicable for the period for which the deposit has run (as prevailing at the time of opening of the deposit in question) without levying any penal interest. III.In the event of death of the depositor before the date of maturity of the deposit and the amount is claimed after the date of maturity, the bank should pay interest at the contracted rate till the date of maturity. From the date of maturity to the date of payment, the bank should pay simple interest at the applicable rate operative on the date of maturity, for the period for which the deposit remained

with the bank beyond the date of maturity. IV.If the depositor dies after the date of maturity of the deposit, the bank should pay interest at a rate operative on the date of maturity in respect of savings deposits held under RFC account scheme, from the date of maturity till date of payment, appropriate to the currency of the deposit, irrespective of the fact whether the heir/s, legal representative/s or nominee/s seek renewal of the deposit/s or seek repatriation of the amount, subject to the condition that they are eligible to receive the claim in foreign currency. V.If the heirs, legal representatives or nominees seek splitting of the deposit and issuance of two or more receipts individually in the name of heir/s, legal representative/s or nominee/s, such splitting shall not be construed as premature closure and no penalty will be levied provided the period and the aggregate amount of the deposit do not undergo any change. VI.If the legal heir/s are residents, then the maturity proceeds may be converted into Indian rupees on the date of maturity and for the subsequent period the interest shall be payable at a rate applicable to the deposit of similar maturity under the domestic deposit scheme. 15. LOANS AND OVERDRAFTS 15.1. TO THE DEPOSITOR Branch may extend loans and advances to the depositor against his deposit for purposes other than prohibited investments subject to compliance of prescribed margin norms and rate of interest as per Central Office circulars in force. The general guidelines stated in paragraphs 9.1.1. to 9.4 of this chapter under section A shall apply for loans and advances granted against the security of FCNR B deposits. Reserve Bank has prohibited Banks from granting fresh loans or renewing existing loans in excess of Rupees 100 lakhs against FCNR (B) deposits either to the depositor or third parties. The loan proceeds is to be credited to NRO Account and not to depositors NRE Account. 15.2. The loan can be repaid either by fresh remittance from abroad or out of maturity proceeds of the deposit. The loan can be repaid out of funds held in his/her NRO account.

15.3.TO THIRD PARTIES Branch may propose to their Regional Office for loans to third parties who are residents in India against FCNR (B) deposits, subject to following conditions: (a)There should not be any direct or indirect foreign exchange consideration for the non-resident depositor agreeing to pledge his/her deposit, to enable the resident individual/firm/company to obtain the facility. (b)The period of loan should not exceed the unexpired period of maturity of the deposit accepted as security. The non-resident depositor should furnish an irrevocable undertaking to the branch not to withdraw the deposit during the pendency of loan/overdraft. (c)The loan should be utilised for personal purposes or for carrying on business activity other than prohibited purposes. (d)Branches should satisfy themselves as to the acceptability of purpose, genuineness of the credit needs of the borrower and end use of funds. They should not be guided solely by the availability of security. (e)Branches should comply with prescribed margin norms and rate of interest as per Central Office circulars in force. 15.4.Branches should be guided by Documentation procedure for loans against NRE deposits set out in this Chapter while granting loans against FCNR(B) deposits. 16.FORWARD COVER TO NON-RESIDENT INDIANS Branches are now permitted to book forward cover for their Non-Resident Indian customers against their FCNR(B) and NRE deposits. Branches should refer to detailed guidelines furnished in the Chapter No. 7 titled Forward contracts of this volume of Book of Instructions. 17. REPORTING 17.1.Branches should send system generated reports of opening/ renewal / closure of FCNR(B) Deposits in the prescribed format promptly. 17.2. NAD branches authorised to handle FCNR deposits should forward such reports to the respective AD branch. 17.3 The quarterly FCNR B reconciliation statement should be thoroughly scrutinised and submitted after reconciliation along with necessary opening/renewal/closure reports.

18.STATEMENT As per extant guidelines, branches should do the updation with regard to the country codes and transaction codes. The Foreign Exchange Department, Central Office, would send the statement NRD-CSR for the bank as a whole to Reserve Bank of India, Mumbai. 19. FCNR SUSPENSE ACCOUNT NAD BRANCHES 19.1.The FCNR (Suspense) Account should not be used by any branch for any purpose. 20. Branches should be guided by instructions contained Master Circular on FCNR B and amendments thereto by AP (DIR) circulars issued by Reserve Bank of India.

RESIDENT FOREIGN CURRENCY ACCOUNTS SCHEME (RFC Accounts) All AD Branches are permitted to open RFC accounts subject to compliance of instructions laid down in Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000 Notification No. FEMA 10/2000-RB dated 3rd May 2000 and subsequent amendments as well as other instructions issued by Central Office from time to time. 1. Eligibility 1.1.Under this scheme, persons of Indian nationality or origin, who having been resident outside India for a continuous period of not less than one year and have become persons resident in India on or after 18th April 1992 are eligible to open and maintain RFC accounts with branches in a freely convertible foreign currency. (For arriving at the period of continuous stay abroad of not less than one year, short visits to India on personal grounds like meeting family members/relatives or on health grounds which do not indicate the persons intention to stay in India for an indefinite period may be ignored) 1.2.Persons who return to India after a short assignment of less than one year abroad

desiring to have RFC accounts should apply through the branch to RBI in form RFC. RFC accounts opened with the specific approval of RBI will be governed by the conditions stipulated by RBI while granting such approval. 1.3.Persons who returned to India prior to 18th April 1992 after having been resident outside India for a continuous period of not less than one year are also eligible to open RFC accounts if: a.They are holding valid specific permission/license from RBI as on 17-4-92 to maintain foreign currency accounts or to hold other foreign currency assets abroad or b.They are in receipt of pension or other monetary benefits from their overseas employers subsequent to their return to India even if they did not maintain foreign currency accounts or hold other foreign currency assets abroad. For the purpose of this Scheme, a person (not being a citizen of Pakistan or Bangladesh) shall be deemed to be of Indian origin, if: i.he at any time held an Indian passport or ii.he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act 1955 or iii.that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh) 2. Nature of Account: 2.1.The RFC account can be maintained in the form of term deposits or Savings Bank Account (without cheque book facility). The Savings Bank account will be without cheque book facility and the minimum balance is USD 500 to become eligible for RFC SB interest. The period of term deposit in the form of RDP would be as under: i)Six months and above but less than One year ii)One year and above but less than Two years iii)Two years and above but less than Three years iv)Three years only Beyond 12 months, the deposits can be accepted in multiples of 3 months only.

2.2. GL/Profit and Loss account codes for such accounts are: RFC SB Account RFC SD/TD Deposit Account Interest Paid on RFC deposit account 1205 1105 5121

2.3.The eligible person should submit application in the form prescribed (Annexure I A), duly filled in and signed supported by required documents. Branches can open the account on being satisfied that the applicant is an eligible person and that funds being credited to the account represent remittances out of eligible assets. 2.4. Branches should have a separate Account Opening Register and suitable account numbers for SB and TD may be given as RFC-SB and RFC-TD etc. Branches may issue standard SB pass books for RFC-SB accounts after making necessary modifications. Standard Deposit Receipts may be issued for RFC term deposits. 2.5. Branches may at the option of RFC depositor obtain an undertaking for automatic renewal of deposits on due date. 3. Joint Account: The account may be held singly or jointly only in the names of eligible persons. 4. Currency of Account: The account can be denominated in any of the following currencies: USD, GBP, JPY, EURO, CAD and AUD FEDAI weekly average rates published by TREASURY (FOREIGN) every quarter will be used for accounting purposes instead of the notional rates used earlier. 5. Renewal of overdue RFC deposit and interest payment for overdue period. 5.1. Overdue RFC deposits cannot be renewed from back date. Such deposit can be renewed from prospective date only. 5.2. For the overdue period, branches are permitted to pay interest at the RFC SB rate (simple) appropriate to the currency of deposit, prevailing at the time of maturity or at the time of renewal, whichever is lower. 5.3. If such renewed deposits are closed before completion of 6 months, then the overdue interest paid on such renewed deposits should be recovered. No interest is payable on the deposit as it would not have run for the minimum period.

5.4. Recovery of swap charges has been dispensed with for the time being. 5.5. In case of premature closure, whether overdue interest has been paid or not, branches will pay interest at the rate applicable to the period for which the deposit has run, as prevailing on the date of opening/renewal less one percent penalty. 6. Credits to the Account Under noted credit transactions may be allowed by branches in RFC accounts: 6.1. Remittance in convertible foreign currency from outside India through normal banking channels representing: i.Funds in bank accounts outside India forming part of eligible assets held by the eligible person. ii.Income such as dividend, interest, profit, rent, etc. earned on eligible assets held by the eligible person. iii.Sale proceeds of eligible assets. 6.2. Pension or other monetary benefits received from outside India in convertible foreign currency, through normal banking channels, arising out of employment taken up outside India by the eligible person prior to his returning to India. 6.3. Interest earned on RFC account. 6.4. Foreign currency notes/travellers cheques brought into India by the eligible person, provided that where the amount tendered exceeds USD 10000 or its equivalent or where the value of foreign currency/bank notes exceeds USD 5000 or its equivalent they have been declared on the Currency Declaration Form. 6.5. Transfers from other RFC accounts of the account holder. 6.6. Balances in any NRE/FCNR Account (other than in NRE rupee accounts of persons resident in the erstwhile Bilateral Group countries which have been funded in nonconvertible rupees) in the name of the eligible person standing to his credit at the time of his arrival in India. (No penalty would be payable for premature withdrawal of NRE/FCNR deposits in such cases).

6.7. Unutilised entitlements under any valid RIFEE permit or Reconversion facility granted by RBI. 6.8. Unspent foreign exchange surrendered by RFC account holders can also be accepted provided the branch is satisfied that the foreign exchange/currency concerned had in fact been released for travel etc. abroad by debit to the same RFC accounts and the amount of foreign exchange/currency is surrendered within the stipulated period as required under the Exchange Control Regulations. (Eligible Assets Assets acquired or held otherwise than in contravention of the Act by an eligible person, while he was resident outside India (non-resident), in the form of deposits in banks outside India, investments in foreign currency shares or securities or immovable properties situated outside India or investments in business etc. outside India and include foreign exchange earnings through employment, business or vocation outside India taken up or commenced by such person while he was resident outside India). 7. Debits to the Account 7.1. The funds in the account may be allowed to be freely utilised by the account holder for bonafide remittance outside India through normal banking channels including for investments abroad provided the cost of such investments and/or subsequent payments required there for are met out of RFC account. 7.2. Branches may permit withdrawals/payments from such accounts (other than for remittances) outside India, or for payments in foreign currency authorised to be made in India by RBI only in equivalent Indian rupees. 8. Rate of Interest Rates of interest on deposits held under this scheme are advised by TREASURY (FOREIGN), Chennai on a monthly basis. For RFC-SB accounts, interest will be payable every quarter on the last working day of the quarter on product-wise calculations. For RFC- term deposit accounts for the period 12 months and above, interest will be compounded half yearly as in the case of FCNR B deposits. For term deposits of 6 months and above but less than 12 months, interest will be paid at a simple rate. 9. Loans/overdrafts against the deposits No loan/overdrafts shall be granted by branches against balances in RFC accounts. 10. Nomination Facility

10.1. The RFC accounts shall have the nomination facility as in the case of resident rupee account. 11. Transfer of Balances on becoming Non-resident Funds held in RFC account may be freely remitted abroad or credited to fresh NRE/FCNR accounts in the event of the account holder becoming non-resident by virtue of his going abroad for employment etc. 12. Accounting Procedure: Branches may refer to Permanent FX Circular No.32/92-93 dated 24.9.92 issued by Foreign Exchange Department, Central Office. Enclose a copy of the circular ANNEXURES I. A. Application for opening RFC Account. II. A. Daily Report of EEFC/RFC/FCA Transactions. (available in Chapter I EEFC Accounts) For any change in Accounting Procedure that may take place hereafter branches are to be guided by the Circulars that may be issued by the Foreign Exchange Department, Central Office. RESIDENT FOREIGN CURRENCY (DOMESTIC) ACCOUNT Reserve Bank vide FEMA notification No. FEMA 74/2002-RB dated November 1, 2002 has allowed a person resident in India to open, hold and maintain with an authorized dealer in India a foreign currency account to be known as Resident Foreign Currency (Domestic) Account. Accordingly all AD branches are permitted to open a foreign currency deposit account for a person (INDIVIDUAL ONLY) resident in India subject to the norms/procedures given below. Any RFC (D) deposit on account of NAD branch customers should be opened at the nearest AD branch only. 1. Eligibility Under the scheme, a person resident (individual) in India is eligible to open a RFC (D) account. 2. Nature of Account The RFC (D) account can be maintained in the form of Current Account only (without cheque book facility).

3. Permitted Currency The account can be denominated in anyone of the currencies permitted for FCNR (B) viz. USD, GBP, EUR, JPY, AUD, CAD 4. Interest No interest is payable on RFC (D) account. 5. Minimum and Maximum Balance The minimum amount will be USD 500 or its equivalent in other currencies and there is no maximum prescribed. 6. Permitted Credits The following Credits are allowed in RFC (D) account

1.Out of foreign exchange acquired in the form of Currency Notes, Bank Notes and Travellers Cheques 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 2.Amount received as a honorarium or gift or for services rendered or in settlement of any lawful obligation from any person not resident in India and who is on a visit to India 3.Amount received by way of honorarium or gift while on a visit to any place outside India 4.Represents the unspent amount of foreign exchange acquired by him from an authorized person for travel abroad 5.Foreign exchange earned through export of goods and/or services, royalty, honorarium etc., and/or gifts received from close relatives (as defined in Companies Act) and repatriated to India through normal banking channels by resident individuals

7. Permitted Debits Payments towards a current account transaction in accordance with the provisions of Foreign Exchange Management (Current Account Transactions) Rules, 2000 and towards a capital account transaction permissible under the Foreign Exchange Management

(Permissible Capital Account Transactions) Regulations, 2000 are allowed. 8. Accounting Procedure: The accounting procedure, notional rate, reporting format/system will be same as in the case of RFC deposits. The GL head for RFC is used for RFC (D) deposits also. But for the purpose of distinction, a separate ledger may be maintained for RFC (D) deposits. For statistics/MIS purpose, branches should maintain Progressive balance and balance should be tallied as per the existing norms/procedures. ANNEXURE I A APPLICATION FOR OPENING AN RFC ACCOUNT To The Manager ......................................................... ......................................................... ......................................................... Please open an RFC Account in my name. The relevant particulars are as under : 1. Name and address of the applicant : 2. Nationality : 3.Origin (state whether you are of : Indian origin) 4. Passport particulars : No. : Issuing Authority : Expiry Date : 5. Date of arrival in India to : become a resident in India 6.Particulars of residence outside India PERIOD FROM TO NATURE OF OCCUPATION

COUNTRY

(An attested copy of the relevant pages of the passport must be enclosed). 7. Do you continue to have any outside India? If so please give full particulars 8.Foreign currency/ies in which RFC : Account/s is/are to be opened 9. Type of Account desired (State : whether fixed deposit, current or savings Account) I hereby declare that I have gone through the provisions of the RFC Accounts Scheme. I declare that the particulars stated herein above are correct and I am eligible to open and maintain RFC Account under the Scheme as applied. I agree that the RFC Account shall be governed by the RFC Accounts Scheme and the directions issued by the Reserve Bank under the Foreign Exchange Regulation Act, 1973, from time to time. Date : Place : INSTRUCTIONS TO THE APPLICANT 1.Applicant is advised to read carefully the RFC Accounts Scheme before making the application. 2.Account will not be opened unless full particulars are furnished in the application form. (Signature) :

employment or business or vocation

3.Application form duly filled in and signed must be accompanied by copies of the relevant pages of the passport duly certified by the applicant as true copies. The passport should be submitted along with the application for verification. 4.Furnishing any false information in the application amounts to a contravention of FEMA 1999. 5.Applicant should furnish such other particulars or documents, as may be required by

the authorised dealer for the latter to satisfy himself that the applicant is an eligible person and the funds proposed to be credited to the RFC Account are eligible for the purpose. 6.Nomination facility is available to the RFC Accounts as in the case of resident rupee accounts. Annexure I B: Undertaking from Depositor of FCNR B / RFC regarding penal provisions: I /We understand that bank will be charging/levying penal interest /swap charges for premature closure of the deposits (together with swap charges, if any), for any purpose as per rules given hereunder and I agree for the same. FCNR DEPOSITS: 1.If the FCNR (B) deposit has not run for 6 months, overdue interest paid, if any at the time of renewal of the deposit will be recovered. No interest is payable on such deposits as the deposit would not have run for the minimum period of 12 months as per RBI stipulation. 2. If the deposit has run for 12 months and above, penal interest @ 1% (0.5%, if premature closure is for the purpose of renewal) will be recovered. RFC DEPOSITS: 1.If the deposit has not run for 6 month, but overdue interest paid, if any at the time of renewal of the deposit will be recovered. No interest is payable on such deposits as the deposit would not have run for the minimum period of 6 month as per RBI stipulation. 2.If the deposit has run for 6 month and above Penal interest @ 1% (0.5%, if pre mature closure is for the purpose of renewal) will be recovered.

SIGNATURE OF THE CUSTOMER