Informist, Thursday, Jan. 16, 2025

NEW DELHI – The Reserve Bank of India Thursday notified three amendments to various sections of the Foreign Exchange Management Regulations, 2019. The central bank has now allowed any bank to open special non-resident rupee accounts, which were earlier restricted to only Indian banks, and has also enabled units in the International Financial Services Centre to create such accounts with non-IFSC authorised dealers in India.

Non-residents can now create special non-resident rupee accounts with even overseas units of Indian authorised dealers, the amended regulations said. Introduced in 2016, these accounts are different from the special rupee vostro accounts the RBI debuted in 2022, which require permission from the central bank to be set up.

The RBI also tweaked norms on repatriation and taxes to represent the special non-resident rupee accounts in India. The central bank also removed the ceiling of tenures for the non-resident accounts until the business of the account holder is done, which was earlier capped at seven years.

The central bank has also allowed Indian exporters to open and maintain a foreign currency account with a bank outside India, for realisation of the full export value and advance remittance received by the exporter towards export of goods or services, as per the notification.

"Funds in this account may be utilised by the exporter for paying for its imports into India or repatriated into India within a period not exceeding the end of the next month from the date of receipt of the funds after adjusting for forward commitments, provided that the realisation and repatriation requirements as specified in Regulation 9 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 are also met," the RBI said.

The central bank has also amended the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019. Now, when a person residing outside India buys or sells an equity instruments of an Indian company, the amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in any repatriable foreign currency or rupee account. Earlier, the payment was allowed only through banking channels or out of funds held in Non-Resident External, Foreign Currency Non-Resident (B) and escrow accounts.

The RBI has allowed foreign portfolio investors to invest in the Indian Depository Receipts out of funds held in a foreign currency account and a special non-resident rupee account.

Further, for the issue of convertible notes by an Indian start-up, banking channels shall include any rupee vostro accounts, including special rupee vostro accounts, permitted to be held by a person resident outside India, the RBI said. End

Reported by Aaryan Khanna and Shubham Rana

Edited by Tanima Banerjee

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