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FAQ for opening of deposit accounts by foreign tourists

EXCHANGE CONTROL DEPARTMENT NON RESIDENT FOREIGN ACCOUNTS DIVISION

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1. Can foreign tourists open a bank account in India during their short visit ? +

Yes, foreign tourists during their short visit to India can open a Non-Resident (Ordinary) Rupee (NRO) account with any bank dealing in foreign exchange .

Q.1 What is direct investment outside India ? +

Direct investment outside India means investment by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity but does not include portfolio investment.

Introduction

The legal framework for administration of exchange control in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. However, the Central Government has been vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account transactions. Accordingly, the Government has issued Notifications GSR.381(E) dated May 3, 2000, and S.O. 301(E) dated March30, 2001, imposing certain restrictions on current account transactions in public interest.

These details are available on the Bank’s website besides with the authorised dealers and regional offices of the Exchange control Department. Our experience so far has been that the residents like to get information on several matters relating to various current account transactions and other incidental issues. This pamphlet contains answers to all such questions in simple language. While preparing replies to questions, special care has been taken to ensure that the replies are drafted in simple words and reference to technical details are avoided.

The Foreign Exchange Management Act,1999 (FEMA), has come into force with effect from June 1, 2000. With introduction of the new Act (in place of FERA) certain structural changes have been introduced and now all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification No.G.S.R.381(E) dated May 3, 2000 (as amended from time to time). Full text of the said Notification is available in the Official Gazette. Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.

Some of the commonly or frequently asked questions by residents in connection with foreign exchange facilities or restrictions have been answered in following paragraphs.

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1. How much exchange is available for a business trip?
+

Authorised dealers can release foreign exchange up to US$25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding US$25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from Reserve Bank. Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Visit abroad for medical treatment and/or check up also falls within this category.

Introduction

The legal framework for administration of exchange control in India is provided by the Foreign Exchange Management Act, 1999. Under the Act, freedom has been granted for buying and selling of foreign exchange for undertaking current account transactions. However, the Central Government has been vested with powers in consultation with Reserve Bank to impose reasonable restrictions on current account transactions. Accordingly, the Government has issued Notifications GSR.381(E) dated May 3, 2000, and S.O. 301(E) dated March 30, 2001, imposing certain restrictions on current account transactions in public interest.

These details are available on the Bank’s website besides with the authorised dealers and regional offices of the Foreign Exchange Department. Our experience so far has been that the residents like to get information on several matters relating to various current account transactions and other incidental issues. This pamphlet attempts to answer to all such questions in simple language. While preparing replies to questions, special care has been taken to ensure that the replies are drafted in simple words and reference to technical details are avoided.

The Foreign Exchange Management Act,1999 (FEMA), has come into force with effect from June 1, 2000. With introduction of the new Act (in place of FERA), certain structural changes have been introduced and now all transactions involving foreign exchange have been classified either as Capital or Current Account transactions. All transactions undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions. In terms of Section 5 of the FEMA, persons are free to buy or sell foreign exchange for any current account transaction except for those transactions on which Central Government has imposed restrictions, vide its Notification No.G.S.R.381(E) dated May 3, 2000 (as amended from time to time). Full text of the said Notification is available in the Official Gazette. It is also available as annexure to our Master Circular on Miscellaneous remittances available at our website /en/web/rbi/notifications/master-circulars .Incidentally, no release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal and Bhutan.

Some of the commonly or frequently asked questions by residents in connection with foreign exchange facilities or restrictions have been answered in the following paragraphs.

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1. Who is a resident? +

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 case - for or on taking up employment outside India, or for carrying on outside India a business or vocation outside India, or for any 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 stays in India, in either case, otherwise than – for or on taking up employment in India, or for carrying on in India a business or vocation in India, or for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; any person or body corporate registered or incorporated in India, an office, branch or agency in India owned or controlled by a person resident outside India, an office, branch or agency outside India owned or controlled by a person resident in India;

General Information

For further details/guidance, please approach any bank authorised to deal in foreign exchange or contact Regional Offices of the Foreign Exchange Department of the Reserve Bank.

FAQ-as on July 1, 2004

These FAQs attempt to put in place the common queries that users have on the subject in easy to understand language. However, for conducting a transaction, the Foreign Exchange Management Act, 1999 (FEMA) and the Regulations made or directions issued thereunder may be referred to. The relevant principal regulations are the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 issued vide Notification No. FEMA 10(R)/2015-RB dated January 21, 2016. The directions issued are consolidated in Part I of the Master Direction No 14 on Deposits and Accounts. Amendments, if any, to the principal regulations are appended.

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1. Who is a person resident in India? +

Sec 2(v) of the Foreign Exchange Management Act, 1999 (FEMA) defines a person resident in India as:

(i) 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 case-

for or on taking up employment outside India, or

for carrying on outside India a business or vocation outside India, or

for any 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 stays in India, in either case, otherwise than-

for or on taking up employment in India, or

for carrying on in India a business or vocation in India, or

for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(ii) any person or body corporate registered or incorporated in India,

(iii) an office, branch or agency in India owned or controlled by a person resident outside India,

(iv) an office, branch or agency outside India owned or controlled by a person resident in India;

1. What is the timeline for realization of local and outstation cheques and compensation payable if there are delays in affording credit? +

Local Cheques

Local cheques are payable within the jurisdiction of the clearing house and will be presented through the clearing system prevailing at the centre. Credit arising out of local cheques shall be given to the customer’s account as indicated in the Cheque Collection Policy (CCP) of the concerned collecting bank.

Notwithstanding to the CCP of concerned collecting bank, ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customers’ accounts immediately after closure of the relative return clearing on the next working day or maximum within an hour of commencement of business on the third working day from the day of presentation in clearing, subject to usual safeguards.

Under grid-based Cheque Truncation System (CTS) clearing, all cheques drawn on bank branches falling within in the grid jurisdiction are treated and cleared as local cheques. The grid clearing allows banks to present / receive cheques to/ from multiple cities to a single clearing house through their service branches in the grid location.

If there is any delay in credit, beyond the period specified above, customer is entitled to receive compensation at the rate specified in the CCP of the concerned collecting bank. In case, no rate is specified in the CCP for delay in realisation of local cheques, compensation at savings bank interest rate has to be paid for the corresponding period of delay.

Outstation Cheques

Maximum timeframe for collection of cheques drawn on state capitals / major cities / other locations are 7/10/14 days respectively.

If there is any delay in collection beyond this period, customer is entitled to receive compensation at the rate specified in the CCP of the concerned bank. In case the rate is not specified in the CCP, interest rate on Fixed Deposits for the corresponding maturity to be paid. Banks' cheque collection policy also indicates the limit up to which outstation cheques are given immediate / instant credit.

Government securities offer the benefit of safety, liquidity and attractive returns to investors. With the enactment of the Government Securities Act, 2006 Government securities, including the Relief/Savings Bonds issued by the Government of India, have become more investor friendly. Investors of such bonds will particularly benefit from such changes in the Act. To create public awareness in this regard and as a customer friendly measure, the following Frequently Asked Questions (FAQs) along with the answers have been released by the Reserve Bank of India (RBI).

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1. What does one mean by Government security? +

Government security (G-Sec) means a security created and issued by the Government for the purpose of raising a public loan or any other purpose as notified by the Government in the Official Gazette and having one of the following forms.

a Government Promissory Note (GPN) payable to or to the order of a certain person; or
a bearer bond payable to a bearer; or
a stock; or
a bond held in a Bond Ledger Account (BLA).

1. What is NDS-OM? +

NDS-OM is a screen based electronic anonymous order matching system for secondary market trading in Government securities owned by RBI. Presently the membership of the system is open to entities like Banks, Primary Dealers, Insurance Companies, Mutual Funds etc. i.e entities who maintain SGL accounts with RBI. These are Primary Members (PM) of NDS and are permitted by RBI to become members of NDS-OM. Gilt Account Holders which have gilt account with the PMs are permitted to have indirect access to the NDS-OM system i.e they can request their Primary Members to place orders on their behalf on the NDS-OM system.

1. What is an Infrastructure finance? +

Ans “Infrastructure loan” means a credit facility extended by NBFCs to a borrower for exposure in the following infrastructure sub-sectors:

Sl.No.	Category	Infrastructure sub-sectors
1.	Transport	i. Roads and bridges ii. Ports iii. Inland Waterways iv. Airport v. Railway Track, tunnels, viaducts, bridges¹ vi. Urban Public Transport (except rolling stock in case of urban road transport)
2.	Energy	i. Electricity Generation ii. Electricity Transmission iii. Electricity Distribution iv. Oil pipelines v. Oil/Gas/Liquefied Natural Gas (LNG) storage facility² vi. Gas pipelines³
3.	Water & Sanitation	i. Solid Waste Management ii. Water supply pipelines iii. Water treatment plants iv. Sewage collection, treatment and disposal system v. Irrigation (dams, channels, embankments etc) vi. Storm Water Drainage System
4.	Communication	i. Telecommunication (Fixed network) ⁴ ii. Telecommunication towers
5.	Social and Commercial Infrastructure	i. Education Institutions (capital stock) ii. Hospitals (capital stock)⁵ iii. Three-star or higher category classified hotels located outside cities with population of more than 1 million iv. Common infrastructure for industrial parks, SEZ, tourism facilities and agriculture markets v. Fertilizer (Capital investment) vi. Post harvest storage infrastructure for agriculture and horticultural produce including cold storage vii. Terminal markets viii. Soil-testing laboratories ix. Cold Chain⁶

Notes:

1. Includes supporting terminal infrastructure such as loading/unloading terminals, stations and buildings

2. Includes strategic storage of crude oil

3. Includes city gas distribution network

4. Includes optic fibre/cable networks which provide broadband / internet

5. Includes Medical Colleges, Para Medical Training Institutes and Diagnostics Centres

6. Includes cold room facility for farm level pre-cooling, for preservation or storage of agriculture and allied produce, marine products and meat.

Q1. What is an Infrastructure Debt Fund (IDF)? +

Ans : IDFs are investment vehicles which can be sponsored by commercial banks and NBFCs in India in which domestic/offshore institutional investors, specially insurance and pension funds can invest through units and bonds issued by the IDFs. IDFs would essentially act as vehicles for refinancing existing debt of infrastructure companies, thereby creating fresh headroom for banks to lend to fresh infrastructure projects. IDF-NBFCs would take over loans extended to infrastructure projects which are created through the Public Private Partnership (PPP) route and have successfully completed one year of commercial production. Such take-over of loans from banks would be covered by a Tripartite Agreement between the IDF, Concessionaire and the Project Authority for ensuring a compulsory buyout with termination payment in the event of default in repayment by the Concessionaire.

1. What is an EEFC Account and what are its benefits? +

Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer Category - I bank i.e. a bank authorized to deal in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.

1. What is National Electronic Funds Transfer (NEFT) system?

Ans: National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). The set of procedures to be followed by various stakeholders participating in the system is available on the RBI website under the following link: /en/web/rbi/-/national-electronic-funds-transfer-system-procedural-guidelines-2346

FAQs attempt to put in place the common queries that users have on the subject in easy to understand language. However, for the purposes of compounding, the Foreign Exchange Management Act, 1999 (FEMA), the Foreign Exchange (Compounding Proceedings) Rules and the ‘Master Direction- Compounding of Contraventions under FEMA, 1999’ (FED Master Direction No.4/2015-16 dated January 01, 2016 and updated as on January 04, 2021) may be referred to.

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Q.1. What is meant by contravention and compounding of contravention? +

Ans. Contravention is a breach of the provisions of the Foreign Exchange Management Act (FEMA), 1999 and rules/ regulations/ notification/ orders/ directions/ circulars issued there under. Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal. The Reserve Bank is empowered to compound any contravention as defined under section 13 of FEMA, 1999 except the contravention under section 3(a)¹ ibid, for a specified sum after offering an opportunity of personal hearing to the contravener. It is a voluntary process in which an individual or a corporate seeks compounding of an admitted contravention. It provides comfort to any person who contravenes any provisions of FEMA, 1999 by minimizing transaction costs. Willful, malafide and fraudulent transactions are, however, viewed seriously, which will not be compounded by the Reserve Bank. Further, in terms of the proviso to rule 8 (2) of Foreign Exchange (Compounding Proceedings) Rules, 2000, inserted vide GOI notification dated February 20, 2017, if the Directorate of Enforcement (DoE) is of the view that the compounding proceeding relates to a serious contravention suspected of money laundering, terror financing or affecting sovereignty and integrity of the nation, such cases will not be compounded by the Reserve Bank. Also, the cases attracting the special provisions under section 37(A) of the FEMA, 1999 - relating to assets held outside India in contravention of section 4, shall not be eligible for compounding by the Reserve Bank.

Q1: The MD-TLE has various clauses incorporating the term ‘time of transfer’. What is to be taken as the ‘time of transfer’? +

Ans: It is clarified that ‘time of transfer’ would mean when the associated risks and rewards, to the extent of economic interest transferred and as documented in the loan participation, assignment or novation contract, becomes binding on the transferor and transferee.

1. ಆಟೋಮೇಟೆಡ್ ಟೆಲ್ಲರ್ ಮಶಿನ್ ಎಂದರೇನು (ಎಟಿಎಮ್)?

ಉತ್ತರ. ಎಟಿಎಮ್ ಎನ್ನುವುದು ಗಣಕೀಕೃತ ಯಂತ್ರವಾಗಿದ್ದು, ಬ್ಯಾಂಕ್ಗಳ ಗ್ರಾಹಕರಿಗೆ ಹಣವನ್ನು ನೀಡುವುದಕ್ಕಾಗಿ ಹಾಗೂ ಬ್ಯಾಂಕ್ನ ಶಾಖೆಗೆ ಭೇಟಿ ನೀಡುವ ಅಗತ್ಯವಿಲ್ಲದೇ ಹಣಕಾಸು ಹಾಗೂ ಹಣಕಾಸೇತರ ವಹಿವಾಟುಗಳನ್ನು ನಡೆಸಲು ತಮ್ಮ ಖಾತೆಗೆ ಪ್ರವೇಶಾವಕಾಶವನ್ನು ಪಡೆಯುವ ಸೌಲಭ್ಯವನ್ನು ಒದಗಿಸುತ್ತದೆ.

1. ಆರ್ಟಿಜಿಎಸ್ ಎಂದರೆನು?

ಉತ್ತರ. ‘ಆರ್ಜಿಎಸ್’ ಎಂಬ ಸಂಕ್ಷಿಪ್ತ ರೂಪವು ರಿಯಲ್ ಟೈಮ್ ಗ್ರಾಸ್ ಸೆಟ್ಲಮೆಂಟ್ ಅನ್ನು ಸೂಚಿಸುತ್ತದೆ, ಇದನ್ನು ಪ್ರತ್ಯೇಕವಾಗಿ ವಹಿವಾಟಿನ ಆಧಾರದ ಮೂಲಕ [ನೆಟ್ಟಿಂಗ್ ಇಲ್ಲದೇ] ಹಣವರ್ಗಾವಣೆಗಳ ನಿರಂತರ ಹಾಗೂ ರಿಯಲ್ -ಟೈಮ್ ಸೆಟ್ಲಮೆಂಟ್ ಅನ್ನು [ವಾಸ್ತವ -ಸಮಯದ- ಹಣ ಸಂದಾಯವನ್ನು] ಹೊಂದಿರುವ ವ್ಯವಸ್ಥೆಯಾಗಿ ವಿವರಿಸಬಹುದಾಗಿದೆ. ‘ರಿಯಲ್-ಟೈಮ್’ ಅಂದರೆ ಸೂಚನೆಗಳನ್ನು ಪಡೆದ ಸಮಯದಲ್ಲಿ ಪ್ರಕ್ರಿಯೆಗೊಳಿಸುವದು; ‘ಗ್ರಾಸ್ ಸೆಟ್ಲಮೆಂಟ್’ ಅಂದರೆ ಹಣ ವರ್ಗಾವಣೆ ಸೂಚನೆಗಳ ವ್ಯವಸ್ಥೆಯು ಪ್ರತ್ಯೇಕವಾಗಿ ಸಂಭವಿಸುವುದು.

1. ಪ್ರಿಪೇಯ್ಡ್ ಪೇಮೆಂಟ್ ಇನ್ಸ್ಟ್ರುಮೆಂಟ್ಗಳ [ಪಿಪಿಐಗಳು]ನೀಡಿಕೆ ಹಾಗೂ ಕಾರ್ಯಾಚರಣೆಗಳ ಕುರಿತು ರಿಸರ್ವ್ ಬ್ಯಾಂಕ್ ಆಫ್ ಇಂಡಿಯಾ [ಆರ್ಬಿಐ] ಮಾಸ್ಟರ್ ಡೈರೆಕ್ಷನ್ [ಎಮ್ಡಿ] ಅನ್ನು ಯಾವ ಅಧಿಕಾರದ ಅಡಿಯಲ್ಲಿ ನೀಡಿದೆ? +

ಉತ್ತರ. ಪಿಎಸ್ಎಸ್ ಆ್ಯಕ್ಟ್, 2007ರ ಸೆಕ್ಷನ್ 10[2]ರೊಂದಿಗೆ ಓದಿದ ಸೆಕ್ಷನ್ 18ರ ಅಡಿಯಲ್ಲಿ ನೀಡಲಾದ ಅಧಿಕಾರಗಳನ್ನು ಚಲಾಯಿಸುವಲ್ಲಿ , ಆರ್ಬಿಐ ಈ ನಿರ್ದೇಶನಗಳನ್ನು ನೀಡಿದೆ.

1. “ಬೇಸಿಕ್ ಸೇವಿಂಗ್ಸ್ ಬ್ಯಾಂಕ್ ಡಿಪೋಸಿಟ್ ಅಕೌಂಟ್“ ಬಿಎಸ್ಬಿಡಿಎ ಇದರ ಅರ್ಥವೇನು ?

ನವೆಂಬರ್ 11, 2005ರ ಸುತ್ತೋಲೆ DBOD. No. Leg. BC. 44/09.07.005/2005-06 ರಲ್ಲಿಯ ಮಾರ್ಗದರ್ಶನದಂತೆ ತೆರೆಯಲಾದ ಎಲ್ಲ ಪ್ರಸ್ತುತವಿರುವ 'ನೊ-ಫ್ರಿಲ್ಸ್' ಖಾತೆಗಳನ್ನು ಮತ್ತು ಆಗಸ್ಟ್ 10, 2012ರ ಸುತ್ತೋಲೆ DBOD. No. Leg. BC. 44/09.07.005/2005-06ರಲ್ಲಿಯ ಮಾರ್ಗದರ್ಶನದ ಪಾಲನೆಯಂತೆ ಬಿಎಸ್ಬಿಡಿಎಗೆ ಪರಿವರ್ತನೆಗೊಂಡ ಖಾತೆಗಳನ್ನು ಹಾಗೂ ಮೇಲ್ಕಾಣಿಸಿದ ಸುತ್ತೋಲೆಯ ಮೇರೆಗೆ ತೆರೆದ ಎಲ್ಲ ಹೊಸ ಖಾತೆಗಳನ್ನು 'ಬಿಎಸ್ಬಿಡಿಎ' ಎಂದು ಪರಿಗಣಿಸಲಾಗುತ್ತದೆ. ಮೌಲ್ಯವರ್ಧಿತ ಸೇವೆಗಳಿಗೆ ಸಮಂಜಸವಾದ ಶುಲ್ಕಪಟ್ಟಿಯಡಿಯಲ್ಲಿ ಹೆಚ್ಚಿನ ಸೌಲಭ್ಯ ಹೊಂದಿರುವ, ವಿಶೇಷವಾಗಿ ಬಿಎಸ್ಬಿಡಿಎ ಗ್ರಾಹಕರ ಖಾತೆಗಳನ್ನು ಬಿಎಸ್ಬಿಡಿಎ ಎಂದು ಪರಿಗಣಿಸಲಾಗದು.

Q1: Will banks be required to maintain specified securities for the amount received in TLTRO in HTM book at all times? +

Ans: Yes. The banks will have to maintain amount of specified securities for the amount received in TLTRO in its HTM book at all times till maturity of TLTRO.

1. In Paragraph 4 of the Annex to the Resolution Framework, it is stated that the reference date for the outstanding amount of debt that may be considered for resolution shall be March 1, 2020. Does this mean that only debt outstanding as on March 1, 2020 can be resolved under the Resolution Framework? +

The stipulation at Paragraph 4 of the Annex to the Resolution Framework is a general clause regarding the date on which the eligibility criteria for resolution under the Resolution Framework may be assessed. The specific application of the reference date with respect to deciding the eligibility of accounts for resolution under Part A and Part B of the Annex to the Resolution Framework have been separately specified in Paragraphs 6 and 13 respectively, i.e, the requirement that the borrowers should be classified as standard, but not in default for more than 30 days with any lending institution as on March 1, 2020. The actual debt that may be considered for resolution will be the outstanding as on the date of invocation.