Foreign Exchange Management (Deposit)
Regulations, 2016
Deposit Regulations between Residents and NRI
[Notification No. FEMA 5(R)/2016-RB dated 1st
April 2016]
1. Short title and commencement:-
2. Definitions:-
3. Restrictions on deposits between a person
resident in India and a person resident outside India:-
4. Exemptions:-
5. Acceptance of deposits by an authorised
dealer/ authorised bank from persons resident outside
India:-
6. Acceptance of deposits by persons other than
authorised dealer/ authorised bank:-
7. Other deposits made or held by authorised
dealer:-
8. Nomination:-
Sub: 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:-
i)
These regulations may be called the Foreign Exchange Management (Deposit)
Regulations, 2016.
ii) 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, -
i)
'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
ii) '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;
iii) 'Authorised dealer' means a person authorised
as an authorised dealer under subsection (1) of section 10 of the Act;
iv) 'Deposit' includes deposit of money with a
bank, company, proprietary concern, partnership firm, corporate body, trust or
any other person;
v) 'FCNR (B) account' means a Foreign Currency
Non-Resident (Bank) account referred to in clause (ii) of sub-regulation (1) of
Regulation 5;
vi) 'Non-Resident Indian (NRI)' means a person
resident outside India who is a citizen of India.
vii) 'NRE account' means a Non-Resident External
account referred to in clause (i) of sub-regulation
(1) of Regulation 5;
viii) 'NRO account' means a Non-Resident Ordinary
account referred to in clause (iii) of sub-regulation (1) of Regulation 5;
ix) ‘Permissible currency’ means a foreign currency
which is freely convertible;
x) ‘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:
a) Who was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
b) Who belonged to a territory that became part of
India after the 15th day of August, 1947; or
c) 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
d) 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.
xi) 'Schedule' means schedule to these Regulations;
xii) 'SNRR account' means a Special Non-Resident
Rupee account referred to in sub-regulation (4) of Regulation 5;
xiii) 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:
a) 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 ;
b) All cheque leaves issued to the account holder
shall be superscribed as “Diplomatic Bond Stores
Account No.”;
c) 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;
d) 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:
a) Credits to the account shall be only by way of:-
(i) proceeds
of inward remittances received from outside India through banking channels; and
(ii) 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;
b) Funds held in such account if converted in
rupees shall not be converted back into foreign currency;
c) 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;
d) The rate of interest on savings or term deposits
shall be such as may be determined by the authorised dealer maintaining the
account;
e) 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:-
1) An authorised dealer in India may accept deposit
i)
under the Non-Resident (External) Account Scheme (NRE
account), specified in Schedule 1, from a non-resident Indian;
ii) under the Foreign
Currency (Non-Resident) Account Banks Scheme, (FCNR(B) account), specified in
Schedule 2, from a non-resident Indian;
iii) under the
Non-Resident (Ordinary) Account Scheme, (NRO account), specified in Schedule 3,
from any person resident outside India;
2) 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.
3) 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.
4) 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.
5) 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:
a) 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;
b) 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;
c) the amount invested in
Commercial Paper shall not be eligible for repatriation outside India; and
d) the Commercial Paper
shall not be transferable.
7. Other deposits made or held by authorised
dealer:-
1) 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.
2) 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.
3) 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
4) 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.