The Reserve Bank of India (RBI) has made amendments to the Foreign Exchange Management (Deposit) Regulations, 2016, to update provisions regarding the operation of foreign exchange deposit accounts, particularly for non-residents and businesses with a presence in India. This amendment seeks to enhance the flexibility of operations involving Special Non-Resident Rupee (SNRR) accounts which is a type of bank account that allows non-resident individuals or entities to hold and manage Indian rupees in India and the transfer of funds between such accounts.

Details:

Regulation 9 has been inserted in the principal regulation as follows:

Transfer of Funds Between Repatriable Rupee Accounts

Notwithstanding anything contained in these regulations, the transfer of funds, for all bona fide transactions, between repatriable Rupee accounts maintained in accordance with these regulations is permitted.

In the principal regulations in schedule 4, the existing paragraph 1 shall be substituted by the following namely:

“A person resident outside India, having business interest in India, may open a Special Non-Resident Rupee Account (SNRR account), with an authorised dealer in India or its branch outside India for the purpose of putting through permissible current and capital account transactions with a person resident in India in accordance with the rules and regulations framed under the Act, and for putting through any transaction with a person resident outside India

Explanation:

Special Non-Resident Rupee (SNRR) Accounts:

1. • Eligibility: Non-residents with business interests in India can open SNRR accounts.
   • Transactions Allowed: Permissible current and capital account transactions with residents and non-residents.
   • Tenure Alignment: The tenure of the account will match the underlying contract or business period.
   • IFSC Provision: Units in International Financial Services Centres (IFSCs) can open SNRR accounts for business transactions outside the IFSC.
2. Authorized Dealers’ Overseas Branches:
   • Authorized dealers outside India can now open and operate Rupee accounts for non-residents, broadening accessibility for global clients.
3. Terminology Changes:
   • In the principal regulation, the term “Indian bank” has been replaced with “a bank” and specifying account locations.

These amendments simplify foreign exchange operations for non-residents, facilitate greater adoption of the Indian Rupee in international trade, and improve alignment with global banking practices.