The Foreign Exchange Management (Deposit) (Third Amendment) Regulations, 2019

Nov 18, 2019 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on November 13, 2019, notifies the Foreign Exchange Management (Deposit) (Third Amendment) Regulations, 2019 to further amend the Foreign Exchange Management (Deposit) Regulations, 2016.

The amendments are made in Schedule 4 related to “Special Non-Resident Rupee Account - SNRR account” of the Foreign Exchange Management (Deposit) Regulations, 2016 has been substituted, stating that any person resident outside India, having a business interest in India, may open Special Non-Resident Rupee Account (SNRR account) with an authorised dealer for the purpose of putting through bona fide transactions in rupees.

Ø  The business interest, apart from generic business interest, shall include the following INR transactions, namely:-

1)      Investments made in India in accordance with Foreign Exchange Management (Non-debt Instruments) Rules, 2019 dated October 17, 2019 and Foreign Exchange Management (Debt Instruments) Regulations, 2019;

2)      Import and export of goods and services in accordance with the Foreign Exchange Management Act 1999;

3)      Trade credit transactions and lending under External Commercial Borrowings (ECB) framework in accordance with Foreign Exchange Management (Borrowing and Lending) Regulations, 2018;

4)      Business related transactions outside International Financial Service Centre (IFSC) by IFSC units at GIFT city like administrative expenses in INR outside IFSC, INR amount from sale of scrap, government incentives in INR, etc. The account will be maintained with bank in India (outside IFSC).

Ø  The SNRR account shall carry the nomenclature of the specific business for which it is in operation. Indian bank may, at its discretion, maintain separate SNRR Account for each category of transactions or a single SNRR Account for a person resident outside India engaged in multiple categories of transactions provided it is able to identify or segregate and account them category-wise.

Ø  The tenure of the SNRR account shall be concurrent to the tenure of the contract or period of operation or the business of the account holder and in no case shall exceed seven years.

Ø  The amount due or payable to non-resident nominee from the account of a deceased account holder, shall be credited to NRO/NRE account of the nominee with an authorised dealer or authorised bank in India or by remittance through normal banking channels.

These Regulations shall come into force with effect from November 14, 2019.

[Notification No. FEMA 5 (R)/(3)/2019-RB]


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