CHAPTER 14

FOREIGN CURRENCY ACCOUNTS IN INDIA

14.1 Introduction
PART A -FOREIGN CURRENCY (NON-RESIDENT) ACCOUNTS [(FCNR(A)]
14A.1 General
PART B -FOREIGN CURRENCY FOREIGN CURRENCY (NON-RESIDENT)
ACCOUNTS (BANKS) SCHEME - [FCNR(B)]
14B.1 General
14B.2 Opening of and Utilisation of funds in FCNR(B) Accounts
14B.3 Mode of Remittance
14B.4 Conversion of Rupees only into Designated Currencies and vice versa
14B.5 Inland Movement of Funds
14B.6 Manner of Payment of Interest
14B.7 Loans/overdrafts against FCNR(B) deposits
14B.8 Transfer of Funds held in FCNR(B) Accounts
14B.9 FCNR(B) Deposits of NRIs on Return to India
14B.10 Statement of Inflow, Outflow and Outstanding Deposits under FCNR Accounts
(Banks) Scheme [FCNR(B)]
PART C - FOREIGN CURRENCY (ORDINARY - NON-REPATRIABLE) - (FCONR)
SCHEME
14C.1 General
PART D - EXCHANGE EARNERS FOREIGN CURRENCY (EEFC) ACCOUNTS
14D.1 General
14D.2 EEFC Accounts not permitted in certain cases
14D.3 Minimum balance
14D.4 Utilisation of Funds for Approved Purposes only
14D.5 Reserve Requirements
14D.6 Rate of Interest
14D.7 Transfer to Other Accounts
14D.8 Liquidation of Export Credit
14D.8A Issue of cheques against EEFC balances
14D.9 Deleted
14D.10 Deleted
PART E - RESIDENT FOREIGN CURRENCY (RFC) ACCOUNTS
14E.1 General
14E.2 Opening of RFC Accounts
14E.3 Eligible Assets
14E.4 Credits
14E.5 Debits
14E.6 Rate of Interest
14E.7 Nomination Facility
14E.8 Reserve Requirements
14E.9 Loans/Overdrafts against the Deposits
 14E.10 Transfer of Balances on Becoming Non-resident
PART F - OTHER FOREIGN CURRENCY ACCOUNTS
14F.1 Escrow Accounts
14F.2 Foreign Currency Accounts by Exporters
14F.3 Foreign Currency Accounts by Airline/Shipping Companies
14F.4 Foreign Currency Accounts of Overseas Companies executing Projects in India
14F.5 Foreign Currency Accounts of Overseas Buyers
14F.6 Foreign Currency Accounts of Foreign Embassies/Missions/Diplomats

Annexure I - Purposes for which funds in EEFC accounts can be utilised.

Annexure II - Resident Foreign Currency Accounts Scheme

FOREIGN CURRENCY ACCOUNTS IN INDIA

Introduction

14.1 (i) Opening of accounts expressed in foreign currency with authorised dealers in India
by non-residents/residents require general or special permission of Reserve Bank. Non-resident
individuals/entities are permitted to maintain foreign currency accounts/deposits in India under
special schemes. Reserve Bank has also granted general permission for opening of foreign
currency accounts in India to residents/returning Indians under different schemes. Non-
residents/resident firms/companies are also permitted to open foreign currency accounts with
authorised dealers in India for certain specified purposes. The various schemes and the purposes
for which authorised dealers have been permitted to open foreign currency accounts in India
have been discussed in this Chapter.

(ii) Applications for permission to open foreign currency accounts with authorised
dealers in India in other cases should be referred to Reserve Bank with full particulars.

PART A FOREIGN CURRENCY (NON-RESIDENT)

ACCOUNTS - [FCNR(A)]
General
14A.1 In terms of Non-resident (External) Accounts Rules, 1970 (See Appendix II in Volume II)
FCNR(A) accounts were opened and maintained by authorised dealers in India designated in
certain foreign currencies. However, the Scheme was subsequently withdrawn with effect from
15th August 1994.

PART B FOREIGN CURRENCY (NON-RESIDENT)

ACCOUNTS (BANKS) SCHEME - [FCNR(B)]
General
14B.1 FCNR accounts under the scheme are opened and maintained in terms of Non-resident
(External) Accounts Rules, 1970 (See Appendix II in Volume II). The provisions applicable to
NRE accounts and detailed in paragraphs 13B.1 to 13B.16 apply, mutatis mutandis, to FCNR(B)
accounts as well. The authorised dealers are allowed to accept deposits from NRIs and OCBs in
such currencies as specified by Reserve Bank from time to time. At present, accounts are
permitted to be maintained only in Pound Sterling, [Link], Deutsche Mark and Japanese Yen.
The salient features of the scheme are as under :

(a) Reserve Bank will not provide exchange rate guarantee to banks for deposits of any maturity
((under the Scheme.
(b) FCNR(B) accounts are permitted to be opened only in the form of term deposits. The
deposits may be accepted for three maturities viz. one year and above but less than 2 years, two
years and above but less than 3 years and three years only.
(c) In respect of liabilities representing amounts received under the scheme authorised dealers
are required to comply with CRR/SLR requirements as laid down by Reserve Bank from time to
time.
(d) Lending of resources mobilised under the Scheme will not be subject to any interest rate
stipulations.
(e) Advances outstanding against the accounts under this Scheme will not be considered as part
of net bank credit for the purpose of determining priority sector lending.

NOTES: A Authorised dealers may accept deposits under FCNR(B) accounts scheme
with the facility of automatic reinvestment of interest as and when it accrues, provided
the compounding of interest on the deposits, period of deposit, etc. are otherwise in
conformity with directives issued by Reserve Bank from time to time and subject to
guidelines issued by Indian Banks' Association/Foreign Exchange Dealers' Association of
India in this regard.

B Premature withdrawal of NRE/FCNR(B) deposits for the purpose of opening NRNR

Rupee Deposit accounts with a different authorised dealer will attract penalty as per the
directions issued by Reserve Bank from time to time.

Opening of and Utilisation of Funds in FCNR(B) Accounts 4 3

14B.2 (i) FCNR(B) term deposit accounts may be opened with funds remitted from abroad in
convertible foreign currency through normal banking channel or funds received in rupees by
debit to the 2 0 0 2VOSTRO accounts of non-resident banks or funds which are of repatriable
nature in terms of general or special permission granted by Reserve Bank. The accounts under
the Scheme may also be opened by transfer of funds from the existing NRE/FCNR accounts of
the non-resident account-holders at the time of maturity or when prematurely withdrawn.
(ii) Instructions contained in paragraph 13B.21 to 13B.23 are applicable, mutatis mutandis, to
FCNR(B) accounts also.

Mode of Remittance
14B.3 (i) Remittances from abroad for opening/crediting to FCNR(B) accounts would ordinarily
be made only in the designated currency in which the account is desired to be
opened/maintained. If, 2 0 0 2however, remittance is received in a currency other than the
designated currency (including funds received in rupees by debit to the account of a non-resident
bank) it will be converted into the latter currency by an authorised dealer at the risk and cost of
the remitter and account opened/maintained in the designated currency.
(ii) In case a customer with any convertible currency other than a designated currency desires to
place a deposit under the Scheme, authorised dealers can undertake a fully covered swap in that
currency against the desired designated currency with the depositor. There is no objection also
for such a swap being done between two designated currencies.

Conversion of Rupees into Designated

Currencies and vice versa
14B.4 (i) Remittances received in Indian rupees for opening FCNR(B) accounts in conformity
with paragraph 14B.2(i) should be converted by authorised dealers into the designated foreign
currency at the clean T.T. selling rate for that currency ruling on the date of conversion.
(ii) Maturity proceeds of FCNR(B) accounts or premature withdrawal thereof for purpose of
meeting -4 0 0 -4local disbursements including investment requirements of account holder in
India should be converted into rupees at the authorised dealer's clean T.T. buying rate for the
relative currency ruling on the date of withdrawal.

Inland Movement of Funds

14B.5 Any inland movement of funds for the purpose of operating FCNR(B) Accounts as well as
for repatriation abroad of balances held in FCNR(B) accounts will be free of inland exchange or
commission for the non-resident depositors. Authorised dealers receiving foreign currency
remittances under the Scheme will also on request pass on the foreign currency to another
authorised dealer if FCNR(B) account has to be opened with the latter, at no extra cost to
remitter.

Manner of Payment of Interest

14B.6 (i) Interest on balances held in FCNR(B) accounts may be paid half-yearly or on an annual
basis as desired by the depositor.

(ii) Interest may be credited to a new FCNR(B) account or an existing/new NRE/NRO account in
the -5 0 0 -5name of the account holder, at his option.

Loans/overdrafts against
FCNR(B) deposits
14B.7 In case of loans/overdrafts against FCNR(B) deposits, the margin requirement shall be
calculated on the rupee equivalent of the deposits at the prevailing notional rate of exchange for
the relative currency.

Transfer of Funds held in

FCNR(B) Accounts
14B.8 Authorised dealers may allow transfer of funds held in FCNR(B) accounts of different
persons maintained with themselves or with other authorised dealers for any purpose subject to
the following conditions:

(a) Authorised dealers should levy penalty if such transfer involves premature withdrawal
of FCNR(B) deposits.
 (b) Where the transfer of funds is by way of gift, it may be allowed after obtaining an
undertaking from the transferee/transferee's bank that gift tax, if any, payable on the
transfer of funds will be paid to the Income-tax authorities in India.
(c) In case of transfer of funds held in the FCNR(B) accounts held with different
authorised dealers, the authorised dealer transferring the funds should issue a certificate
confirming the non-resident status of the transferor and repatriable nature of funds.

FCNR(B) Deposits of NRIs

on Return to India
14B.9 The FCNR(B) deposits of persons of Indian nationality/origin who return to India for
permanent settlement may be allowed to be continued till maturity at the contracted rate of
interest, if desired. However, except the provisions relating to rate of interest and reserve
requirements as applicable to FCNR(B) deposits, for all other purposes such deposits would be
treated as resident deposits from the date of return of the accountholder to India. In case the
FCNR(B) deposits are withdrawn before maturity, the directions issued in this regard by Reserve
Bank including directions, if any, about levy of penalty would be applicable. Authorised dealers
should convert the FCNR(B) deposits on maturity into resident rupee deposits accounts or RFC
account (if eligible), at the option of the accountholder and interest on the new deposit (rupee
account or RFC account) would be payable at the relevant rate applicable for such a deposit.

Statement of Inflow, Outflow and

Outstanding Deposits under FCNR
Accounts (Banks) Scheme
14B.10 Authorised dealers should submit a monthly statement for the bank as a whole, in form
STAT 5 showing the inflow, outflow and outstanding deposits under the Foreign Currency (Non-
Resident) Accounts (Banks) Scheme during the month, so as to reach the Reserve Bank before
the 10th day of the month following that to which it relates.

PART C FOREIGN CURRENCY (ORDINARY - NON-REPATRIABLE)

DEPOSIT (FCONR) SCHEME

General
14C.1 Foreign Currency (Ordinary - Non-repatriable) Deposit (FCONR) Accounts in the names
of non-residents denominated in U.S. dollar were allowed to be opened by authorised dealers out
of funds transferred to India in an approved manner in convertible foreign currency from abroad
or by transfer of funds from NRE/FCNR accounts. The Scheme was withdrawn with effect from
20th August 1994.

PART D - EXCHANGE EARNERS FOREIGN CURRENCY

(EEFC) ACCOUNTS
General

14D.1 (i) Reserve Bank, by its Notification No.F.E.R.A. 183/98-RB dated 22nd April, has

permitted exporters of goods and services and other beneficiaries of inward remittances in
convertible foreign currency, other than those remittances received pursuant to undertakings
given by them or those received for meeting specific obligations, to open and maintain with
authorised dealers in India accounts expressed in foreign currency and titled "Exchange Earners
Foreign Currency (EEFC) Accounts" and to credit to such accounts amounts not exceeding 50%
of such remittances and operate on such accounts. In the case of 100% Export Oriented Units or
units located in Export Processing Zones or in Software Technology Parks or in Electronic
Hardware Technology Parks, amounts up to 70% of the remittances can be credited to such
accounts. Authorised dealers may also allow credits to EEFC accounts in the following cases:

a) Up to 50%/70% of the inward remittances, as the case may be, received towards
export advance in freely convertible currencies subject to monitoring of the advances
received by the authorised dealers concerned in terms of paragraph 6C.6.

b) Up to 50% of the payments received by exporters by debit to [Link] Escrow

accounts maintained in India as also under the foreign currency debt repayment
route, towards value of goods exported by them.

c) Up to 50% of the payments received by hotels from Credit Card Servicing

Organisations (CCSO) in India in rupees against goods/services sold/supplied to
foreign tourists against international credit cards issued abroad, provided CCSO in
India confirms that the total bill amount as per charge slips received by the hotels has
been realised in convertible foreign currency in an approved manner. In such cases
foreign exchange equivalent of the 50% of the amount received in rupees may be
credited to their EEFC accounts by converting at the market rate.

Note: Unspent foreign exchange surrendered out of the foreign exchange obtained
for travel abroad may be re-credited to EEFC account, provided the foreign
exchange was released by debit to the same EEFC account .

(ii) The resident beneficiaries of the payments received in foreign exchange from the EEFC
account holders in accordance with Notification No.F.E.R.A.186/98-RB dated 4th September
1998 issued by Reserve Bank will be required to surrender the foreign exchange within seven
days of its receipt to an authorised dealer as per the existing regulations. The resident
beneficiaries of foreign exchange in such cases will not be eligible for EEFC facility.

EEFC Accounts not permitted in certain cases

14D.2 (i) Exporters maintaining foreign currency accounts in terms of paragraph 6A.12 are not
eligible to maintain EEFC accounts.

14D.2(ii) Authorised dealers may maintain EEFC account in any convertible foreign currency
and in any form (current, savings or term deposit accounts). Savings bank accounts in the names
of firms, companies, etc. should, however, not be permitted.
Minimum balance

14D.3 Authorised dealers maintaining EEFC accounts may prescribe a suitable minimum
balance

for these accounts.

Utilisation of Funds for Approved Purposes only

14D.4 (i) Authorised dealers may allow utilisation of funds held in EEFC accounts for making
all bonafide payments of the account holders in foreign exchange connected with their trade and
business related transactions which are of a current account nature (besides certain permitted
capital account transactions) without any restrictions except in the case of remittance of agency
commission. In other words such business/trade related remittances may be allowed by
authorised dealers beyond the monetary or percentage ceiling if any, prescribed in ECM,
except that where rate of agency commission on export exceeds 12.5% of invoice value
prior approval of Reserve Bank should be obtained.

14D.4 (i) The funds held in EEFC accounts may be permitted to be utilised by the account

holder for all bona fide payments of the account holder subject to the limits and conditions and on
verification of documents prescribed in the Manual and/or against permits issued by Reserve Bank.
Authorised dealers may also permit utilisation of the funds held in EEFC accounts for making bona
fide payments of the account holders in foreign exchange connected with their trade and business
related transactions which are of a current account nature (i.e. other than for capital account
transactions viz. for investments abroad or for repayment of loans, etc.), without any restriction
except in the case of remittance of agency commission on exports. In other words such
business/trade related remittances may be allowed by authorised dealers beyond the monetary or
percentage ceilings, if any, prescribed in the Manual or for similar other purposes not expressly
stated therein but where the rate of agency commission on exports exceeds 12.5 per cent (cf.
paragraph 6E.2) prior approval of Reserve Bank should be obtained. Before allowing such
remittances authorised dealers should satisy themselves about the bona fides of the transaction with
reference to the documentary evidence produced by the account holder. Doubtful cases should,
however, be referred to Reserve Bank with full details together with comments of the authorised
dealer.

(ii) Funds held in EEFC accounts may also be allowed to be used for the purposes

listed in Annexure I.

NOTE: Funds held in EEFC accounts may also be allowed to be utilised for payment of air
fare and hotel expenditure abroad in connection with visits abroad of the employees/directors
 etc. of the account holder.
Reserve Requirements

14D.5 The balances in the EEFC accounts will be subject to Cash Reserve Ratio and Statutory
Liquidity Ratio as prescribed by Reserve Bank from time to time.

Rate of Interest

14D.6 The rate of interest payable on the balances in savings/term deposit accounts will be

determined by the banks taking into account the interest rates prevailing in international markets.
No interest is payable on the balances held in the form of current accounts.

Transfer to Other Accounts

14D.7 Funds held in the EEFC accounts will not be permitted to be sold/transferred to accounts

of other residents in India. However, authorised dealers may permit, on application, transfer of
funds from the EEFC account/s of the Indian tour operator/s to EEFC accounts of hotels and other
establishment/s provided the tour operator confirms that the amount represents the proportionate
share of the latter in relation to the services rendered to foreign tourists.

Liquidation of Export Credit

14D.8 In case the exporter has obtained any export credit from a bank against shipment in

respect of which a percentage of the proceeds is sought to be credited to the EEFC account,
authorised dealers should ensure that the export credit has been liquidated fully before affording
any credit out of export proceeds to the EEFC account.

Issue of cheques against EEFC balances

14D.8A i) Authorised dealers may allow EEFC account holders the facility of making payments
from such accounts for eligible purposes by issue of cheques to the beneficiaries of the payment.
In order to facilitate easy identification of cheques drawn on EEFC accounts, authorised dealers
may issue to their constituents maintaining EEFC accounts with them, separate cheque books
containing a special series of cheques distinct from cheques issued on domestic rupee accounts
and NRE accounts superscribed with the words "EEFC Account". Authorised dealers may fix
their own requirement of minimum balance in the account for being eligible to avail of cheque
facility. While allowing the above facility authorised dealers should advise the EEFC account
holders that while issuing cheques for making payments in foreign exchange out of funds held in
EEFC accounts, they will ensure that the cheques are issued for payments for approved purposes
only and the relevant exchange control regulations are complied with.
ii) EEFC account holders should immediately after issue of the cheque, but in any case not later
than seven days, submit an application to authorised dealer on form A1 or A2, as the case may
be, together with supporting documents giving full particulars of transaction for which cheque
was issued.

iii) While making payment of cheques issued on EEFC account, authorised dealers should satisfy
themselves that the transaction in question is permissible under the current exchange control
regulations. Any payment made by issue of a cheque for a purpose for which use of funds held in
EEFC account is not permissible should be reported to Reserve Bank promptly.

iv) The transaction should be reported in appropriate "R" return when the cheque is cleared for
payment.

India or abroad, against the security of funds held in the EEFC accounts.

Statement of Operations on EEFC Accounts

14D.10 Deleted

PART E - RESIDENT FOREIGN CURRENCY (RFC) ACCOUNTS

General

14E.1 A scheme known as 'Resident Foreign Currency Accounts (RFC accounts) Scheme' has
been

drawn up by Reserve Bank in pursuance of Government of India Notification No. F.10/22/90/NRI

Cell dated 17th July 1992 and Reserve Bank Notifications Nos. FERA.116, 117 and 118 /92-RB
dated 7th September 1992 to enable eligible returning Indians to open and maintain foreign
currency accounts with authorised dealers in India. The Scheme has been reproduced in Annexure
II. Reserve Bank has also granted exemption from the prohibition imposed under Section 24 of
FERA 1973 in respect of gift of foreign exchange held in India/abroad or of any property held
abroad in certain cases referred to in its Notification No. FERA 165/95-RB dated 28th April 1995.

Opening of RFC Accounts

14E.2 (i) Under the scheme, persons of Indian nationality or origin, who, having been resident

outside India for a continuous period of not less than one year, have become persons resident in
India on or after 18th April 1992 are eligible to open and maintain the accounts with authorised
dealers in India in any freely convertible foreign currency. Authorised dealers may, on receipt of an
application in form RFC, open RFC accounts in the names of eligible persons. Persons who return
to India after a short assignment of less than one year abroad desiring to have RFC accounts should
apply through authorised dealers to Reserve Bank in form RFC. RFC accounts opened with the
specific approval of Reserve Bank will be governed by the conditions stipulated by Reserve Bank
while granting such approval.

NOTE: For arriving at the period of continuous stay abroad of not less than one year,
short visits to India on personal grounds like meeting family members/relatives or
on health grounds which do not indicate the person's intention to stay in India for
an indefinite period may be ignored.

(ii) RFC accounts may be maintained in the form of current, savings (without cheque

facility) or term deposit accounts and held singly or jointly only in the names of eligible persons.

NOTES:A. Persons who returned to India prior to 18th April 1992 after having been
resident outside India for a continuous period of not less than one year are
also eligible to open RFC accounts if (a) they are holding valid specific
permission/licence from Reserve Bank as on 17th July 1992 to maintain
foreign accounts or to hold other foreign currency assets abroad or (b) they
are in receipt of pension or other monetary benefits from their overseas
employers subsequent to their return to India even if they did not maintain
foreign currency accounts or hold other foreign currency assets abroad.

B. Persons holding RIFEE permits or Reconversion facility have been given

option to continue those facilities or avail of RFC account facility (cf.
paragraph 12.13). These options can be exercised at one stroke or in part
amounts during the validity period of RIFEE permit or Reconversion facility.
Accordingly, holders of RIFEE permit or Reconversion facility are also
eligible to open RFC accounts.

Explanation: For the purpose of this Scheme -

A person (not being a citizen of Pakistan or Bangladesh) shall be deemed to be of Indian origin, if,

i) he at any time held an Indian passport,

or

ii) he or either of his parents or any of his grand parents was a citizen of India by virtue of
the Constitution of India or the Citizenship Act, 1955 (57 of 1955),
 or

iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a
citizen of Pakistan or Bangladesh).

Eligible Assets

14E.3 Assets acquired or held otherwise than in contravention of the Act by an eligible person,

while he was resident outside India(non-resident), in the form of deposits in banks outside India,
investments in foreign currency shares or securities or immovable properties situated outside India
or investments in business etc. outside India and include foreign exchange earnings through
employment, business or vocation outside India taken up or commenced by such person while he
was resident outside India.

Credits

14E.4 Undernoted credit transactions may be allowed in RFC Accounts by authorised dealers.

(a) Remittance in convertible foreign currency from outside India through normal banking
channels representing

i) Funds in bank accounts outside India forming part of eligible assets held by
the eligible person.

ii) Income such as dividend, interest, profit, rent, etc. earned on eligible assets
held by the eligible person.

iii) Sale proceeds of eligible assets.

(b) Pension or other monetary benefits received from outside India in convertible foreign
currency, through normal banking channels, arising out of employment taken up
outside India by the eligible person prior to his returning to India.

(c) Interest earned on RFC account.

(d) Foreign currency notes/travellers cheques brought into India by the eligible person,
provided that where the amount tendered exceeds US$ 10,000 or its equivalent or
where the value of foreign currency/bank notes exceeds US$ 2500 or its equivalent
they have been declared on the Currency Declaration Form (CDF) (cf. papragraph
7D.5).

(e) Transfers from other RFC accounts of the account holder.

 (f) Balances in any NRE/FCNR Account (other than in NRE rupee accounts of persons
resident in the erstwhile Bilateral Group countries which have been funded in non-
convertible rupees) in the name of the eligible person standing to his credit at the time
of his arrival in India. No penalty would be payable for premature withdrawal of
NRE/FCNR deposits in such cases.

(g) Unutilised entitlement under any valid RIFEE permit or Reconversion facility granted
by Reserve Bank (See paragraph 12.13).

(h) Unspent foreign exchange surrendered by the RFC accountholders provided authorised
dealer is satisfied that the concerned foreign exchange/currency had in fact been
released for travel etc. abroad by debit to the same RFC accounts and the amount of
foreign exchange/currency is surrendered within the stipulated period as required under
the Exchange Control regulations.

Debits

14E.5 (i) The funds in the RFC account may be allowed to be freely utilised by the account

holder for any bona fide remittance outside India through normal banking channels including for
investments abroad provided the cost of such investments and/or any subsequent payments required
therefor are met out of RFC account.

(ii) Withdrawals/payments from such accounts, other than for remittances outside India, or
for payments in foreign currency authorised to be made in India by Reserve Bank, shall be permitted
by the authorised dealer only in equivalent Indian rupees.

Rate of Interest

14E.6 Rate of interest payable on the funds held in RFC accounts may be decided by authorised

dealers on the basis of market rates. No interest shall be payable on balances held in the form of
current accounts.

Nomination Facility

14E.7 (i) RFC accounts shall have the nomination facility as in the case of resident rupee

accounts.

(ii) On the death of a RFC account holder, the balance in the account may be repatriated to

nominees to the extent of his/their entitlement, if on the date of death of the account holder such
nominees are resident outside India. To the extent any nominee is a person resident in India on the
date of the death of account holder, the amount may be paid to him in equivalent Indian rupees.
Reserve Requirements

14E.8 Funds held in RFC accounts are exempt from CRR/SLR requirements.

Loans/Overdrafts against the Deposits

14E.9 No loan/overdraft shall be granted by authorised dealers against balances in RFC accounts.

Transfer of Balances on becoming Non-resident

14E.1 Funds held in RFC account may be freely remitted abroad or credited to fresh NRE/FCNR
0

accounts in the event of the account holder becoming non-resident by virtue of his going abroad for
employment, etc. A monthly statement in form STAT 10 for the bank as a whole may be forwarded
to the Chief General Manager, Exchange Control Department (Central Statistical Division),
Reserve Bank of India, Central Office, Mumbai 400 001 so as to reach him by 10th of the month
following the month to which it relates.

PART F - OTHER FOREIGN CURRENCY ACCOUNTS

Escrow Accounts

14F.1 Under a Counter trade proposal involving adjustment of value of goods imported into India
against

value of exports from India in terms of an arrangement voluntarily entered into between the Indian
party and the overseas party, there is need for an Escrow Account to be opened with a bank in
India. Proposals for opening such accounts designated in a foreign currency will be considered by
Reserve Bank. Application for permission for opening such an account in the name of the overseas
party should be made by the overseas exporter/organisation through the authorised dealer with
whom the account is proposed to be opened to the concerned office of Reserve Bank (See
paragraph 6A.13).

Foreign Currency Accounts by Exporters

14F.2 Deleted (Please see paragraph 6A.12).

Foreign Currency Accounts by Airline/Shipping Companies

14F.3 Authorised dealers may open foreign currency accounts in the names of airline/shipping
companies

or their agents in India for crediting freight collections from local exporters/importers (cf.
paragraph 8C.4). Withdrawal of funds from such accounts may be permitted for meeting local
expenses of the concerned airline/shipping company, payment of taxes, etc. or for making
remittances abroad towards surplus passage/ freight collections, operating expenses, etc. to the
extent permitted by Reserve Bank (cf. Part B of Chapter 8).

Foreign Currency Accounts of Overseas Companies executing Projects in India

14F.4 Overseas companies executing projects in India will be permitted, on application, to open
foreign

currency accounts with authorised dealers in India for meeting local expenses in connection with
the projects in India. Applications for the purpose should be submitted to Reserve Bank, through an
authorised dealer, with full details and copies of the approvals obtained from Government of
India/Reserve Bank for the concerned project.

Foreign Currency Accounts of Overseas Buyers

14F.5 Reserve Bank may consider applications from overseas buyers for opening foreign currency

accounts with authorised dealers in India provided they are funded by remittances in any permitted
currency from abroad for making payments to Indian exporters. Authorised dealers should refer
such requests to Reserve Bank with full particulars viz., name and address of the overseas party,
sources of credits and the purpose of opening the account, etc.

Foreign Currency Accounts of Foreign Embassies/Missions/Diplomats

14F.6 Authorised dealers may open foreign currency accounts in India in the names of Foreign
Embassies/Missions/ Diplomats without the approval of Reserve Bank subject to the following
conditions:

i. The accounts should be funded by inward remittance in convertible currencies.

ii. Funds from such accounts can be utilised for payments for import of goods, purchases
from Bonded Stores, payment of passage fare, etc.
iii. Funds held in these accounts, if converted in rupees cannot be reconverted into foreign
currency for credit to the accounts.
iv. The balances in the account may be repatriated/transferred abroad without the approval of
Government of India/Reserve Bank.
v. While the accounts of Diplomatic Missions may be maintained in the form of
Current/Fixed Deposit accounts, Foreign Diplomats may maintain Current/Savings
Bank/Fixed Deposit accounts subject to usual terms and conditions of operating these
accounts.
vi. Rate of interest to be paid on Savings/Term Deposit accounts may be determined by the
banks as in the case of EEFC/RFC accounts.