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Introduction:
As a step towards
liberalization it has been decided by Reserve Bank of India to allow a
person resident in India to open, hold and maintain with an Authorised
Dealer in India a Foreign Currency Account to be known as Resident
Foreign Currency (Domestic) account (RFC(D)).This facility is in
addition to the existing facilities of
i.
Resident Foreign Currency account (RFC)
ii.
Exchange Earners Foreign Currency account (EEFC) and
iii.
Retention of foreign exchange in cash and/or travelers
cheques up to US$2000 or its equivalent in terms of Regulation 3 of
RBI Notification No.FEMA.11/2000-RB dated 3rd May, 2000.
Part-A
Exchange Management
Regulations
1.Directions of
RBI:
The account can be
opened out of foreign exchange acquired in the form of currency
notes, bank notes and travellers cheques from the
sources specified below:
i.
Acquired while on a visit to any place outside India by way of
payment for services not arising from any business in/or anything
done in India.
ii.
Acquired from any person not resident in India and who is on a
visit to India as honorarium or gift for services rendered or in
settlement of any lawful obligation.
iii.
Acquired by way of honorarium or gift while on a visit to any
place outside India.
iv.
Unspent foreign exchange acquired from an authorized person for
travel abroad.
2.Customer
eligibility:
It should be noted
that RFC(D) facility is available to any person resident in
India.
While opening these accounts the Authorised Dealers should however
follow the same procedures including "Know Your Customer (KYC)'
guidelines as applicable for opening any other domestic account.
3.Type of
accounts:
The account will be
matained in the form of current account and shall not bear any
interest. Cheque facility will be available. There will be ceiling on
the balances held in the account.
4.Currency
of the account:
The account is to be
maintained in any convertible foreign currency
5.Utilisation
of funds in RFC(D):
Funds in the account
shall be utilized for payment towards current/capital account
transactions in accordance with the existing foreign exchange
regulations.
Part-B
Procedural
formalities
1.For the present the
work connected with RFC(D) account is centralized at IBD, Chennai. The
branches should maintain the RFC(D) accounts in their books of account.
The accounts are to be maintained in foreign currencies and in Indian
Rupees at notional rate of exchange for the foreign currency concerned.
IBD Chennai will communicate the notional rate of exchange for the
various currencies from time to time. Branches are directed to make
a reference to IBD, Chennai and obtain their permission/instructions in
the matter of opening/ operation of RFC(D) accounts whenever required.
2.Application in the
prescribed form as per enclosure should be utilized for opening these
accounts. While opening the accounts the principle of "Know Your
Customer(KYC)" that is being applied for opening domestic
accounts must be applied diligently in letter and spirit without
deviations. All the guidelines pertaining to KYC must be followed
meticulously.
3.Presently only
accounts in US$ will opened in our bank. If there are requests for
opening the account in other currencies the matter must be referred to
IBD, Chennai immediately giving all the particulars including the name
of the foreign currency and the amount. However we may accept the
foreign exchange in various currencies with the acceptance from the
customer that the foreign exchange can be converted into US$ for
opening/crediting the RFC(D) account. For the time being each customer
can hold only one RFC(D) account in a branch.
4.Accounts will be
opened duly rounding off to tens of US$. Fractions below US$10 and
cents will have to be taken back by the customer or converted into
Indian Rupees as per his option. However there is no ceiling on the
balances to be held in RFC(D) account.
5.Foreign exchange
acquired as mentioned in Part-A (1) above will be accepted for
crediting the account. While accepting such foreign exchange for credit
to this account the following documentary evidences have to be
verified. Photocopies of the same have to be retained at the branches
to enable the internal inspectors/RBI officials/Concurrent auditors for
verification:
-
Foreign exchange
acquired while on a visit to any place outside India by way of
payment for services not arising from any business in or anything
done in India:
i. Verify the
passport to satisfy that the customer has undertaken a foreign
visit
ii.
Documentary evidence from the person paying the foreign exchange to the
customer that the payment was for services rendered outside India. It
should indicate the nature of the service rendered to satisfy that the
payment is not arising from business or anything done in India.
-
Acquired from any
person not resident in India and who is on a visit to India as
honorarium or gift for services rendered or in settlement of any
lawful obligation
i.
Documentary evidence from the person paying the foreign exchange
stating that he is not a resident of India and that the payment was
made to the resident towards honorarium or gift for services or in
settlement of any lawful obligation duly mentioning the obligation.
c.
Acquired by way of honorarium or gift while on a visit to any
place outside India.
i.
Documentary evidence from the person paying the foreign exchange
stating that the payment was made to towards honorarium or gift to the
customer while on a visit to that country,
d. Unspent foreign
exchange acquired from an authorized person for travel abroad.
i.
Verify the passport to satisfy that the customer has undertaken
a foreign visit and that the foreign exchange sought to be credited to
the RFC(D) account is the unspent foreign exchange availed at the time
of undertaking the travel.
6.As outward
remittances from out of the balances in RFC(D) could be made only for
permissible current/capital account transactions as per exchange
regulations cheques in the foreign currency in which the account is
maintained should be issued only in the name of "City Union Bank
Limited" duly accompanying an application for the outward
remittance. The necessary documentary evidences should be annexed to
the application. The branch must forward the application form along
with documentary evidences to IBD Chennai for further course of
action. The branch should also give necessary authority to IBD.
Chennai to raise IBR for the amount to be debited for the outward
remittance. The Manual of Instructions on FOREX operations (other than
Non-Resident accounts) Chapter no:6 on Outward Remittances contains
specimen forms for various types of outward remittances.
At the option of the
customer the funds in the account can be converted into Indian Rupees.
But funds once withdrawn in Indian Rupees cannot be re-credited to the
account. Necessary application should be made to the branch concerned
who in turn will forward the same to IBD Chennai for further course of
action. The branch should also give necessary authority to IBD.Chennai
to raise IBR for the amount to be debited in the RFC(D) account. IBD,
Chennai will debit the branch for the foreign currency at the notional
rate of exchange and credit the branch simultaneously with the actual
value of the Rupees for the foreign exchange surrendered out of the
RFC(D) account.
The branch should
respond to the IBR at the notional rate by debiting the RFC(D) account.
The credit advice from IBD,Chennai should be responded by crediting the
domestic account of the customer.
7.While forwarding
the instruments intended for crediting RFC(D) accounts for realization
to IBD,Chennai the branches must utilize the prescribed covering
schedule as per annexure.
8.Presently the
following facilities are not permitted in opening these accounts:
i. opening
joint accounts
ii. opening of
accounts in the names other than individuals
iii. nomination
facility
iv. operation in
the account by power of attorney holders or holders of other types of
authority
9.As Government of India is yet to bring out a
Notification in this matter applications for opening such accounts have
to be referred to the Regional Office of Reserve Bank of India by the
International Banking Division, Chennai for approval. Therefore
initially there may be delay in opening such accounts. Branches must
bring this matter to the notice of the prospective customers in this
regard.
10.As these accounts
are non-interest bearing accounts branches may take efforts to canvass
such accounts by bringing the details of the account to their
prospective customers.
11.The specimens of
various forms and applications to be used in the operation of RFC(D)
are given in the annexures. Only the prescribed forms have to be used.
List of annexures:
a. Opening form for
RFC(D) account (to be filled in duplicate and one copy should be sent
to IBD,Chennai with branch recommendation for prior approval for
opening the account
b. Chalan for
depositing the foreign currency instruments for credit to RFC(D)
account
c. Branch covering
schedule for forwarding the instruments to IBD,Chennai for realisation.
d. Application
from the customer for withdrawing the funds from the RFC(D) account
either for outward remittance or for conversion into Indian
LIST OF ANNEXURE IN
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