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TMI BlogForeign Exchange Management (Deposit) Regulations, 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... No. FEMA 5(R)/2016-RB dated April 1, 2016 ), hereinafter referred to as Deposit Regulations. 2. These regulations seek to regulate deposits between a person resident in India and a person resident outside India: 3. Some of the key definitions under the regulations are given below: (i) Deposit includes deposit of money with a bank, company, proprietary concern, partnership firm, corporate body, trust or any other person. (ii) A Non-resident Indian (NRI) is a person resident outside India who is a citizen of India. (iii) A Person of Indian Origin (PIO) is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es/ correspondents outside India to grant loans outside India to the non-resident depositor or to a third party against the security of deposits, subject to the conditions laid down in the regulations. v) The facility for premature withdrawal of the deposits shall not be available where loans against such deposits are availed of. vi) The term loan shall include all types of fund based/ non-fund based facilities. vii) Income from interest on the balances in the account is exempt from income tax and balances are exempt from wealth tax. viii) Current income like rent, dividend, pension, interest, etc. of NRIs and PIOs will be construed as a permissible credit to their NRE account provided the Authorised Dealer is satisfied that the credit represents current income of the NRI/ PIO account holder and income tax thereon has been deducted/ paid/ provided for, as the case may be. ix) AD Category I banks and authorized banks may credit proceeds of demand drafts / bankers' cheques/ account payee cheques issued against encashment of foreign currency to the NRE account where the instruments issued to the NRE account holder are supported by encashment certificate issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y purpose indicating his intention to stay in India for an uncertain period. ix) Authorized Dealer Banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per proforma at annex. x) Opening of accounts by individuals of Pakistan nationality and entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India. xi) Individuals of Bangladesh nationality can open an NRO account provided they hold a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO) concerned. D) Special Non-Resident Rupee (SNRR) Account i) Any person resident outside India, having a business interest in India, may open an SNRR account in Indian Rupee with Authorized Dealers for the purpose of putting through bona fide transactions in rupees, subject to the conditions specified in Schedule 4 of the Deposit Regulations. ii) The SNRR account shall carry the nomenclature of the specific business for which it is opened and shall not earn any interest. iii) The debits/ credits and the balances in the account shall be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dealer, and held in its books in India, will be governed by the directions issued by the Reserve Bank in this regard. iii) A shipping or airline company incorporated outside India, can 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 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. iv) An Authorised Dealer may 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 an SNRR account as specified in Schedule 4 of the Deposit Regulations for the purpose of undertaking transactions in the ordinary course of its business. The debits and credits in these accounts should be incidental to the business requirement of the UJV. The tenure of the account should be concurrent to the tenure of the contract/ period of operation of the UJV and all operations in the account shall be in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulation 4(2) of Foreign Exchange Management (Remittance of Assets) Regulations, 2016 . 11. Authorised Dealers can allow the following operations on non-resident accounts in terms of Power of Attorney granted in favour of a resident by the non-resident account holder: (a) The operations in NRE/ FCNR(B) Accounts are restricted to: (i) Withdrawal for local payments; and (ii) Remittance of funds through banking channels to the non-resident account holder. (b) The operations in NRO Accounts are restricted to: (i) All local payments in rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank; and (ii) Remittance outside India of current income in India of the non-resident individual account holder, net of applicable taxes. The resident Power of Attorney holder is not permitted to repatriate outside India funds held in the account other than to the non-resident individual account holder nor making payment by way of gift to a resident on behalf of the non-resident account holder or transfer funds from the account to another NRO account. 12. Regional Rural Banks (RRBs) are permitted to open a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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