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Exchange Control Manual


Operations on NRE accounts
Date : Jun 03, 2005
13B.22
Credits to NRE Accounts

13B.22 Undernoted credit transactions may be allowed in NRE accounts by authorised dealers in conformity with conditions, if any, laid down against each item. A report of the transaction should be submitted to Reserve Bank on form A4 only in cases where (i) the transaction is of Rs.1,00,000/- or above and (ii) a specific indication has been given against the relative item.

NOTE:
Funds remitted from abroad in fulfilment of an undertaking given by the account holder should not be credited to the account.

(a) Proceeds of remittances to India in freely convertible foreign currency in an approved manner from abroad. (Report on form A4 should be submitted).

(b) Proceeds of foreign currency travellers cheques, drafts and personal cheques drawn by account holder on a foreign currency account maintained abroad by him (including instruments expressed in Indian rupees for which reimbursement will be received in foreign currency or in rupees from the account of a non-resident bank) deposited by account holder during his temporary visit to India, provided authorised dealer is satisfied that the account holder is still normally resident abroad, the travellers cheques/drafts are standing in the name of account holder and have not been endorsed in his favour and in the case of travellers cheques, they are discharged by the account holder in the presence of the bank officials. (Report on form A4 should be submitted. See Guide to authorised dealers for compilation of R Returns regarding submission of form A2 with R Return for certain transactions).

(c) Proceeds of foreign currency/bank notes tendered by account holder during his temporary visits to India, provided these are tendered to the authorised dealer in person by the account holder himself and the authorised dealer is satisfied that account holder is still normally resident outside India (Report on form A4 should be submitted).

NOTES :
A. (Purchases of travellers cheques/ currency notes/bank notes made in terms of (b) and (c) above should be endorsed on the reverse of Currency Declaration Form (CDF), wherever applicable (See paragraph 3E.3). A photocopy of CDF should be kept on record by the authorised dealer.

B. Foreign currency notes/bank notes and travellers cheques tendered by the Power of Attorney holder or any person other than the account holder should not be credited to NRE account.

C. Rupee proceeds of foreign currencies/bank notes or travellers cheques tendered to a bank other than the one maintaining NRE account or to a money changer should not be credited to NRE account on the strength of encashment certificate issued by them.)

(d) Transfers from other NRE accounts of same/other persons [See paragraph 13B.19]. Report on form A4 should be submitted.

(e) Interest accruing on the deposit account.

(f) Interest on Government securities and dividend on Units of Unit Trust of India, provided the securities/units were purchased by debit to account holder's NRE account or FCNR account (Report on form A4 should be submitted).

(g) Maturity proceeds of Government securities including National Plan/Savings Certificates as well as proceeds of Government securities sold on a recognised Stock Exchange in India and sale proceeds of Units received from Unit Trust of India, provided the securities/units were originally purchased by debit to account holder's NRE account or FCNR account (Report on form A4 should be submitted).

NOTE:
While crediting interest/dividend on securities/units or maturity/sale proceeds thereof in terms of (f) and (g) above, authorised dealers should satisfy themselves that the investments were originally made from out of account holder's funds in NRE/FCNR accounts with them. Suitable notes of the original debits should be taken in the ledger folios to facilitate verification of the transactions by Reserve Bank. While completing form A4 for credits, similar information should be furnished. In the case of units purchased directly from the Unit Trust of India, the payment should be received from the Trust with a confirmation that the units were purchased by the non-resident investor either out of remittances sent from abroad in an approved manner or out of funds in NRE/FCNR accounts.

(h) Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof if the amount of subscription was paid earlier from the same account or from another NRE/FCNR account of the account holder or by remittance from abroad through normal banking channels (Report on form A4 should be submitted).

(i) Any other transaction if covered under general or special permission granted by Reserve Bank subject to compliance with conditions, if any, laid down by it (Report on form A4 should be submitted).

(j) Refund of application/earnest money made by the house building agencies on account of non-allotment of flat(s)/plot(s), provided that the original payment was made by debit to the NRE/FCNR accounts of the concerned NRI or by direct remittance from abroad to the house building agencies and the authorised dealer is satisfied about the genuineness of the transaction with reference to the documentary evidence such as receipts issued by the house building agency and/or copy of agreement/sale deed/letter from the house building agency indicating non-allotment of flat/plot. Before allowing the credit of such refunds authorised dealers may call for inward remittance certificate evidencing receipt of funds from abroad by the agency concerned or a certificate from the concerned bank with whom the NRE/FCNR account is maintained to the effect that the payment of application/earnest money was made by debit to the FCNR/NRE account of the applicant. A declaration from the account holder to the effect that he continues to be a non-resident with his overseas address should be obtained. The net amount of Interest, (i.e. after payment of tax) if any, paid by the house building agency on the application/earnest money may also be credited to NRE/FCNR account. (Report on form A4 should be submitted).

Debits

13B.23 Undernoted debit transactions may be allowed in NRE accounts.

(a) Local disbursements;

(b) Remittances abroad;

(c) Transfer to NRE/FCNR accounts of the same account holder;

(d) Transfer to NRE accounts of persons other than the account holder for any purpose [see paragraph 13B.19(ii))];

(e) Investment in shares/securities/commercial paper of Indian companies or for purchase of immovable property in India provided such investment is covered by general/special permission granted by Reserve Bank (Report on Form A4 should be submitted if the amount involved is Rs.1,00,000/- or more).

(f) Any other transaction if covered under general or special permission granted by Reserve Bank.

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