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Handbook on Liberalised Forex Facilities
For Residents
       
STATE BANK OF TRAVANCORE
 www.statebankoftravancore.com 
INDEX
                                                                    Page
Foreign Exchange Facilities for Residents                     3
Frequently Asked Questions (FAQs)                             7
Liberalised Remittances Scheme                                    9  
Transactions which are prohibited                                11
Transactions which require prior approval
From the Central Government                                

FOREIGN EXCHANGE FACILITIES FOR RESIDENTS
Who is a resident?
A 'person resident in India' is defined in Section 2(v) of FEMA, 1999 as:
A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –
  • A. a person who has gone out of India or who stays outside India, in either case
           for or on taking up employment outside India, or
           for carrying on outside India a business or vocation outside India, or
           for any other purpose, in such circumstances as would indicate his  
           intention to stay outside India for an uncertain period;
  • B. a person who has come to or stays in India, in either case, otherwise than – for or on taking up employment in India, or
           for carrying on in India a business or vocation in India, or
          for any other purpose, in such circumstances as would indicate his 
          intention to stay in India for an uncertain period;
          any person or body corporate registered or incorporated in India,
          an office, branch or agency in India owned or controlled by a person  
          resident outside India,
          an office, branch or agency outside India owned or controlled by a person  
          resident in India;
          That is to qualify as a resident the person concerned will have to fulfill the
          criterion regarding
(A)           the duration of stay and
(B)           the purpose of stay.
The term Person Resident Outside India is defined in the Act as a person who is not a person resident in India.
Who is an Authorised Dealer?
An Authorised Dealer is normally a bank specifically authorised by the Reserve Bank under Section 10(1) of FEMA,1999, to deal in foreign exchange or foreign securities (List available on www.fedai.org.in
If you are a Resident of India:
You can buy foreign exchange without taking permission from Reserve Bank of India for:
Purpose
Eligible amount
Business trip
Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits
  • Up to USD 25000 for a business trip to any country other than Nepal & Bhutan.
Medical treatment
  • Up to USD 100,000 on self declaration basis
  • For amount exceeding the limit as per estimate of medical expenses from Doctor/Hospital abroad or Doctor in India
  • For medical treatment, additional USD25,000 can be drawn for meeting boarding/lodging/travel expenses of the patient and also the accompanying attendant on self-certification
Study abroad
  • Foreign exchange up to USD 100,000 per academic year or estimate from the institution abroad which ever is higher
Private visits
  • Up to USD 10000 in any financial year to any country except Nepal & Bhutan
  • For Nepal & Bhutan, Indian Currency only without any limit except currency notes of denominations of Rs.500 and above
  • Amount can be released on the basis of self-declaration
Employment abroad
  • Up to USD 100,000
Emigration
  • Up to USD 100,000
Gifts & donations (Individuals)
  • Under the liberalised remittance scheme upto USD200,000 per financial year..
Gifts & donations(others)
  • Other residents like corporates, partnership firms, trusts etc., are free to remit up to USD 5000 per annum per donor/remitter each as gift and donation.

International Credit Cards(ICC)
  • ICC can be used for meeting expenses/making purchases while abroad and for making payment in foreign exchange for purchase of books and other items through Internet. The entitlement of foreign exchange on ICC is limited by the credit limit fixed by the card issuing authority.

International Debit Cards (IDC)
  • IDC can be used for drawing cash or making payment to a merchant establishment. IDC can be used only for permissible current account transactions. IDCs cannot be used on internet for purchase of prohibited items like lottery tickets, banned or proscribed magazines etc .

Endorsement on Passport
  • Not mandatory. However, if requested by the traveler, Authorised Dealer may record under their stamp, date and signature, details of foreign exchange sold for trave

Purchase of

  • Foreign exchange can be purchased from any bank branch dealing in foreign exchange or full-fledged moneychangers provided they are also permitted to release exchange for business & private visits.
  • Generally, Travellers are allowed to purchase foreign currency notes/coins only up to USD 2000. Balance amount can be taken in the form of travellers cheque or banker’s draft. Exceptions to this are          (a)travellers proceeding to Iraq and Libya can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent.                                                                                                             (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States can draw entire foreign exchange released in the form of foreign currency notes or coins.
  • If the rupee equivalent exceeds Rs.50,000/- the entire payment has to be made by way of crossed cheque/banker’s cheque/pay order/demand draft only.
  • Foreign exchange can be bought 60 days ahead of the journey date. In case it is not possible to use the foreign exchange within a period of 60 days, it should be surrendered to the Bank.
Surrender of Foreign Exchange on return
  • Foreign exchange up to USD 2,000 in the form of foreign currency notes or travelers cheques can be retained indefinitely for future use.
  • Amounts in excess of USD 2,000 have to be surrendered to a bank within 180 days of return
  • Facility to credit the amounts to Rupee Foreign Currency (Domestic) account is also available. Foreign coins can be retained indefinitely without any limit.

Carrying of Indian Currency while proceeding abroad

  • Residents are permitted to take outside India (other than Nepal & Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount of Rs.5,000/- per person. A person can take or send out of India to Nepal & Bhutan, currency notes other than notes of denomination of above Rs.100.
Carrying Indian Currency while coming to India.
  • A person coming into India from abroad can bring in with him Indian currency notes within the limits given below:
a. up to Rs. 5,000 from any country other than Nepal or Bhutan, and
b. any amount in denomination not exceeding Rs.100 from Nepal or Bhutan

Carrying foreign exchange while coming to India

A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.
FREQUENTLY ASKED QUESTIONS

Can a resident open a foreign currency denominated account in India?

Persons resident in India are permitted to maintain foreign currency accounts in India under the following three Schemes:
a.Exchange Earners’ Foreign Currency (EEFC) Accounts:-
All categories of resident foreign exchange earners can credit up to 100 per cent of their foreign exchange earnings, as specified in the paragraph 1 (A) of the Schedule to Notification No.FEMA.10/2000-RB dated 3rd May, 2000 and as amended from time to time, to their EEFC Account with an authorised dealer in India. Funds held in EEFC account can be utilised for all permissible current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/ Notifications/ Directives issued by the Government/RBI from time to time.
b. Resident Foreign Currency (RFC) Accounts :-
Returning Indians, i.e., those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The foreign exchange (i) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA,1999 or (ii) referred to in clause I of section 9 of the Act or acquired as gift or inheritance therefrom may also be credited to this account or (iii) received as the proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority.
The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.
c. RFC (Domestic) Account:-
A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travellers cheques from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. The account may also be credited with/opened out of foreign exchange earned like proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals. The account shall be maintained in the form of Current Account and shall not bear any interest. There is no ceiling on the balances in the account
Is there any category of visit which requires prior approval from the Reserve Bank or Govt. of India?
Dance troupes, artistes, etc., who wish to undertake cultural tours abroad, are required to obtain prior approval from the Ministry of Human Resources Development, Government of India, New Delhi
Is one required to follow complete export procedure when a gift parcel is sent outside India?
A person resident in India is free to send (export) any gift article of value not exceeding Rs. 5,00,000 provided export of that item is not prohibited under the extant Foreign Trade Policy.
How much jewellery one can carry while going abroad?
Taking personal jewellery out of India is governed by Baggage Rules framed under Foreign Trade Policy by the Government of India. No approval of Reserve Bank is required in this case
Can a resident extend local hospitality to a non-resident?
A person resident in India is free to make any payment in Indian Rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India.
Can residents purchase air tickets in India for their travel not touching India?
Residents may book their tickets in India for their visit to any third country. That is, residents can book their tickets for travel, for instance from London to New York, through domestic/foreign airlines in India itself.
.
Can a person resident in India hold assets outside India?
In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India
Liberalised Remittances Scheme
What is the Liberalised Remittance Scheme of USD 200,000?
This is a facility extended to all resident individuals under which, they may freely remit upto USD 200,000 per financial year for any permissible current or capital account transaction or a combination of both.

Is there any frequency for the remittance?

There is no restriction on the frequency. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during the current financial year should be within the limit of USD 200,000/-.
What are the purpose/s for which remittance can be made under the Scheme?
This facility is available for making remittance/s for any permissible current or capital account transaction or a combination of both. It is not available for purposes specifically prohibited (Schedule I) or regulated by the Government of India (Schedule II) of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
Can residents avail of this facility for acquiring immovable property and other assets abroad?
Yes. Individuals are free to use this Scheme to acquire and hold immovable property, shares or any other asset outside India without prior approval of Reserve Bank.
Can individuals open foreign currency account abroad for making remittance under the Scheme?
Yes. Individuals are free to open, hold and maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without the prior approval of Reserve Bank. The account can be used for putting through any transaction connected with or arising from remittances under the Scheme.
Can an individual send remittance under the Scheme to any country?
Remittance cannot be made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. The facility is also not available for making remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as ‘non-co-operative Countries or Territories, from time to time.
For the current list of such countries/ territories please visit www.fatf-gafi.org.
Further, remittance under the facility cannot be made to individuals and entities identified as posing significant risk or committing acts of terrorism as advised to banks by Reserve Bank from time to time.
What are the requirements to be complied with by the remitter?
The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance. He has to furnish an application-cum-declaration in the specified format regarding the purpose of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.
If an investment of USD 200,000 rises in value within the year, can one book profits and invest abroad again?
The investor is free to book profit or loss abroad and to invest abroad again. He is under no obligation to repatriate the funds remitted abroad.
Can an individual, who has repatriated the amount remitted during the financial year, avail of the facility once again?
Once a remittance is made for an amount upto USD 200,000 during the financial year, he would not be eligible to make any further remittances under this route, even if the proceeds of the investments have been brought back into the country.
Can remittances be made only in US Dollars?
The remittances can be in any currency equivalent to USD 200,000 in a financial year.
Can bankers open foreign currency accounts in India for residents under the Scheme?
No. Banks in India can not open foreign currency accounts in India for residents under the Scheme.
Can an Offshore Banking Unit (OBU) in India be treated on par with a branch of the bank outside India for the purpose of opening of foreign currency accounts by residents under the scheme?
No. For the purpose of the Scheme, an OBU in India is not treated as an overseas branch of a bank in India.
‘Know Your Customer”guidelines and Anti-Money Laundering Rules in force should be complied with.
Remittances to non-residents will be allowed to be made by the authorised dealers on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the format prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India.
Schedule I
Transactions which are Prohibited

1. Remittance out of lottery winnings.
2. Remittance of income from racing/riding etc. or any other hobby.
3. Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes, etc.
4. Payment of commission on exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian companies.
5. Remittance of dividend by any company to which the requirement of dividend balancing is applicable.
6. Payment of commission on exports under Rupee State Credit Route, except commission upto 10% of invoice value of exports of tea and tobacco.
7. Payment related to 'Call Back Services' of telephones.
8. Remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme.

Schedule II

Transactions which require prior approval of the Central Government

Purpose of Remittance
Ministry/Department of Govt. of India whose approval is required
1. Cultural Tours
Ministry of Human Resources Development, (Department of Education and Culture)
2. Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding USD 10,000) by a State Government and its Public Sector Undertakings
Ministry of Finance, (Department of Economic Affairs)
3. Remittance of freight of vessel chartered by a PSU
Ministry of Surface Transport, (Chartering Wing)
4. Payment of import by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis)
Ministry of Surface Transport, (Chartering Wing)
5. Multi-modal transport operators making remittance to their agents abroad
Registration Certificate from the Director General of Shipping
6. Remittance of hiring charges of transponders by
(a) TV Channels
(b) Internet Service providers
Ministry of Information and Broadcasting
Ministry of Communication and Information Technology
7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping
Ministry of Surface Transport (Director General of Shipping)
8. Remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2 million
Ministry of Industry and Commerce
9. Remittance of prize money/sponsorship of sports activity abroad by a person other than International / National / State Level sports bodies, if the amount involved exceeds USD 100,000.
Ministry of Human Resources Development (Department of Youth Affairs and Sports)
10. Remittance for membership of P& I Club
Ministry of Finance, (Insurance Division)
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Telephone Numbers (Code-00-91-484)
Assistant General Manager                                                                                            : 2373985
Rupee Inward Remittance                                                                                              : 2353226     
PABX                                                                                                : 2366416, 2350713, 2358805
Fax Numbers                                                                                                   : 2370880, 2354483
E-mail                                                                                                                  : agmfed@sbt.co.in
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Telephone Numbers (Code-00-91-484)
Chief Manager                                             : 2353226
FAX                                                               : 2374732
E-mail                                                                                                                      : cmisb@sbt.co.in
                          
International Banking Department , Head Office, Poojapura, Thiruvananthapuram - 695 012.
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