Entries from September 2011 ↓

RBI liberalises Forex Facilities for Individuals

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999. The facilities are:
1. NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts
Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis.
2. Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) , are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis.
3. Residents can gift Shares/Debentures upto USD 50,000 Value
A person resident in India can now give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 50,000 in value per financial year subject to certain conditions. Earlier, a person resident in India could give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 25,000 per calendar year.
4. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account
Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts.
5. Gifts to NRIs can be credited to NRO Accounts in Rupees
Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO. 2
6. Loans to NRI Close Relatives can be given in Rupees
Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to certain conditions.
7. Residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives. Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans.
8. Residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India.

Press Release : 2011-2012/455

External Commercial Borrowings – Simplification of Procedure

RBI/2011 -12/169
A. P. (DIR Series) Circular No. 11 September 07, 2011
To All Category – I Authorised Dealer Banks

Madam / Sir,

External Commercial Borrowings – Simplification of Procedure

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Borrowing or lending in foreign exchange) Regulations, 2000, notified vide Notification No. FEMA 3/2000-RB dated May 3, 2000, amended from time to time and the A.P. (DIR Series) Circular No. 5 dated August 1, 2005, amended from time to time relating to the External Commercial Borrowings (ECB).

2. As per the extant ECB procedures, any request for change of the lender for an existing ECB is required to be referred by the Authorised Dealer Bank to the Reserve Bank for necessary approval.

3. As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD Category-I banks to approve the request from the ECB borrowers with respect to change in the recognized lender when the original lender is an international bank or a multilateral financial institution (such as IFC, ADB, CDC, etc.) or a regional financial institution or a Government owned development financial institution or an export credit agency or supplier of equipment and the new lender also belongs to any one of the above mentioned categories, subject to the Authorised Dealer ensuring the following conditions:-
(i) the new lender is a recognized lender as per the extant ECB norms;
(ii) there is no change in the other terms and conditions of the ECB; and
(iii) the ECB is in compliance with the extant guidelines.

4. However, changes in the recognized lender in case of foreign equity holder and foreign collaborator will continue to be examined by the Reserve Bank.

5. The changes in the recognized lender should be promptly reported to the Department of Statistics and Information Management, Reserve Bank of India in Form 83.

6. The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy, such as, USD 500 million limit per company per financial year under the automatic route, eligible borrower, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

7. AD Category -I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
8. The directions contained in this circular have been issued under sections 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

 

Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager

New Guideline for banks’ customer service

AT a recent conference of Banking Ombudsman held in RBI, it was decided, among others, that:-

  • Banks should issue tax deduction at source (TDS) certificates duly completed in all respects to the account holders and despatch it to their mailing address.
  • In case of ATM/Internet based banking transactions, in the event of any monetary dispute involving the customer and the bank, the onus should be on the bank to prove the customer’s negligence or mistake. Customer must be compensated for the losses arising out of customers’ non-authorised transactions.
  • Banks must not recover pre-payment charges in floating rate loans.
  • The Reserve Bank/IBA would examine the issues pertaining to monetary compensation for mental harassment suffered by bank customers.
  • To create awareness about the Banking Ombudsman Scheme, the Banking Ombudsmen will annually share with local media, information regarding complaints received and resolved, including important cases and awards given.

RBI Governor Subba Rao said that often, prevention was better than cure. In customer service area too, rendering good customer service was like ‘prevention’ and was better than the ‘cure’ which was the various grievances redressal mechanisms. He flagged various issues relating to banks’ customer service for the consideration of the participants. He asked whether customer service was a criterion in evaluating the performance of a branch level official or did levying of penalty on a bank reflected in any manner on the staff which caused the levy of penalty; do all banks have customer grievances redressal officer and at what level; were the most important terms and conditions (MITC) explained to the bank customers before they signed the documents; and whether the deviation from most important terms and conditions of a banking product transparent. He urged bankers to identify ten action points to further improve their customer service.