Foreign exchange deposit now in rural areas
New Delhi, July 8: Foriegn exchange earned by people in rural areas can now be deposited in banks, with the Reserve Bank of India (RBI) authorising Regional Rural Banks (RRBs) to open and maintain Foreign Currency Non-Resident (FCNR) (B) Deposit accounts.
Pursuant to the Union Budget for 2007-08 declaration, Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can now deposit their foreign currencies with the rural banks in their area.
This has been done with view to make foreign exchange services available to the NRIs/PIO on a wider scale, said RBI in a notification.
In this context, the eligibility criteria prescribed for opening and maintaining Non-Resident Ordinary (NRO) and Non Resident External (NRE) accounts have also been reviewed.
As in the case of authorisation for NRO/NRE accounts, RRBs will approach the concerned Regional Office of the Foreign Exchange Department for authorisation for acceptance of FCNR (B) deposits.
The deposits may be accepted in US Dollars (USD), Pound Sterling (GBP), Euro, Japanese Yen (JPY), Australian Dollars (AUD) and Canadian Dollars (CAD).
RBI has also permitted RRBs not having a well-developed treasury to manage the foreign currency liability or risk by entering into suitable tie-up arrangements with their sponsor banks for necessary support and expertise in putting through the transactions regarding acceptance of FCNR (B) deposits.
The deposits would be received by credit to the nostro accounts of the sponsoring banks.
While the FCNR (B) deposit receipt would be issued by the RRBs to the depositors concerned, the foreign currency funds received as deposits would be treated as placements/deposits by the RRBs with their sponsoring banks. The sponsoring banks will be required to manage the foreign currency funds including deployment of FCNR (B) deposit funds.
RRBs who desire to make use of the foreign currency resources, arising out of the FCNR (B) deposits, would be allowed to swap foreign currency funds including accrued interest with the sponsoring banks.
The operational and accounting details relating to rate of interest to be offered by the RRBs, accounting treatment of interest accruals on such deposits, payment of maturity proceeds to be decided by mutual agreement between the RRBs and the sponsoring banks, said RBI.