Attention of the Authorised Dealers is invited to the instructions
contained in A.P.
DIR (Series) Circular No. 64 dated February 4, 2004, whereby Reserve Bank
announced a Scheme permitting resident individuals to make remittance for an
amount not exceeding USD 25,000 per calendar year. This facility is available
for making remittance up to USD 25,000 per calendar year for any current or
capital account transaction or a combination of both.
2. A number of foreign banks operating in India as well
as Indian banks have been subsequently soliciting foreign currency deposits
from residents under the above Scheme. It has been observed that several advertisements/
news items have appeared soliciting foreign currency funds/deposits at certain
interest rates to be placed at overseas centers or on behalf of overseas mutual
funds. These advertisements do not contain appropriate disclosures to guide
potential depositors. In the case of banks operating in India concerns arise
regarding adequate disclosures from the point of view of protecting the interest
of the resident individuals. Further, marketing in India of schemes soliciting
foreign currency deposits by foreign entities, not having operational presence
in India, also raises supervisory concerns.
3. It has therefore been decided in public interest, that
all banks, both Indian and foreign, including those not having an operational
presence in India, should seek prior approval from RBI for the schemes being
marketed by them in India to residents either for soliciting foreign currency
deposits for their foreign/overseas branches or for acting as agents for overseas
mutual funds or any other foreign financial services company. The applications
in this regard may be addressed to the Chief General Manager-in-Charge, Department
of Banking Operations and Development, Reserve Bank of India, Central Office,
Centre-1, World Trade Center , Cuffe Parade, Mumbai -400005.
4. The above instructions do not restrict the freedom of
resident individual from investing in permissible capital account transactions
under the Scheme.
5. Reserve Bank has issued a press release in this regard,
a copy of which is enclosed for the guidance of the Authorised Dealers.
6. Authorised Dealers may bring the contents of this circular to the notice
of their constituents concerned.
7. 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).
Yours faithfully,
Grace Koshie
Chief General Manager