Reserve Bank authority to specify permissible capital account transactions governs regulated foreign exchange drawal and conditions.

The Reserve Bank, consulting the Central Government under Section 6(2) and Rule 5, may specify classes of capital account transactions involving debt instruments, set foreign exchange limits, and impose conditions, subject to an exception for drawal of foreign exchange for amortisation of loans and depreciation on direct investments. Regulation 3 classifies permissible capital account transactions into Schedule I for residents and Schedule II for non residents, enumerating categories such as foreign investment, borrowings, immovable property transfers, guarantees, currency movements, deposits, accounts, remittances of capital assets, and derivative contracts, all subject to authorised person routes and prescribed limits.

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