TaxTMI 
TaxTMI 
Master Circular of instructions relating to deposits held in FCNR(B) Accounts
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..... No. Dir. BC.12 /13.03.00/2009-10 July 1, 2009 Ashadha 9, 1931(Saka) All Scheduled Commercial Banks (excluding RRBs) Dear Sir Master Circular of instructions relating to deposits held in FCNR(B) Accounts Please refer to the Master Circular DBOD No. Dir. BC.16/ 13.03.00/2008-09 dated July 1,2008 consolidating the instructions/guidelines issued to banks till June 30, 2008 relating to deposits held in FCNR(B) Accounts. The Master Circular has been suitably updated by incorporating the instructions issued up to June 30, 2009 and has been placed on the RBI website (http://www.rbi.org.in). A copy of the Master Circular is enclosed. Yours faithfully (P. Vijaya Bhaskar) Chief General Manager-in-Charge Encl: as above ₪,ÿ¢‘¿ÅŠ, Å“,1£\„¥‚ù£1","Ã…,-,",ž,,Å , “/2Å›Ãúj, “Å‚Ä¥¡, -Ø›£1,“ÅûÅœ,£1/2", “Åø¥,“„, Ÿé¿ª,fÄ-400005 DEPARTMENT OF BANKING OPERATIONS & DEVELOPMENT CENTRE -1, WORLD TRADE CENTRE, CUFFE PARADE, COLABA, MUMBAI- 400005 FAX NO. 0091-22-22183785 Tel. No.022-22189131-39 (9....
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....rawal of deposits 2.6 Payment of interest on overdue FCNR(B) deposits 2.7 Advances against FCNR(B) deposits - Manner of charging interest 2.8 Restrictions on advances against FCNR(B) deposits - Quantum of loans 2.9 Margin on advance against term deposit 2.10 Interest payable on the deposit of a deceased depositor 2.11 Addition or deletion of name/s of joint account holders 2.12 Payment of interest on FCNR(B) deposits of NRIs on return to India 2.13 Conversion of FCNR(B) Accounts of the returning Indians into RFC Account - Waiver of penalty 2.14 Conversion of FCNR(B) Accounts of the returning Indians into RFC Accounts/Resident Rupee Accounts- Payment of interest 2.15 Payment of interest on term deposit maturing on Saturday/ Sunday/holiday/non-business working day 2.16 Prohibitions Annex 1 - Interest rates on deposits under FCNR (B) Scheme Annex 2- List of circulars consolidated 1 DBOD - MC on deposits held in FCNR(B) Accounts - 2009 1. INTRODUCTION 1.1 The Foreign Currency Non-Resident (FCNR(B)) scheme was introduced with effect from May 15, 1993 to replace the then prevailing FCNR(A) scheme introduced in 1975, where the foreign exchan....
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....such rates were indicated by FEDAI for the last working day of February, 2006. 1.4 A commercial bank which is an Authorised Dealer in foreign exchange should not pay interest on deposits of money accepted by it or renewed by it under the Foreign Currency (Non-Resident) Accounts (Banks) Scheme, which came into force from May 15, 1993, except in accordance with the rates as specified in Annex 1 hereto and on the terms and conditions specified in the guidelines given below. 2 DBOD - MC on deposits held in FCNR(B) Accounts - 2009 2. GUIDELINES 2.1 Definition of the term "Deposit" The deposits under the Scheme mean "term deposits" received by the bank for a fixed period and withdrawable only after the expiry of the said fixed period and includes Reinvestment Deposits and Cash Certificates or other deposits of similar nature. 2.2 Other important features of the Scheme (i) The Scheme covers deposits in Pound Sterling, US Dollar, Canadian Dollar, Australian Dollar, EURO and Japanese Yen from non-resident individuals of Indian nationality or origin (NRIs). Note a) The facility of opening and maintaining FCNR(B) Accounts by Overseas Corporate Bodies such as oversea....
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....any other member or members of his/her family, or ii) the spouse of a deceased member or a deceased retired member of the bank's staff, a bank may, at its discretion, allow additional interest at a rate not exceeding one per cent per annum over and above the rate of interest prescribed by the bank subject to the following conditions: a) The depositor or all depositors of a joint account is/are non- resident/s of Indian nationality or origin, and; b) The bank should obtain a declaration from the depositor concerned that the moneys so deposited or which may, from time to time, be deposited, shall be moneys belonging to the depositor, as stated in clauses (i) or (ii) above. iii) The rate fixed by the bank for deposits of staff members, existing or retired, should not exceed the ceiling rate prescribed by RBI (please refer to para (a) of Annex 1). Explanation 'Family' means and includes the spouse of the member/retired member of the bank's staff, his/her children, parents, brothers and sisters who are dependent on such a member/retired member but does not include a legally separated spouse. 2.5 Premature withdrawal of deposits (i) Banks on request from the de....
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....roprietor of a proprietary concern and the advance is made to such a concern; d) a ward whose guardian is competent to borrow on behalf of the ward, and where the advance is made to the guardian of the ward in such capacity; a bank would be free to charge a rate of interest without reference to its own Benchmark Prime Lending Rate (BPLR). A bank, at its discretion, may charge a rate of interest less than what was prescribed above in the case of advances up to Rs.3 lakh, when converted 5 DBOD - MC on deposits held in FCNR(B) Accounts - 2009 notionally in Rupees at the time of granting advance, to a member or a retired member of the bank's staff or the spouse of a deceased member/retired member of the bank's staff against his/her term deposit specified in paragraph 2.4 above. (ii) When an advance is granted against a term deposit, which is not in the nature of sub-clause (i) above; a) a bank would be free to charge a rate of interest without reference to the Benchmark Prime Lending Rate, provided the advance is up to Rs. 2 lakh, and b) if the advance exceeds Rs.2 lakh, the bank should charge interest at the rate prescribed in terms of Reserve Bank of India'....
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.... on the maturity of the deposit; b) in the event of the payment of the deposit being claimed before the maturity date, the bank should pay interest at an applicable rate prevailing on the date of placement of the deposit, without charging penalty; c) in the event of death of the depositor before the date of maturity of the deposit and the amount of the deposit being claimed after the date of maturity, the bank should pay interest at the contracted rate till the date of maturity. From the date of maturity to the date of payment, the bank should pay simple interest at the applicable rate operative on the date of maturity, for the period for which the deposit remained with the bank beyond the date of maturity. However, in the case of death of the depositor after the date of maturity of the deposit, the bank should pay interest at a rate operative on the date of maturity in respect of savings deposits held under RFC Account Scheme, from the date of maturity till the date of payment; d) if, on request from the claimant/s, the bank agrees to split the amount of term deposit and issues two or more receipts individually in the name/s of the claimant/s, it should not be construed a....
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....mature conversion of balances held in FCNR(B) deposits into Resident Foreign Currency Accounts by Non-Resident Indians on their return to India. 2.14 Conversion of FCNR(B) Accounts of Returning Indians into RFC Accounts/Resident Rupee Accounts- Payment of interest A bank should pay interest at its discretion at the time of conversion of FCNR(B) Account into RFC/Resident Rupee Account even if the same has not run for a minimum maturity period, subject to the condition that the rate of interest should not exceed the rate payable on savings bank deposits held under RFC Account Scheme. 2.15 Payment of interest on term deposit maturing on Saturday/Sunday/ holiday/non-business working day In case of reinvestment deposits, banks should pay interest for the intervening Saturday/Sunday/holiday/non-business working day on the maturity value. However, in the case of ordinary term deposits, the interest for the intervening Saturday/Sunday/holiday/non-business working day should be paid on the original principal amount. 2.16 Prohibitions No bank should: i) accept or renew a deposit over five years; ii) discriminate in the matter of rate of interest paid on the deposits, ....