TaxTMI 
TaxTMI 
Master Direction – Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses (Updated as on December 22, 2022)
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....hange business in compliance with the provisions of the Act and any rules, regulations, notifications, directions or orders made there under. 3. The directions relating to Opening and Maintenance of Rupee/ Foreign Currency Vostro Accounts of Non-resident Exchange Houses in India are being issued in a consolidated form through the Master Direction enclosed herewith. Reporting instructions can be found in Master Direction on Reporting. It may be noted that whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the rules, regulations, notifications, directions or orders or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/constituents. The Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (Vivek Srivastava) Chief General Manager Master Direction - Opening and Maintenance of Rupee/ Foreign Currency Vostro Accounts of Non-resident Exchange Houses 1. Introduction Cross-border inward remittances may also be received under Rupee Drawing Arrangements (RDAs) ....
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....egory-I banks and Exchange Houses under the Rupee Drawing Arrangement/ Foreign Currency Drawing Arrangement has been made optional. However, such arrangements should be subjected to comprehensive legal documentation and AD Category-I banks should take care of all necessary legal requirements in this regard. Further, it should be ensured that all the partners of the Exchange Houses are jointly and severally bound to honour the obligations devolving on the Exchange Houses under the agreement. (c) The normal banking requirements of registration of Power of Attorney/ specimen signatures of signing officials of the Exchange Houses should be observed. 3. Instructions regarding operations in the Rupee vostro accounts (a) The accounts can be used for channeling cross- border inward remittances into India primarily on private account. The remitter and the beneficiary should be individuals barring a few exceptions. Remittances through Exchange Houses for financing of trade transactions are permitted up to Rs.15,00,000 (Rupees fifteen lakhs only) per transaction. The accounts should not be used for cross-border outward remittances from India. (b) The a....
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....e Exchange House should not credit to the account, rupees purchased by the latter unless confirmation is received to the effect that the nostro account of the AD Category-I bank has been credited with the counter-value in foreign currency (cf. paragraph 3.3.1 of the Guidelines for Internal Control over Foreign Exchange Business, February, 2011). (h) AD Category-I banks may obtain suitable and adequate collateral either in the form of a cash deposit in any convertible foreign currency or guarantee of a bank of international repute, depending on the type of arrangement to take care of the credit and operational risks. They may frame their own policy in this regard^2. (i) A cap of 300 on the number of drawee branches has been prescribed by the Reserve Bank as a prudential measure. However, AD Category-I banks may designate drawee branches beyond 300, provided such branches are under the Core Banking Solution where on-line monitoring of funds position is ensured to avoid concealed overdrafts in vostro accounts, subject to the terms and conditions of Reserve Bank's approval for the tie-up with an Exchange House and the instructions pertaining to RDA issued by the ....
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....ssistance and Relief in Emergency Situations (PM-CARES) Fund subject to the condition that the remittances are directly credited to the Fund by the banks and the banks maintain full details of the remitters Note: No cash disbursement of remittances received is allowed under Rupee / Foreign Currency Drawing Arrangements. (c) Foreign inward remittances received by the AD Category-I Bank (termed as 'Partner Bank') having RDA with Non Resident Exchange Houses may be credited directly to the account of the beneficiary held with a bank other than the AD Category-I Bank (termed as 'Recipient Bank') through the following means: i. Electronic mode, such as, NEFT, IMPS, etc. ii. ^6Bharat Bill Payment System (BBPS) The above shall be subject to the following conditions: i. The Recipient Bank will credit the amount transferred by the Partner Bank only to the KYC compliant bank accounts. ii. In respect of the bank accounts which are not KYC compliant, the Recipient Bank shall carry out KYC/CDD of the recipient before the remittance to such account is credited or allowed to be withdrawn. iii. The Partner ....
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.... 1(a) above] on the next working day before noon. (c) The Exchange House will send to the drawee bank information about the total number and the aggregate value of drafts drawn and daily deposits in the DDA account. Transfer from the DDA account should be as frequently as possible and is subject to the stipulation as at 1(e) below. (d) The funds will be held in the DDA account under lien to the drawee bank. The only debits allowed from the DDA account will be (i) on account of transfer to the nostro account of the drawee bank where the DDA account is maintained with a bank other than the drawee bank, (ii) for crediting the Rupee vostro account of the Exchange House by selling permitted foreign currency to the drawee bank where the DDA account is maintained with the drawee bank. (e) It will be the responsibility of the Exchange House to arrange for the transfer of the sum collected on any particular day to the DDA account. The float period for the funds with DDA account will be decided by the drawee bank in consultation with the Exchange House subject to a maximum of five days. (f) The interest earned on the amount deposited by the Exchange H....
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....tegory-I banks should periodically review the arrangement by paying visits to the Exchange Houses and / or by periodical review of opinion reports. The visits of officials from AD Category-I banks should be at a sufficiently senior level, who are fully conversant with the conduct of the Non-resident Rupee Accounts of the Exchange Houses. (q) Collateral Cover for DDA: For Exchange Houses which have not completed three years of operation, collateral cover in cash deposit in any convertible foreign currency or guarantee from a bank of international repute equivalent to 7 days' projected drawings may be obtained. For Exchange Houses which have completed three years of successful operations, no collateral is prescribed. However, AD Category-I banks may secure their position by acquiring adequate collateral cover. Cash deposit in any convertible foreign currency or a guarantee from a bank of international repute equivalent to 15 days' estimated drawings may be obtained as collateral cover where it is not possible to appoint auditors as mentioned at 1(g) above. The deposit should be in the name of the AD Category-I bank with interest thereon at market related rates payable to the....
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....ly, the Exchange House should fund the Rupee account through the nostro account of the AD Category-I bank in advance before issuing payment instructions and on verification of data and availability of balances in the vostro account of the exchange house the AD Category-I bank issues drafts in favour of the beneficiary or credits the account of the beneficiary. ^8(iii) Where facility of speed remittance is extended to existing Rupee drawing arrangements, the Exchange House shall open a separate Rupee account with the prior approval of the Reserve Bank. However, where the operations in the existing Rupee drawing arrangements under DDA/ Non-DDA procedure are satisfactory, AD Category-I banks can extend the facility of speed remittance to the same Exchange House without prior approval of the Reserve Bank, subject to usual terms and conditions and after obtaining all the necessary documents from the Exchange House. However, the Reserve Bank should be informed in the matter immediately. ^9(b) The AD Category - I banks are free to determine the requirement of collateral, if any, based on factors such as whether the remittances are pre-funded....
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....basis of operations under this arrangement and if necessary the Exchange House should increase the quantum of the deposit. AD Category-I banks should allow interest on this deposit at an appropriate rate. (i) AD Category-I banks are allowed to keep the amount of deposit required to be kept under foreign currency draft drawing arrangements and Non-DDA procedure of Rupee Drawing Arrangement in India with the Account maintaining branch. 7. Miscellaneous Provisions (a) AD Category-I banks should adhere to the Know Your Customer (KYC)/ Anti Money Laundering (AML) / Combating the Financing of Terrorism (CFT) Guidelines issued by the Reserve Bank, while undertaking any transaction under Rupee/ Foreign Currency Drawing Arrangements, as applicable. (b) AD Category-I banks should include in their concurrent audit the Rupee/ Foreign Currency Drawing Arrangement to ensure that credit of funds to the vostro account of the Exchange House takes place before payments are made to the beneficiaries. (c) AD Category-I banks should undertake a 'due diligence' exercise in respect of remittances received through Rupee/ Foreign Currency Drawing Arrangements so....
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.... Direction on Opening and Maintenance of Rupee/ Foreign Currency Vostro Accounts of Non-resident Exchange Houses Sl. No. Notification/ Circular Date 1. A.P. (DIR Series) Circular No. 28 [ A.P.(FL/ RL Series) Circular No. 02] February 6, 2008 2. A.P. (DIR Series) Circular No.11 [ A.P.(FL/ RL Series) Circular No. 01] August 22, 2008 3. A.P. (DIR Series) Circular No.37 [A.P.(FL/ RL Series) Circular No. 02] December 2, 2008 4. A.P. (DIR Series) Circular No. 16 [ A.P.(FL/ RL Series) Circular No. 3] November 27, 2009 5. A.P. (DIR Series) Circular No. 09 [ A.P.(FL/ RL Series) Circular No. 01] August 29, 2011 6. A.P. (DIR Series) Circular No. 72 January 30, 2012 7. A.P. (DIR Series) Circular No. 81 January 24, 2013 8. A.P. (DIR Series) Circular No. 85 February 28, 2013 9. A.P. (DIR Series) Circular No. 88 January 9, 2014 10. A.P. (DIR Series) Circular No. 111 March 13, 2014 11. A.P. (DIR Series) Circular No. 120 April 10, 2014 12. A. P. (DIR Series) Circular No. 7 July 18, 2014 13. A. P. (DIR Series) Circular No. 35 October 9, 2014 1....