TaxTMI 
TaxTMI 
Master Direction - Deposits and Accounts (Updated as on June 29, 2026)
X X X X Extracts X X X X
X X X X Extracts X X X X
....016 issued vide ^2Notification No. FEMA 5(R)/2016-RB dated April 1, 2016. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. 2. To operationalize the Regulations as may be necessary, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. 3. Instructions issued on maintenance of deposits and accounts under the Foreign Exchange Management Act, 1999 have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix, which continue to remain in force. Reporting instructions can be found in Master Directions on reporting (Master Direction No. 18 dated January 1, 2016) 4. The present amendment in this Master Direction is aimed at consolidating the directions pertaining to Vostro accounts of non-resident banks hitherto contained in Part B and paragraph A.(x) of Part E of Master Direction - Risk Management and Inter-Bank Dealings (FMRD Master Direction No. 1/2016-17 dated July 5, 2016, as amended from ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....below: 2.1 'Authorised Dealer' (AD) means a person authorised as an authorised dealer under sub-section (1) of section 10 of FEMA. 2.2 'Foreign Currency Account' means an account held or maintained in currency other than the currency of India or Nepal or Bhutan. 2.3 'Relative' is a person as defined in ^5section 2(77) of the Companies Act, 2013. ^62.4 A 'Startup' is an entity which complies with the conditions laid down in Notification No. GSR 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. 3. Foreign Currency Accounts that can be held in India 3.1 Exchange Earner's Foreign Currency (EEFC) Account - EEFC Account A person resident in India may open an EEFC account with an AD in India as per the conditions stipulated in Schedule I to FEMA 10(R). The salient features of the scheme are: 1) Credits: The credits permitted to this account are: • 100 percent of the foreign exchange earnings by way of inward remittance through normal banking channel, (other than loans or investments); • payments received for the purpose of counter trade; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. 7) Fund-based/ non-fund based credit facilities should not be granted against the balances held in EEFC Accounts. 8) Exporters can repay packing credit advances, whether availed of in Rupee or in foreign currency, from balances in their EEFC account to the extent exports have actually taken place. 9) Balances held in the account may be credited to NRE/ FCNR (B) Accounts, at the option/ request of the account holders consequent upon change of their residential status from resident to non-resident. 3.2 Resident Foreign Currency (RFC) Account - RFC Account 1) A person resident in India is permitted to open a RFC account with an AD bank in India out of foreign exchange received or acquired by him: • as pension or superannuation benefits or other monetary benefits from his overseas employer; • by converting assets which were acquired by him when he was a non-resident or inherited from or gifted by a person resident outs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder RBI Notification No.FEMA.11(R)/ 2015-RB dated December 29, 2015, as amended from time to time. 3) The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. 4) Balances in the account can be used for any current or capital account transactions in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 or the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, respectively. 5) Balances may be credited to NRE/ FCNR (B) Accounts, at the option/ request of the account holders consequent upon change of their residential status from resident to non-resident. 3.4 Diamond Dollar Account (DDA) Scheme - DDA Account Firms and companies which comply with the eligibility criteria stipulated in the Foreign Trade Policy of the Government of India may open DDA accounts, details of which are laid down in Schedule II of FEMA 10(R), as amended from time to time, with an AD in India. The salient featu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under which the project has been sanctioned, specifically provides for payment in foreign currency, 3) Each Project has only one Foreign Currency Account. 4) Debits: a. Payment of project related expenditure. 5) Credits: a. Foreign currency receipts from the Project Sanctioning Authority, and b. Remittances from parent/ Group Company abroad or bilateral/ multilateral international financing agency. 6) The Foreign Currency account should be closed at the completion of the Project. 7) Inter-project transfer of funds will be permitted with the prior permission of the Regional Office of the Reserve Bank under whose jurisdiction the project office is situated. 8) In case of disputes between the Project Office and the project sanctioning authority or other Government/ Non-Government agencies etc., the balance held in such account shall be converted into INR and credited to a special account which shall be dealt with as per the settlement of the dispute. 3.8 Organisers of international Seminars, Conferences, Conventions, etc. - can open temporary foreign currency accounts in India subject to the following conditions: • Credits: All inward remitta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on-debt Instruments) Rules, 2019 dated October 17, 2019, as amended from time to time, may open and maintain a foreign currency account with an Authorized Dealer in India provided the Indian investee company has impending foreign currency expenditure and the account is closed immediately after the requirements are completed or within six months from the date of opening of such account, whichever is earlier. ^133.12 Re-insurance and Composite Insurance brokers registered with Insurance Regulatory and Development Authority of India (IRDA) may open and maintain non-interest bearing foreign currency accounts with an AD bank in India for the purpose of undertaking transactions in the ordinary course of their business. 4. Foreign Currency Accounts that can be held outside India 4.1 The following persons can open a foreign currency account with a bank outside India for carrying on normal business and incidental transactions. • An authorized dealer in India with its branch/ head office/ correspondent outside India. • A branch outside India of a bank incorporated in India. • An Indian shipping or airline company. • ^14Insurance/ r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of sending remittances under the Liberalized Remittance Scheme. 4.8 Subject to compliance with the conditions in regard to raising of External Commercial Borrowings (ECB) or raising of resources through American Depository Receipts (ADRs) or Global Depository Receipts (GDRs), the funds so raised may, pending their utilisation or repatriation to India, be held in deposits in foreign currency accounts with a bank outside India. ^174.9 Indian startup, having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of crediting to the account the foreign exchange earnings out of exports/ sales made by the said startup or its overseas subsidiary. The balances held in such accounts, to the extent they represent exports from India, shall be repatriated to India within the period prescribed for realization of exports, in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016, as amended from time to time. ^184.10 A person resident in India, being an exporter, may open, hold and maintain a Foreign Currency Account with a bank outside India, for realisation of full export value and advance r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to restrict, regulate and prohibit the maintenance of deposits between a person resident in India and a person resident outside India. These regulations are notified under ^20 Notification No. FEMA 5(R)/2016-RB of April 1, 2016, (FEMA 5(R)) as amended from time to time. 2. Definitions Some key terms used in the regulations are given below: 2.1 'Authorised Bank' is a bank including a co-operative bank authorised by the Reserve Bank to maintain an account of a person resident outside India. 2.2 'Authorised Dealer' is a person authorised as an authorised dealer under sub-section (1) of section 10 of FEMA. 2.3 'Deposit' includes deposit of money with a bank, company, proprietary concern, partnership firm, corporate body, trust or any other person. 2.3 (a) ^21International Financial Services Centre' or 'IFSC' shall have the same meaning as assigned to it in clause (g) of section 3 of the International Financial Services Centres Authority Act, 2019 (50 of 2019). 2.4 ^22A 'Non-resident Indian' (NRI) is a person resident outside India who is a citizen of Ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lomatic staff, may also be held in the form of savings account; • The rate of interest on savings or term deposits shall be such as may be determined by the authorised dealer maintaining the account; • The funds in the account may be repatriated outside India without the approval of Reserve Bank. 3.3 Deposits with Authorized Dealer maintained in rupees by persons resident in Nepal and Bhutan. 3.4 Deposits with authorized dealer maintained by any multilateral organization and its subsidiary/ affiliate bodies and officials in India, of which India is a member nation. 4. Non-Resident (External) Rupee Account Scheme - (NRE Account): The detailed instructions for opening and maintaining this account are laid down in Schedule 1 to Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time. The salient features of the scheme are given below: 4.1 Non-resident Indians (NRIs) and Person of Indian Origin (PIOs) are permitted to open and maintain these accounts with authorised dealers and with banks (including cooperative banks) authorised by the Reserve Bank to maintain such accounts. 4.2 The accounts may be maintained in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n exchange consideration for the non-resident depositor agreeing to pledge his deposits to enable the resident individual/ firm/ company to obtain such facilities. In case of the loan sanctioned to the account holder, it can be repaid either by adjusting the deposits or through inward remittances from outside India through banking channels or out of balances held in the NRO account of the account holder. 4.8.2 Authorised Dealers may allow their branches/ correspondents outside India to grant loans to or in favour of non-resident depositor or to third parties at the request of depositor for bona fide purpose against the security of funds held in the NRE accounts in India and also agree for remittance of the funds from India, if necessary, for liquidation of the outstanding. 4.8.3 The facility for premature withdrawal of deposits will not be available where loans against such deposits are availed of. 4.8.4 The term "loan" shall include all types of fund based/ non-fund based facilities. 4.9 NRE accounts should be designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts, at the option of the account holder, immediately u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as credits/debits, joint accounts, loans / overdrafts, operation by power of attorney etc., as applicable to an NRE account will be applicable to FCNR (B) account as well. 5.4 The rate of interest and tenor applicable to these accounts will be in accordance with the directions/ instructions issued by the Department of Banking Regulation, Reserve Bank of India. 6. Non-Resident (Ordinary) Account Scheme - NRO account The detailed instructions for opening and maintaining this account are laid down in Schedule 3 to Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time. The salient features of the scheme are given below: 6.1 Any person resident outside India (as per Section 2 (w) of FEMA), may open and maintain NRO account with an Authorised Dealer or an Authorised Bank for the purpose of putting through bona fide transactions denominated in Indian Rupees. 6.2 Post Offices in India may maintain savings bank accounts in the names of persons resident outside India and allow operations on these accounts subject to the same terms and conditions as are applicable to NRO accounts maintained with an authorised dealer/ authorised bank. 6.3 NRO ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is being maintained. The Head Office of the AD bank shall furnish the above details on a quarterly basis to the Under Secretary (Foreigners), Ministry of Home Affairs, NDCC-II Building, Jai Singh Road, New Delhi - 110 001. AD banks are advised to ensure strict compliance to these instructions. 6.5 The accounts may be maintained in any form, e.g. savings, current, recurring or fixed deposit account. 6.6 The accounts may be held jointly with residents ^29on 'former of survivor' basis. NRIs and PIOs may hold an NRO account jointly with other NRIs and PIOs. 6.7 Inward remittances from outside India, legitimate dues in India ^30and transfers from other NRO accounts are permissible credits to NRO account. Rupee gift/ loan made by a resident to a NRI/PIO relative within the limits prescribed under the Liberalised Remittance Scheme may be credited to the latter's NRO account. 6.8 The account can be debited for the purpose of local payments, ^31transfers to other NRO accounts, or remittance of current income abroad. Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to conditions specified in Foreign Ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... - The remittances (net of applicable taxes) will be allowed to be made by the Authorised Dealer banks on production of requisite information in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India from time to time. Reserve Bank of India will not issue any instructions under FEMA, clarifying tax issues. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of tax laws, as applicable. 7. Special Non-Resident Rupee Account - SNRR account ^347.1 ^35A person resident outside India may open a Special Non-Resident Rupee Account (SNRR account), with an authorised dealer in India or its branch outside India (including in an IFSC in India), for the purpose of putting through permissible current and capital account transactions with a person resident in India in accordance with the rules and regulations framed under the Act, and for putting through any bona fide transaction with a person resident outside India. 7.2 ^36 ^37 ^38 7.3 ^39 7.4 ^40 7.5 ^41 ^42 ^43. 7.6 The operations in the SNRR account shall not result in the account holder making available foreign exchange to any person reside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eptance of deposits by Indian proprietorship concern/ firm or a company from NRIs or PIOs on non-repatriation basis 10.1 An Indian proprietorship concern/ firm or a company (including Non-Banking Finance Company) registered with Reserve Bank can accept deposits from NRIs or PIOs on non-repatriation basis subject to the terms and conditions specified in Schedule 7 to ^54Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time. 10.2^55 11. ^56Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director Keeping deposits with an Indian company by persons resident outside India, in accordance with section 160 of the Companies Act, 2013, is a current account (payment) transaction and, as such, does not require any approval from Reserve Bank. All refunds of such deposits, arising in the event of selection of the person as director or getting more than twenty five percent votes, shall be treated similarly. 12. Other Accounts / Deposits ^5712.1 A deposit made by an Authorised Dealer with its branch, head office or correspondent outside India, and a deposit made by a branch or correspondent outside I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent (Deposit) Regulations, 2016 is permitted. 15. Responsibility of authorised dealers maintaining foreign currency accounts:- An authorised dealer maintaining accounts under this Master Direction is required to: a) comply with the directions issued by the Reserve Bank from time to time; and b) submit periodic return or statement, if any, as may be stipulated by the Reserve Bank. ^62Part III- Provisions pertaining to Vostro Accounts 1. Rupee Vostro Accounts of Banks AD Category-I banks may open/close Rupee accounts (non-interest bearing) in the name of their overseas branches or correspondents without prior reference to the Reserve Bank. Opening of Rupee accounts in the name of branches of Pakistani banks operating outside Pakistan requires specific approval of the Reserve Bank. (i) Credit to the account of a non-resident bank is a permitted method of payment to non-residents and is, therefore, subject to the regulations applicable to transfers in foreign currency. (ii) Debit to the account of a non-resident bank is in effect an inward remittance in foreign currency. 1.1 Funding of Accounts of Non-resident Banks (i) AD Category I banks may freely pu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r value dating. (ii) AD Category-I bank wishing to extend any other credit facility in excess of that mentioned at (i) above to overseas banks should seek prior approval from the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Central Office. 1.7 Reports to the Reserve Bank The Head/Principal Office of each AD Category-I banks should furnish an up-to-date list of all its offices/branches, which are maintaining Rupee accounts of non-resident banks as at the end of December every year giving their code numbers allotted by Reserve Bank through CIMS by 15th January of the following year. The offices/branches should be classified according to area of jurisdiction of Reserve Bank Offices within which they are situated. 2. Special Rupee Vostro Account for Banks AD Category-I banks may also open Special Rupee Vostro Accounts of correspondent bank/s for settlement of trade transactions of the partner trading country. The detailed instructions are consolidated in FED Master Direction No. 16/2015-16 dated January 01, 2016, on export of goods and services, as amended from time to time. 3. Rupee Vostro Accounts of Exchange Houses Opening....
X X X X Extracts X X X X
X X X X Extracts X X X X
....April 1, 2016. ^3 Updated up to April 12, 2019 (cf. AP (DIR Series) circular No 29 dated April 11, 2019). The Original Master Direction No. 14/2015-16 was issued on January 1, 2016. ^4 FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 was repealed and replaced by FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 with effect from January 21, 2016. ^5 Inserted by FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as "section 6 of the Companies Act, 1956". ^6 Inserted by Amendment Notification No. FEMA 10(R)/(1)/2016-RB notified vide G.S.R.No.570(E) dated June 1, 2016 intimated vide AP (Dir Series) Circular No. 77[(2)/10(R)] dated June 23, 2016. ^7 Inserted by FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as "ADR/GDR Scheme approved by the Government of India." ^8 Inserted by Amendment Notification No. FEMA 10(R)/(1)/2016-RB notified vide G.S.R.No.570(E) dated June 1, 2016 intimated vide AP (Dir Series) Circular No. 77[(2)/1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of receipt of the funds after adjusting for forward commitments, provided that the realisation and repatriation requirements as specified in Regulation 9 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 are also met.' ^19 Inserted by FEM (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 with effect from January 21, 2016. ^20 FEM (Deposit) Regulations, 2000 was repealed and replaced by FEM (Deposit) Regulations, 2016 with effect from April 1, 2016. ^21 Inserted vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026. ^22 Inserted by AP (DIR Series) circular No 67/2015-16/ [(1)/5(R)] dated May 5, 2016 vide FEMA Notification No. 5(R)/2016-RB dated April 1, 2016. Prior to insertion it read as, "A 'Non-resident Indian' (NRI) is a person resident outside India who is a citizen of India or is a 'Person of Indian Origin'." ^23 Inserted by AP (DIR Series) circular No 67/2015-16/ [(1)/5(R)] dated May 5, 2016 vide FEMA Notification No. 5(R)/2016-RB dated April 1, 2016. Prior to insertion it read as "Person of Indian Origin' (PIO) means a citizen of any country other than Bangladesh or Pakistan who had (a) at any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 5(R)/2016-RB dated April 1, 2016. ^32 FEM (Remittance of Assets) Regulations, 2000 repealed and replaced by FEM (Remittance of Assets) Regulations, 2016 vide FEMA Notification No. 13(R)/2016-RB dated April 1, 2016. ^33 Inserted vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026. ^34 Modified vide Notification No. FEMA 5(R)(5)/2025-RB dated January 15, 2025 Prior to modification it read as "Any person resident outside India, having a business interest in India, may open a Special Non-Resident Rupee Account (SNRR account) with an authorised dealer for the purpose of putting through bona fide transactions in rupees, not involving any violation of the provisions of the Act, rules and regulations made thereunder. The business interest, apart from generic business interest, shall include the following INR transactions, namely: • Investments made in India in accordance with Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 dated October 17, 2019 and Foreign Exchange Management (Debt Instruments) Regulations, 2019 notified vide Notification No. FEMA 396/2019-RB dated October 17, 2019, as applicable and as amended from time to time. â....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de Notification No. FEMA 5(R)(5)/2025-RB dated January 15, 2025. Prior to modification it read as "Indian". ^38 Deleted vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026. Prior to deletion, it read as "The SNRR account shall carry the nomenclature of the specific business for which it is in operation and shall not earn any interest. A bank may, at its discretion, maintain separate SNRR account for each category of transactions or a single SNRR Account for a person resident outside India engaged in multiple categories of transactions provided it is able to identify/segregate and account them category-wise." ^39 Deleted vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026. Prior to deletion, it read as "The debits/ credits and the balances in the account shall be incidental and commensurate with the business operations of the account holder." ^40 Deleted vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026. Prior to deletion, it read as "Authorised Dealers shall ensure that all the operations in the SNRR account are in accordance with the provisions of the Act, rules and regulations made thereunder." ^41 Modified vide Foreign Exchange Mana....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a person resident Outside India) Regulations, 2017 has been superseded by Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 issued by Government on October 17, 2019 ^53 FEM (Deposit) Regulations, 2000 repealed and replaced by FEM (Deposit) Regulations, 2016 vide FEMA Notification No. 5(R)/2016-RB dated April 1, 2016. ^54 FEM (Deposit) Regulations, 2000 repealed and replaced by FEM (Deposit) Regulations, 2016 vide FEMA Notification No. 5(R)/2016-RB dated April 1, 2016. ^55 Deleted vide Notification No. FEMA 5(R)(2)/2019-RB dated July 16, 2019 read with AP (DIR Series) Circular No. 06 dated August 16, 2019. Prior to deletion, it read as, "Indian companies can accept deposits from NRIs or PIOs by issue of a commercial paper subject to terms and conditions specified in sub-Regulation (3) of Regulation 6 of Notification No FEMA 5(R)/ 2016-RB dated April 1, 2016." ^56 Inserted vide AP (DIR Series) Circular No. 59 dated April 13, 2016. Accordingly, existing paras 11, 12 and 13 re-numbered as 12, 13 and 14, respectively. ^57 Inserted by AP (DIR Series) circular No 67/2015-16/ [(1)/5(R)] dated May 5, 2016. ^58 Inserted by Inserted by AP (DIR Series) circular N....