Foreign Currency Accounts for Residents & Other Aspects

A. Permitted Credits

• →100% foreign exchange earnings by inward remittance through normal banking channels (other than loans or investments).
• →Payments received for counter trade.
• →Advance remittance received towards export of goods or services.
• →Professional earnings (director's fees, consultancy fees, lecture fees, honorarium and similar) received by a professional rendering services in individual capacity.
• →Interest earned on funds held in the account.
• →Re-credit of unutilised foreign currency earlier withdrawn from the account.
• →Disinvestment proceeds on conversion of shares held by the resident to ADRs/GDRs.
• →Repayment of trade-related loans/advances (granted to the account holder's importer customer).
• →Foreign exchange received by Indian startups from their overseas subsidiaries.

B. Permitted Debits

• →Payment outside India for capital or current account transactions.
• →Payment of customs duty as per Export Import Policy.
• →Payment in FX for goods purchased from a 100% EOU or a unit in EPZ/STP/EHTP.
• →Trade-related loans/advances by an exporter account holder to his importer customer outside India.
• →Payment in foreign exchange to a person resident in India for supply of goods/services (including air fare and hotel expenditure).

C. Other Conditions

• →Withdrawal in rupees is permitted — but the withdrawn amount CANNOT be re-credited.
• →Claims settled in rupees by ECGC/insurance companies cannot be credited.
• →NON-INTEREST BEARING account.
• →Fund-based or non-fund-based credit facilities must NOT be granted against these balances.
• →Can be used to repay packing credit advances (in any currency) up to actual exports made.
• →Balance converted to INR by the last day of the succeeding calendar month after adjusting for utilisation and forward commitments.

A. Permitted Credits (Sources)

• →Pension or superannuation benefits, or other monetary benefits from an overseas employer.
• →Foreign exchange held outside India before July 8, 1947, or income arising/accruing thereon (with RBI permission).
• →By converting assets acquired as a non-resident, or inherited from / gifted by a person resident outside India, and repatriated to India.
• →Proceeds of LIC claims/maturity/surrendered value settled in forex from an Indian insurance company.

B. Debits & Other Conditions

• →Balance can be FULLY UTILISED outside India, or converted to Indian Rupee at any time.
• →Can have a resident relative as joint holder on 'former or survivor' basis — the joint holder CANNOT operate the account during the account holder's lifetime.
• →Balances in NRE/FCNR(B) accounts can be credited to the RFC account when the NRI/PIO's residential status changes to 'Resident'.
• →No mandatory monthly conversion rule (unlike EEFC, RFC(D), and DDA).

Persons Prohibited from Accepting Foreign Contribution

• 1.Candidate for election
• 2.Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper
• 3.Public servant, Judge, Government servant or employee of any government-owned/controlled corporation
• 4.Member of any Legislature
• 5.Political party or office bearers thereof
• 6.Organisations of a political nature as specified by the Central Government
• 7.Associations or companies engaged in production/broadcast of audio/audio-visual news or current affairs programmes
• 8.Correspondent or columnist, cartoonist, editor, owner of such associations/companies

Foreign Hospitality — Persons Who Need Prior Government Permission

The following persons cannot accept foreign hospitality without prior permission of the Central Government:

• →A member of a Legislature
• →A Judge
• →An office-bearer of a political party
• →A Government servant
• →An employee of any corporation or body owned or controlled by the Government

FCRA Account — Banking Channel Rules

• →Foreign contribution MUST be received in an account designated as 'FCRA Account' at New Delhi Main Branch of State Bank of India (SBI) — effective September 2020.
• →The person may open one or more accounts in other scheduled banks for utilising the foreign contribution transferred from the SBI FCRA Account.
• →No funds other than foreign contribution shall be received or deposited in any such account.
• →Reporting by banks: SBI NDMB or the scheduled bank where the FCRA account is held must report to the specified authority the amount, source, and manner of foreign remittance.
• →Bank reporting deadline: 48 HOURS for every transaction in respect of receipt or utilisation of foreign contribution — irrespective of the amount.
• →Banks must submit online reports through the software developed by Ministry of Home Affairs (MHA), Government of India.

Transfer & Utilisation Restrictions

• →Transfer prohibited: A person who received foreign contribution cannot transfer it to any other person — unless that other person is also registered or has prior permission under FCRA.
• →Utilisation: Foreign contribution must be used ONLY for the purpose for which it was received.
• →No speculative use: Foreign contribution (or any income from it) cannot be used for speculative purposes.
• →Administrative expense restriction: Use of foreign contribution for defraying administrative expenses is restricted.
• →Suspension: A person whose certificate is suspended must not receive any foreign contribution without specific CG permission, and must utilise existing funds only with prior CG approval.
• →Unutilised balance on cancellation: Vests with the banking authority until Central Government issues directions.

Disclosure Requirements (Rule 13)