What changed
RBI issued Master Circular No.9/2004-05 on March 19, 2005, consolidating 12 earlier circulars and 2 notifications on NRO accounts into a single document. The circular includes a sunset clause, meaning it will be withdrawn on July 1, 2005 and replaced by an updated version, as recommended by the Tarapore Committee.
What it means for you
Banks now have a single reference for all NRO account rules, reducing confusion from multiple circulars. The sunset clause ensures regular updates, keeping regulations current. Banks must ensure compliance with DBOD interest rate guidelines and handle Bangladesh/Pakistan nationals with prior RBI approval.
What you must do
- Update internal NRO account policies to align with this consolidated Master Circular.
- Ensure all NRO accounts comply with permissible credits/debits, including Currency Declaration Form for cash over USD 5,000.
- Verify that interest rates on NRO accounts follow DBOD directives.
- Seek prior RBI approval before opening NRO accounts for individuals/entities from Bangladesh or Pakistan.
- Prepare for the sunset clause by planning to adopt the updated circular after July 1, 2005.
Who it affects
All Authorised Dealers in Foreign Exchange, Authorised banks handling NRO accounts, Non-resident Indians (NRIs) and persons of Indian origin, Foreign nationals of non-Indian origin visiting India, Individuals/entities from Bangladesh and Pakistan
What is the sunset clause in this Master Circular?
The circular will stand withdrawn on July 1, 2005 and be replaced by an updated version, as recommended by the Tarapore Committee on Procedures and Performance Audit on Public Services.
Can a Bangladesh or Pakistan national open an NRO account without RBI approval?
No, opening NRO accounts by individuals or entities of Bangladesh or Pakistan nationality/ownership requires prior approval from the Reserve Bank of India.
What documentation is needed for cash deposits over USD 5,000 in an NRO account?
Foreign currency cash exceeding USD 5,000 or its equivalent must be supported by a Currency Declaration Form. Rupee funds from outside India need an Encashment Certificate.