What changed
RBI confirmed that IDCs and Store Value Cards are treated like other forex instruments under FEMA. The circular explicitly bars using IDCs for prohibited items like lottery tickets or call-back services. It also introduced an annual reporting requirement for IDC usage above USD 100,000.
What it means for you
Banks must ensure IDC and Store Value Card usage complies with current account transaction limits and prohibitions. The reporting threshold of USD 100,000 per IDC holder per year adds a compliance burden on AD banks. This circular aligns card-based forex usage with existing FEMA rules, closing potential loopholes.
What you must do
- Update internal policies to restrict IDC and Store Value Card usage to permissible current account transactions only.
- Implement monitoring systems to track aggregate forex utilization per IDC holder and trigger reporting when it exceeds USD 100,000 in a calendar year.
- Submit the prescribed proforma statement to Chief General Manager, Foreign Exchange Department, External Payments Division, Central Office, Mumbai- 400 001 by January 20 each year for qualifying IDC holders.
- Brief customers on prohibited uses (e.g., lottery, banned magazines) and applicable FEMA limits.
Who it affects
All Authorised Dealer (AD) banks issuing International Debit Cards, Banks issuing Store Value Cards, Charge Cards, or Smart Cards for overseas use (no reporting requirement), Resident Indians traveling abroad using these cards
What transactions are prohibited on International Debit Cards?
IDCs cannot be used for prohibited items like lottery tickets, banned magazines, sweepstakes, or call-back services—any activity where forex drawal is not permitted under FEMA.
When must banks report high-usage IDC holders?
If a cardholder's total forex usage exceeds USD 100,000 in a calendar year, banks must submit a statement as on December 31 to RBI by January 20 of the next year.
Do Store Value Cards need RBI approval before issuance?
No prior RBI permission is required to issue Store Value Cards, but their use is limited to permissible current account transactions and must follow FEMA limits.