FCNR(B) Maturity Proceeds: Remittance to Third Parties Abroad Allowed
Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2006-2007/401 · issued 18 May 2007 · ~1 min read
Quick answerRBI now permits AD Category-I banks to remit FCNR(B) maturity proceeds to third parties outside India, provided the account holder specifically authorizes it and the bank is satisfied about the transaction's bonafides.
The rule, in the simplest words
Banks can now send the final money from an FCNR(B) account (a foreign-currency savings account for people living outside India) to a person or company in another country, not just back to the account holder.
The account holder must give clear permission in writing for the money to go to that third party.
The bank must check that the transaction is real and honest (bonafides) before sending the money.
This is a new rule—before, banks could only send FCNR(B) money like NRE accounts (rupee accounts for non-residents), which didn't allow sending to third parties abroad.
How it plays out — a real example
A forex & trade-finance officer in Mumbai receives a request from Mr. Patel, an FCNR(B) account holder, to send his deposit's maturity proceeds to his daughter studying in the UK. The officer asks Mr. Patel to sign a specific authorization form, then verifies the daughter's bank details and the purpose of the transfer (tuition fees). Satisfied it's genuine, the officer processes the remittance, following the new RBI rule.
What changed
Previously, FCNR(B) accounts followed NRE account rules for repatriation, which did not explicitly allow remittance of maturity proceeds to third parties abroad. This circular, based on the 2007-08 Annual Policy Statement, now permits such remittances if the account holder authorizes it and the bank verifies the transaction's genuineness.
What it means for you
Banks can now process remittances of FCNR(B) maturity proceeds to third parties outside India, expanding customer service options. This requires banks to implement robust verification processes to ensure the transaction is bonafide and specifically authorized by the account holder, reducing operational risk.
What you must do
Update internal policies and procedures to allow remittance of FCNR(B) maturity proceeds to third parties abroad.
Train staff to verify account holder authorization and assess bonafides of each transaction before processing.
Maintain clear documentation of customer authorization and due diligence for audit and compliance purposes.
Inform customers about this new facility through circulars or notices.
Who it affects
AD Category-I banks, Authorised banks, FCNR(B) deposit account holders
❓ Common questions
Can we remit FCNR(B) maturity proceeds to any third party abroad?
Yes, but only if the account holder specifically authorizes the transaction and your bank is satisfied about its bonafides. You must verify the authorization and ensure the transaction is genuine.
Do we need to amend our existing FEMA documentation for this?
RBI is separately notifying amendments to the Foreign Exchange Management (Deposit) Regulations, 2000. In the meantime, you can implement this change based on the circular, but ensure your internal policies align with the upcoming formal amendments.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/401
A.
P. (DIR Series) Circular No. 57
May
18, 2007
To,
All
Category - I Authorised Dealer banks and Authorised banks
Madam
/ Sir,
Foreign
Exchange Management (Deposit) Regulations, 2000-
Repatriation of maturity proceeds
of FCNR(B) deposits
Attention
of Authorised Dealer Category - I (AD Category – I) and authorised banks is invited
to paragraph 11 of Schedule 2 to Notification
No. FEMA 5/2000-RB dated May 3, 2000 , as amended from time to time, in terms
of which the terms and conditions as applicable to Non-Resident (External) Rupee
(NRE) accounts in respect of joint accounts, repatriation of funds, opening account
during temporary visit, operation by power of attorney, loans / overdrafts against
security of funds held in accounts, shall apply mutatis mutandis to Foreign Currency
(Non-Resident) Account (Banks) [FCNR (B) accounts].
2.
As announced in the Annual
Policy Statement for the year 2007-08 [para 146 (ii) (iii)], it has been decided
to allow AD Category – I banks and authorised banks to permit remittance of the
maturity proceeds of FCNR (B) deposits to third parties outside India, provided
the transaction is specifically authorised by the account holder and the authorised
dealer is satisfied about the bonafides of the transaction.
3. Necessary
amendments to Notification
No. FEMA 5/2000-RB dated May 3, 2000 , [Foreign Exchange Management (Deposit)
Regulations, 2000] are being notified separately.
4. AD
Category - I banks and authorised banks may bring the contents of the circular
to the notice of their constituents and customers concerned.
5. The
directions contained in this circular have been issued under Sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/401 · issued 18 May 2007. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Authorised banks, FCNR(B) deposit account holders), your first concrete step on “FCNR(B) Maturity Proceeds: Remittance to Third Parties Abroad Allowed” is: “Update internal policies and procedures to allow remittance of FCNR(B) maturity proceeds to third parties abroad.” (RBI issued this 18 May 2007).
Circular: RBI/2006-2007/401 -- FCNR(B) Maturity Proceeds: Remittance to Third Parties Abroad Allowed
Issued: 18 May 2007
Action required: Update internal policies and procedures to allow remittance of FCNR(B) maturity proceeds to third parties abroad.
Action required: Train staff to verify account holder authorization and assess bonafides of each transaction before processing.
Action required: Maintain clear documentation of customer authorization and due diligence for audit and compliance purposes.
Action required: Inform customers about this new facility through circulars or notices.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3525&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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