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
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.