What changed
RBI issued Master Circular No. 05/2008-09 consolidating all existing instructions on miscellaneous remittances from India for residents into a single document. The circular includes a sunset clause, meaning it will stand withdrawn on July 1, 2009, and be replaced by an updated version. It also clarifies that drawal of foreign exchange includes use of International Credit Cards, Debit Cards, and ATM cards.
What it means for you
For banks and authorised dealers, this circular simplifies compliance by bringing all relevant instructions under one roof, reducing the need to refer to multiple circulars. It reinforces the delegation of approval for Schedule III transactions up to specified thresholds, streamlining processing for common remittance requests. The sunset clause signals RBI's intent to regularly update the framework, so banks must stay alert for the replacement circular.
What you must do
- Familiarise your forex team with the consolidated instructions in this master circular for resident remittances.
- Ensure compliance with Schedule I prohibitions, Schedule II approvals, and Schedule III thresholds for current account transactions.
- Update internal processes to treat International Credit Cards, Debit Cards, and ATM cards as 'drawal' of foreign exchange under FEMA rules.
- Prepare to transition to the updated master circular expected by July 1, 2009, and monitor RBI notifications for its release.
Who it affects
All Authorised Persons in Foreign Exchange (banks and Category-II dealers), Resident individuals seeking remittances for current account transactions
What is the sunset clause in this master circular?
The circular includes a sunset clause of one year, meaning it will automatically stand withdrawn on July 1, 2009, and be replaced by an updated master circular on the same subject.
Does the use of international credit cards fall under these remittance rules?
Yes, the circular clarifies that 'drawal' of foreign exchange includes use of International Credit Cards, Debit Cards, and ATM cards, and all FEMA rules apply to their use.
What transactions require prior RBI approval under this circular?
Transactions listed in Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 require prior RBI approval if the remittance exceeds the specified threshold values. For amounts up to those thresholds, Authorised Dealers can approve them.