What changed
Previously, only demand drafts or bankers' cheques issued against foreign currency encashment could be credited to NRE accounts. This circular extends the facility to include account payee cheques as well, subject to the same supporting encashment certificate requirement.
What it means for you
Banks can now process NRE account credits more flexibly, accepting account payee cheques alongside existing instruments. This reduces friction for NRIs converting foreign currency, as they can use a broader range of instruments. Banks should bring the contents of this circular to the notice of their constituents.
What you must do
- Update internal guidelines to allow crediting of account payee cheques to NRE accounts when supported by an encashment certificate.
- Train staff on verifying encashment certificates from AD Category-I or Category-II banks for such cheques.
- Communicate this change to NRI customers and relevant branches to ensure smooth processing.
Who it affects
AD Category-I banks, Authorised banks, NRI account holders with NRE accounts
What instruments can now be credited to NRE accounts under this circular?
In addition to demand drafts and bankers' cheques, account payee cheques issued against foreign currency encashment can now be credited, provided an encashment certificate from an AD Category-I or Category-II bank is presented.
Is an encashment certificate still required for these new instruments?
Yes, the circular explicitly states that the account payee cheque must be supported by an encashment certificate issued by an AD Category-I or Category-II bank.