What changed
RBI issued Master Circular No. 02/2010-11 consolidating all existing instructions on remittance facilities for NRIs, PIOs, and foreign nationals into a single document. The circular includes a sunset clause of one year, meaning it will stand withdrawn on July 1, 2011, and be replaced by an updated version.
What it means for you
Banks must now refer to this master circular as the single source for remittance rules, replacing earlier scattered notifications. AD banks need to ensure that remittances of current income (rent, dividend, pension, interest) are allowed only with proper tax certification or NRO account debits. Repatriation of assets by foreign nationals of non-Indian origin requires RBI approval unless specifically exempted under FEMA.
What you must do
- Update internal remittance processing guidelines to align with this master circular.
- Ensure NRO account debits for current income remittances are permissible only with tax compliance.
- Verify that remittances of assets by foreign nationals of non-Indian origin have RBI approval unless exempted.
- Maintain records of Chartered Accountant certifications for remittances by NRIs without NRO accounts.
- Prepare for the sunset clause by tracking the circular's validity until July 1, 2011.
Who it affects
All Authorised Dealer Category – I banks, Authorised banks handling NRI/PIO remittances, Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Foreign nationals of non-Indian origin
What is the definition of NRI and PIO under this circular?
NRI means a person resident outside India who is a citizen of India. PIO means a citizen of any country other than Bangladesh or Pakistan who at any time held an Indian passport, or whose parents/grandparents were Indian citizens, or who is a spouse of an Indian citizen or such person.
Can NRIs remit current income like rent or pension without an NRO account?
Yes, AD banks may allow repatriation of current income for NRIs who do not maintain an NRO account, based on a Chartered Accountant certificate confirming eligibility and tax payment or provision.
What is the sunset clause mentioned in this circular?
The master circular has a sunset clause of one year, meaning it will stand withdrawn on July 1, 2011, and be replaced by an updated master circular on the same subject.