What changed
RBI now allows AD Category-II entities to seek one-time approval for opening and operating Nostro accounts, as per this circular. Earlier, such permission was not explicitly available under the referenced circular of April 4, 2012.
What it means for you
This gives AD Category-II entities a clearer path to manage foreign currency transactions directly, reducing reliance on AD Category-I banks. For lenders, it may streamline cross-border operations but requires RBI approval upfront.
What you must do
- Review if your entity qualifies as AD Category-II and needs Nostro account access.
- Prepare documentation for a one-time approval application to RBI.
- Ensure compliance with all unchanged instructions from the April 4, 2012 circular.
- Inform relevant constituents about this new facility.
Who it affects
Authorised Dealer Category-II entities, Banks and financial institutions handling forex transactions, Customers of AD Category-II entities involved in foreign exchange
What is a Nostro account in this context?
A Nostro account is a foreign currency account held by a domestic bank in another country. This circular allows AD Category-II entities to open such accounts with RBI's one-time approval.
Do all instructions from the earlier circular still apply?
Yes, all other instructions from the April 4, 2012 circular remain unchanged, as stated in the document.