Current · Source: Reserve Bank of India · RBI/2011-12/512 · issued 18 Apr 2012 · ~1 min read
Quick answerAD Category-II entities can now approach RBI for one-time approval to open and operate Nostro accounts. This expands their forex capabilities beyond earlier limits.
The rule, in the simplest words
AD Category-II entities can now ask RBI for one-time permission to open and use Nostro accounts.
This lets them handle foreign currency transactions directly, without needing AD Category-I banks.
RBI approval is needed upfront, and all other rules from the April 4, 2012 circular still apply.
How it plays out — a real example
A forex & trade-finance officer in Indore can now help their customers manage foreign currency transactions more easily, by applying for one-time RBI approval to open a Nostro account. This means they can handle transactions directly, without needing to go through another bank. The officer will need to prepare the necessary documents and ensure compliance with all unchanged instructions from the April 4, 2012 circular.
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
❓ Common questions
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.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/512
A. P. (DIR Series) Circular No. 109
April 18, 2012
To,
All Authorised Persons in Foreign Exchange
Madam/ Sir,
Authorised Dealer Category II – Permission for additional activity and opening of Nostro account
Attention of Authorised Persons is invited to Para 3 of A. P. (DIR Series) Circular No. 104 dated April 4, 2012 on the captioned subject.
2. Authorised Dealer Category-II entities desirous of opening Nostro accounts may approach the Reserve Bank for a one time approval to open and operate Nostro accounts.
3. All other instructions contained in the A.P. (DIR Series) Circular No. 104 dated April 4, 2012 shall remain unchanged.
4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.
5. The directions contained in this Circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/512 · issued 18 Apr 2012. The plain-English explanation above is BankPulse’s own independent summary.
Prepare documentation for a one-time approval application to RBI.
📜 Compliance
Review if your entity qualifies as AD Category-II and needs Nostro account access.
Ensure compliance with all unchanged instructions from the April 4, 2012 circular.
Inform relevant constituents about this new facility.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Authorised Dealer Category-II entities, Banks and financial institutions handling forex transactions, Customers of AD Category-II entities involved in foreign exchange), your first concrete step on “AD Category II: Nostro Account Approval Process” is: “Review if your entity qualifies as AD Category-II and needs Nostro account access.” (RBI issued this 18 Apr 2012).
Circular: RBI/2011-12/512 -- AD Category II: Nostro Account Approval Process
Issued: 18 Apr 2012
Action required: Review if your entity qualifies as AD Category-II and needs Nostro account access.
Action required: Prepare documentation for a one-time approval application to RBI.
Action required: Ensure compliance with all unchanged instructions from the April 4, 2012 circular.
Action required: Inform relevant constituents about this new facility.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7146&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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