What changed
The threshold for foreign exchange remittances for miscellaneous purposes without requiring any documentation (including Form A-2) has been increased from USD 5,000 to USD 25,000. This applies to current account transactions not covered under Schedules I and II of the Government Notification on Current Account Transactions, provided payment is via cheque or demand draft from the applicant's account.
What it means for you
Banks can now process higher-value miscellaneous remittances with minimal paperwork, reducing operational burden and improving customer experience. However, ADs must still prepare a dummy A-2 form for statistical reporting of the purpose code to support Balance of Payments data. This liberalization may increase the volume of small-value outward remittances, requiring banks to ensure robust monitoring for compliance with FEMA and other laws.
What you must do
- Update internal procedures to accept simple letters for remittances up to USD 25,000 for eligible current account transactions.
- Ensure dummy A-2 forms are prepared for each such transaction to capture the purpose code for BoP reporting.
- Verify that the transaction is not covered under Schedules I or II of the Government Notification on Current Account Transactions.
- Confirm payment is made via cheque drawn on the applicant's bank account or demand draft, not cash.
- Communicate the revised limit and documentation relaxation to all relevant branches and constituents.
Who it affects
Authorised Dealers (ADs) in foreign exchange, Retail customers making miscellaneous remittances, Bank compliance and operations teams handling forex transactions
What transactions are covered under this relaxed documentation requirement?
Only current account transactions that are not listed in Schedules I or II of the Government Notification on Current Account Transactions. The remittance must be for a permissible purpose and the amount should not exceed USD 25,000 or its equivalent.
Do we still need to report these transactions to RBI?
Yes, ADs must prepare a dummy A-2 form to capture the purpose of remittance for statistical inputs used in Balance of Payments compilation. This is for reporting, not for customer documentation.
What payment methods are acceptable under this circular?
Payment must be made by a cheque drawn on the applicant's bank account or by a Demand Draft. Cash transactions are not covered under this relaxation.