What changed
RBI issued Master Circular No.2/2012-13 consolidating all existing instructions on Non-Resident Ordinary Rupee (NRO) accounts into one document. The circular includes a sunset clause, meaning it will stand withdrawn on July 1, 2013, and be replaced by an updated version. It does not introduce new rules but compiles previous circulars for easier reference.
What it means for you
Banks now have a single reference point for NRO account operations, reducing the need to track multiple circulars. The one-year validity ensures periodic review and updates. Lenders must ensure compliance with all consolidated instructions, including those on joint accounts, permissible credits/debits, and tax obligations, to avoid regulatory issues.
What you must do
- Update internal NRO account policies to align with this Master Circular's consolidated instructions.
- Train staff on eligibility criteria, especially for Bangladesh/Pakistan nationals requiring prior RBI approval.
- Ensure proper documentation for foreign currency cash exceeding USD 5000, including currency declaration forms.
- Monitor joint account operations to comply with resident/non-resident joint holding rules.
- Prepare for the circular's withdrawal on July 1, 2013, by tracking the upcoming replacement circular.
Who it affects
All Authorised Dealer Category – I banks, All Authorised banks handling NRO accounts, NRI and PIO customers with NRO accounts, Compliance and operations teams in banks
Can a Bangladesh or Pakistan national open an NRO account without RBI approval?
No, the circular states that opening accounts by individuals or entities of Bangladesh or Pakistan nationality/ownership requires prior approval from the Reserve Bank.
What are the permissible credits to an NRO account?
Permissible credits include proceeds of remittances from outside India in freely convertible foreign currency, foreign currency tendered during a temporary visit (with currency declaration form if over USD 5000), and transfers from rupee accounts of non-resident banks.
Is there a sunset clause for this Master Circular?
Yes, the circular includes a sunset clause of one year. It will stand withdrawn on July 1, 2013, and be replaced with an updated Master Circular on the subject.