What changed
This Master Circular consolidates all existing instructions on Rupee/Foreign Currency Vostro accounts for non-resident Exchange Houses into a single document. It includes a sunset clause, meaning it will be withdrawn on July 1, 2013, and replaced by an updated version. The circular covers operational procedures, permitted transactions, drawing arrangements, and reporting requirements.
What it means for you
Banks must follow a structured approval process: seek RBI approval for the first Rupee Drawing Arrangement (RDA) with an Exchange House, then inform RBI for subsequent ones. After 20 RDAs, an external audit is mandatory before the board can authorize more. This ensures robust internal controls and compliance with FATF guidelines for cross-border remittances.
What you must do
- Obtain prior RBI approval for the first RDA with any non-resident Exchange House using Annex-I form.
- Conduct due diligence on Exchange Houses' financial standing before opening accounts.
- Once total RDAs reach 20, the bank may arrange an external audit of internal systems; based on satisfactory report, board may authorize more arrangements; file board note and resolution with RBI.
- Comply with FATF compliance requirements: for Gulf, Hong Kong, Singapore, Malaysia (only under Speed Remittance Procedure), and for all other FATF-compliant countries (only under Speed Remittance Procedure).
- Submit periodic statements (Annex II-VI) as specified in the circular.
Who it affects
AD Category-I banks, Non-resident Exchange Houses from Gulf countries, Hong Kong, Singapore, Malaysia (only under Speed Remittance Procedure), and all other FATF-compliant countries (only under Speed Remittance Procedure), RBI's Foreign Exchange Department
What is the sunset clause in this Master Circular?
The circular will stand withdrawn on July 1, 2013, and be replaced by an updated Master Circular on the same subject.
When is an external audit required for RDAs?
Once the total number of Rupee Drawing Arrangements reaches 20, the AD Category-I bank must cause a detailed external audit of their internal system to ensure satisfactory working.
Which countries' Exchange Houses are covered under this circular?
Exchange Houses from Gulf countries, Hong Kong, Singapore, Malaysia (only under Speed Remittance Procedure), and all other FATF-compliant countries (only under Speed Remittance Procedure).