What changed
This Master Circular consolidates all existing instructions on Non-Resident Ordinary Rupee (NRO) accounts into a single document, replacing earlier circulars. It includes a sunset clause, meaning it will be withdrawn on July 1, 2014, and replaced with an updated version. The circular restates definitions and eligibility criteria, including specific conditions for individuals from Bangladesh and prior RBI approval for Pakistan nationals.
What it means for you
Banks must now refer to this single master circular for NRO account guidelines, simplifying compliance but requiring careful attention to the sunset clause. The circular reinforces that NRO accounts are for bona fide rupee transactions by non-residents, with no violation of FEMA. Banks need to ensure proper KYC and reporting, especially for accounts opened by Bangladesh nationals, and must prepare for the circular's replacement after one year.
What you must do
- Review and implement the consolidated NRO account instructions from this master circular immediately.
- For NRO account openings by Bangladesh nationals, ensure they hold a valid visa and valid residential permit from FRO/FRRO, and satisfy yourself of these documents.
- Prepare for the sunset clause by planning to adopt the updated master circular after July 1, 2014.
- Maintain quarterly reporting of NRO account openings for individuals from Bangladesh as per Annex-1.
- Train staff on the definitions of NRI and PIO as per FEMA Notification No.5/2000-RB.
Who it affects
All Authorised Dealer Category – I banks, Authorised banks handling NRO accounts, Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs), Bangladesh nationals (subject to conditions) and Pakistan nationals (with prior RBI approval) seeking NRO accounts
What is the sunset clause in this master circular?
The circular includes a sunset clause of one year, meaning it will be withdrawn on July 1, 2014, and replaced with an updated master circular on NRO accounts.
Can a Bangladesh national open an NRO account without prior RBI approval?
An authorised dealer or authorised bank may allow a Bangladesh national to open an NRO account without prior RBI approval, provided the bank is satisfied that the individual holds a valid visa and a valid residential permit from the Foreigner Registration Office (FRO) or Foreigner Regional Registration Office (FRRO).
What types of NRO accounts are allowed under this circular?
NRO accounts can be opened as current, savings, recurring, or fixed deposit accounts, with interest rates and operational guidelines as per RBI directives.