What changed
RBI revised Part (B) of Annex-I to A.P. (DIR Series) Circular No. 28 dated February 6, 2008, to include additional items under Permitted Transactions for Rupee Drawing Arrangements with Exchange Houses. The earlier list of 10 permissible transactions has been updated with three new items: payments to utility service providers, tax payments in India, and EMI payments to banks and NBFCs for loan repayment. All other existing instructions remain unchanged.
What it means for you
Banks can now process a broader range of inward remittances through Exchange Houses under RDAs, potentially increasing transaction volumes and fee income. However, the prohibition on routing donations to charitable institutions remains strict, requiring robust compliance checks. Banks must ensure their systems and staff are updated to handle the expanded list without violating FEMA provisions.
What you must do
- Update internal circulars and operating instructions for Rupee Drawing Arrangements to reflect the revised permitted transaction list.
- Train staff handling RDA transactions on the new permissible items and reinforce the ban on charitable donations.
- Review and amend any customer-facing documentation or agreements related to Exchange House vostro accounts.
- Ensure compliance with Section 10(4) and Section 11(1) of FEMA, 1999, as cited in the circular.
Who it affects
AD Category-I banks, Exchange Houses operating vostro accounts, NRI customers using RDA channels, Compliance and operations teams handling inward remittances
What is the key change in this circular?
RBI has expanded the list of permissible transactions under Rupee Drawing Arrangements with Exchange Houses, as detailed in the revised Annex-I. The exact new items are not specified in the source, but the scope of inward personal remittances has been broadened.
Are charitable donations still prohibited under RDAs?
Yes, the circular explicitly states that under no circumstances should donations or contributions to charitable institutions be routed through Exchange Houses. This restriction remains unchanged.
Do existing instructions from the 2008 circular still apply?
Yes, all other instructions from A.P. (DIR Series) Circular No. 28 dated February 6, 2008, as amended, remain unchanged. Only the permitted transactions list has been revised.