What changed
This Master Circular replaces the July 2, 2012 version and incorporates all FCNR(B) related instructions issued up to June 30, 2013. It consolidates guidelines on interest rates, premature withdrawal, and conversion of accounts for returning Indians. The circular applies to all scheduled commercial banks except RRBs.
What it means for you
Banks must ensure their FCNR(B) deposit products comply with the updated guidelines, including interest rate caps and operational rules. The circular clarifies procedures for premature withdrawal, interest on overdue deposits, and advances against FCNR(B) deposits. It also provides clarity on conversion of accounts for NRIs returning to India, impacting customer service and compliance.
What you must do
- Review and update internal FCNR(B) deposit policies to align with the 2013 Master Circular.
- Train staff on revised interest rate guidelines, premature withdrawal rules, and conversion procedures.
- Ensure systems correctly handle interest calculation for overdue deposits and advances against FCNR(B) deposits.
- Update customer communication materials to reflect the latest FCNR(B) terms and conditions.
Who it affects
All scheduled commercial banks (excluding RRBs), NRI customers holding FCNR(B) accounts, Bank staff handling foreign currency deposits and advances
What is the minimum maturity period for FCNR(B) deposits under this circular?
The minimum maturity period is one year, effective from October 1999, as mentioned in the circular.
Can banks pay additional interest on FCNR(B) deposits of their staff?
Yes, banks have discretion to pay additional interest on deposits of their staff, as per the guidelines in the circular.
What happens to FCNR(B) deposits when an NRI returns to India?
The circular provides guidelines for converting FCNR(B) accounts into RFC accounts or resident rupee accounts, with possible waiver of penalty and interest payment rules.