What changed
Previously, FCNR(B) deposits were restricted to six designated currencies: Pound Sterling, US Dollar, Japanese Yen, Euro, Canadian Dollar, and Australian Dollar. Now, AD banks are permitted to accept FCNR(B) deposits in any 'permitted currency', defined as a freely convertible currency under FEMA regulations.
What it means for you
Banks can now offer FCNR(B) accounts in a wider range of currencies, potentially attracting more NRI deposits by catering to currency preferences. This liberalisation may increase competition among banks for NRI funds and require updates to deposit systems and currency risk management. It aligns with the committee's recommendation to enhance flexibility for individuals under FEMA.
What you must do
- Update internal policies and systems to accept FCNR(B) deposits in any freely convertible currency.
- Train staff on the new definition of 'permitted currency' and ensure compliance with FEMA regulations.
- Communicate the expanded currency options to existing and potential NRI account holders.
- Review currency risk management frameworks to handle a broader range of foreign currencies.
Who it affects
Authorised Dealer (AD) banks in India, NRI depositors holding or seeking FCNR(B) accounts, Treasury and forex operations teams at banks
What currencies were previously allowed for FCNR(B) accounts?
Only six currencies were designated: Pound Sterling, US Dollar, Japanese Yen, Euro, Canadian Dollar, and Australian Dollar.
What does 'permitted currency' mean in this circular?
It means any foreign currency that is freely convertible, as defined in Regulation 2(v) of FEMA 14/2000-RB, as amended.
Do banks need to seek additional approval to offer new currencies?
No, the circular itself permits AD banks to accept deposits in any permitted currency without further RBI approval, subject to other applicable laws.