Forex (FAQs)

Q.1 How much foreign exchange can one buy when traveling abroad on private visits to a country outside India?

For private visits abroad, other than to Nepal and Bhutan, viz. for tourism purposes, etc, any resident can obtain foreign exchange up to an aggregate amount of USD 10,000, from an authorized dealer, in any one financial year, on self-declaration basis, irrespective of the number of visits undertaken during the year. This limit of USD 10,000 or its equivalent per financial year for private visits can also be availed of by a person who is availing of foreign exchange for travel abroad for any purposes, such as, for employment or immigration or studies.

No foreign exchange is available for visit to Nepal and / or Bhutan for any purpose.

A resident Indian is allowed to take INR of denomination of ` 100 or lesser denomination to Nepal and Bhutan without limit.

Q.2 How much foreign exchange is available for a business trip?

For business trips abroad to countries, other than to Nepal and Bhutan, a person can avail of foreign exchange up to USD 25,000 per visit. Visits in connections with attending of an international conference, seminar, specialized training, study tour, apprentice training, etc., are treated as business visits. Release of foreign exchange exceeding USD 25,000 for business travel abroad (other than to Nepal and Bhutan), irrespective of the period of stay, requires prior permission from the Reserve Bank.

No release of foreign exchange is admissible for any kind of travel to Nepal and Bhutan or for any transaction with persons resident in Nepal.

Investments in Bhutan are permitted in India Rupees as well as in freely convertible currencies. If investment is made in freely convertible currency / ies, sale / winding up proceeds are required to be repatriated to India in freely convertible currencies.

Q.3 How much foreign exchange can be drawn for medical treatment abroad?

AD Category I banks and AD Category II, may release foreign exchange up to USD 100,000 or its equivalent to resident Indians for medical treatment abroad on self declaration basis, without insisting on any estimate from a hospital / doctor in India / abroad. A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided the request is supported by an estimate from a hospital / doctor in India / abroad.
An amount up to USD 25,000 is allowed for maintenance expenses of a patient going abroad for medical treatment or check up abroad or to a person for accompanying as attendant to a patient going abroad for medical treatment / check-up
The amount of USD 25,000 allowed to the patient going abroad is in addition to the limit of USD 100,000 mentioned above.

Q.4. How many days in advance one can buy foreign exchange for travel abroad?

Permissible foreign exchange can be drawn 60 days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surrendered to an authorized person. However, residents are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC(Domestic)]Accounts.

Q.5. How much foreign exchange can be brought in while visiting India?

A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travelers cheques brought in exceeds UCD 10,000 or its equivalent and/or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDP), on arrival in-India.

Q.6. Is it required to follow complete export procedure when a gift parcel is sent outside India?

A person resident in India is free to send (export) any gift article of value not exceeding `.5,00,000 provided export of that item is not prohibited under the extant Foreign Trade Policy and the exporter submits a declaration that goods of gift are not more than `.5,00,000 in value.

Export of goods or services up to `.5,00,000 may be made without furnishing the declaration in Form GR/ SOF/ PP/ SOFTEX, as the case may be.

a. Exchange Earners Foreign Currency Accounts:-

All categories of resident foreign exchange earners can credit up to 100 per cent of their foreign exchange earnings, a specified in the paragraph 1 (A) of the Schedule to Notification No. FEMA 10/2000-RB dated 3rd May, 2000 and as amended from time to time, to their EEFC Account with an Authorized Dealer in India. Funds held in EEFC account can be utilized for all permissible current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/ Notifications/ Directives issued by the Government / RBI from time to time. The account is maintained in the form of a non-interest bearing current account.

b. Resident Foreign Currency Accounts: -

A person resident in India may open, hold and maintain with an Authorized Dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets which were held outside India at the time of return can be credited to such accounts. The foreign exchange received as (i) pension of any other superannuation or other monetary benefits from title employer outside India; (ii) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA, 1999 or (iii) referred to in clause (c) of section 9 of the Act or acquired as gift or inheritance there from or (iv) received as the proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority may also be credited to this account.

RFC account can be maintained in the form of current or savings or term deposit accounts.

The funds in RFC account are free from all restrictions regarding utilization of foreign currency balances including any restriction on investment outside India.

Q.7.Can a person resident in India hold assets outside India?

In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. (Please also refer to the Liberalized Remittance Scheme of USD 200,000 discussed below).

Q.8. Whether credit facilities in Indian Rupees or foreign currency would be permissible against security of such deposits ?

No. The scheme does not envisage extension of credit facility against the security of the deposits. Further, the banks should not extend any kind of credit facilities to resident individuals to facilitate remittances under the scheme.

Features of various Deposit Schemes available to Non-Resident Indians (NRIs) (Updated as on April 21,2011) Features of various Deposit Schemes available for Non-Resident Indians (NRIs)
Particulars Foreign Currency (Non- Resident) Account (Banks) Scheme [FCNR (B) Account] Non-Resident (External) Rupee Account Scheme [NRE Account] Non-Resident Ordinary Rupee Account Scheme [NRO Account]
(1) (2) (3) (4)
Who can open an account NRIs (individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of RBI) NRIs (individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of RBI) Any person resident outside India (other than a person resident in Nepal and Bhutan). Individuals / entities of Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the Reserve Bank
Joint account In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin. In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin. May be held jointly with residents
Nomination Permitted Permitted Permitted
Currency in which account is denominated Pound Sterling, US Dollar, Japanese Yen, Euro Canadian Dollar and Australian Dollar Indian Rupees Indian Rupees
Repatriability Repatriable Repatriable Not repatriable except for the following: 1) Current income ii) up to USD 1 (one) million per financial year (April-March), for any bonafide purpose, out of the balances in
      the account, .e.g. sale proceeds of assets in India acquired by way of purchase / inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions.
Type of Account Term Deposit only Savings, Current , Savings, Current ,
    Recurring Fixed Deposit Recurring Fixed Deposit
Period for fixed deposits For terms not less than 1 year and not more than 5 years At the discretion of the bank As applicable to resident accounts.
Rate of Interest S Subject to cap as stipulated by the department of banking operations and development. Reserve Bank of India: Subject to cap as stipulated by the department Banking Operations and Development, Reserve Bank of India: Fixed / Recurring Deposits Banks are free to determine interest rates for term deposits.
  At present, with effect from the close of business on November 15, 2008, interest shall be paid within the ceiling rate of LIBOR / SWAP rates plus 100 basis points for the respective currency / corresponding maturities. Fixed / Recurring Deposits At present with effect from the close of business on November 15, 2008, interest rates on NRE deposits for one to three years should not exceed the LIBOR / SWAP rates plus 175 basis points for corresponding maturities, as on the last working day of the previous month, for US dollar of corresponding maturities. Savings Bank Account Interest rate shall be at the rate applicable to domestic savings account. Currently, the rate is 4 per cent.
  On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency / maturity plus 100 basis points. The interest rates as determined above for three year deposits will also be applicable in case the maturity period exceeds three years.  
  For floating rate deposits, the interest reset period shall be six months. Savings Bank Account Interest rate shall be at the rate applicable to domestic savings account. Currently, the rate is 4 per cent.  
Operations by Power of Attorney in favour of a resident by the nonresident account holder Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees. Remittance of current income to the account holder outside India or remittance to the account holder himself through normal banking channels. Remittance is subject to the
Loans     ceiling of USD 1 (one) million per financial year.
(a) In India
i) to the account holder
Permitted only up to `100 lakhs Permitted only up to `100 lakhs Permitted subject to the extant rules.
ii) to third parties Permitted only up to ` 100 lakhs Permitted only up to ` 100 lakhs Permitted, subject to conditions.
(b) Abroad
i) to the account holder
Permitted (provided no funds are remitted back to India and are used abroad only) Permitted (provided no funds are remitted back to India and are used abroad only) Not permitted
ii) to third parties Permitted (provided no funds are remitted back to India and are used abroad only) Permitted (provided no funds are remitted back to India and are used abroad only) Not permitted
(c) Foreign Currency Loans in India
i) to the account holder
Permitted up to ` 100 lakhs Not permitted Not permitted
ii) to third parties Not permitted Not permitted Not permitted
Purpose of Loan      
(a.) In India
i) to the account holder
i) Personal purposes or for carrying on business activities* i) Personal purposes or for carrying on business activities* Persona requirement and / or business purpose*
  ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies. ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies.  
  iii) Acquisition of flat / house in India for his own residential use. (Please refer para 9 of schedule 2 to FEMA 5). iii) Acquisition of flat / house in India for his own residential use. (Please refer para 9 of schedule 2 to FEMA 5).  
ii) to third parties Fund bases and / or nonfund based facilities for personal purposes or for carrying on business activities* (Please refer to para 9 of Schedule 2 to FEMA 5) Fund bases and / or non-fund based facilities for personal purposes or for carrying on business activities *(Please refer to para 9 of Schedule 2 to FEMA 5) Personal requirement and / or business purpose.
b) Abroad To the account holder and third parties Funds bases and / or nonfund based facilities for bonafide purposes Funds bases and / or nonfund based facilities for bonafide purposes Not permitted

* The loans cannot be utilized for the purpose of on lending or for carrying on agriculture or plantation activities or for investment in real estate business,

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