A.P. (DIR Series) (2000-2001) Circular No. 19, dated 30-10-2000
Attention
of authorised dealers is invited to the Government of India Notification No.
GSR 381(E), dated 3rd May, 2000 notifying the Foreign Exchange Management (Current
Account Transactions) Rules, 2000 in terms of which drawal of exchange for
certain current account transactions has been prohibited and restrictions have
been placed on certain other transactions. In terms of Rule 5, the transactions
specified in Schedule III to the Notification require prior approval of the
Reserve Bank. Accordingly, authorised dealers may follow directions contained
in the Annexure to this circular as far as applications for release of
foreign exchange for travel abroad are concerned.
2. It is
clarified that the directions contained in the Annexure should be read together
with the Rules notified by the Government of India, Ministry of Finance vide
Notification dated 3rd May, 2000, referred to above.
3. In terms
of clause (b) of Rule (2) of the Government of India Notification No. GSR
381(E), dated 3rd May, 2000, “Drawal” includes use of International Credit
Cards, International Debit Cards, ATM Cards, etc. It is, therefore, clarified
that use of these instruments is also subject to the restrictions imposed under
the Notification. Further, in terms of clause (h) of section 2 of Foreign
Exchange Management Act, 1999, “currency”, inter alia, includes International
Credit Cards. The Reserve Bank has also vide its Notification No. FEMA
15/RB-2000 dated 3rd May, 2000 notified ATM Cards and Debit Cards as
“Currency”. Accordingly, payments made by Credit Cards, ATM Cards and Debit
Cards, etc. being only different methods of payment, all Rules, Regulations
made and Directions issued under the Act apply to Credit Cards, ATM Cards,
Debit Cards, etc., also.
4. It is
clarified that where a person is going abroad for a purpose other than a
private visit it is not mandatory for authorised dealers to endorse the amount
of foreign exchange sold for such travel on the traveller’s passport. However,
wherever foreign exchange is sold for a private visit, i.e., travellers
availing Basic Travel Quota (BTQ) it should invariably be endorsed on the
traveller’s passport under the authorised dealer’s stamp, date and signature.
5. Authorised
dealers may allow advance remittance for any current account transaction for
which the release of foreign exchange is admissible, provided the amount of
advance remittance does not exceed US $ 25,000 or its equivalent. Where the
amount exceeds US $ 25,000 or its equivalent, a guarantee from a bank of
international repute situated outside India or a guarantee from an authorised
dealer in India, if such a guarantee is issued against the counter-guarantee of
a bank of International repute situated outside India, should be obtained from
the overseas beneficiary. The authorised dealer should also follow up to ensure
that the beneficiary of the advance remittance has fulfilled his obligations
under the contract or agreement with the remitter in India.
6. The
Directions contained in the Annexure to this circular supersede the
instructions contained in Part A of Chapter 8 of Exchange Control Manual (1993
edition), and its Annexures I, II and IV.
7. Authorised
dealers may bring the contents of the circular to the notice to their
constituents concerned.
8. The
directions contained in this circular have been issued under section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Any contravention
or non-observance of these directions is subject to the penalties prescribed
under the Act.
Annexure
For
release of foreign exchange to the persons resident in India for travel abroad,
authorised dealers should be guided by the Rules made by the Government of
India under section 5 of Foreign Exchange Management Act, 1999. In terms of
item (b) of Rule 3 of the Government Notification No. GSR 381(E), dated 3rd
May, 2000, no release of foreign exchange is admissible for travel to Nepal and
Bhutan. For release of foreign exchange exceeding certain limits, as specified
in Schedule III to the Notification, prior approval of Reserve Bank should be
obtained. All applications for release of exchange exceeding the limits prescribed
in Schedule III to the Government. Notification should be referred to the
Regional Office of the Exchange Control Department under whose jurisdiction
the applicant is functioning/residing.
(a) Where
permits/approvals have been issued by the Reserve Bank/Government of India,
foreign exchange may be sold within the period of validity stated on the
permit/approval and the sale be endorsed on the reverse of the permit/original
approval.
(b) Authorised
dealers need not endorse on the traveller’s passport Foreign Exchange sold for
travel abroad where the traveller is going abroad for a purpose other than
private visit.
Wherever
foreign exchange is sold for a private visit it should invariably be endorsed
on the traveller’s passport under the authorised dealer’s stamp, date and
signature.
Notes :
A. Authorised dealers may, if requested by the traveller,
record under their stamp and signature details of foreign exchange sold for
travel, other than the private visit abroad.
B. In case of a child travelling on a parent’s passport, the
endorsement should be made on the joint passport.
C. In case of issue of travellers cheques, the traveller
should sign the cheques in the presence of an authorised official and the
purchaser’s acknowledgement for receipt of the travellers cheques should be
duly maintained.
D. Out of the overall foreign exchange
being sold to a traveller, exchange in the form of foreign currency notes and
coins may be sold up to the limit indicated below :
|
(i) |
Travellers
proceeding to countries other than Iraq, Libya, Islamic Republics of Iran,
Russian Federation and other Republics of Commonwealth of Independent States |
not
exceeding US $500 or its equivalent |
|
(ii) |
Travellers
proceeding to Iraq or Libya |
not
exceeding US $ 5,000 or its equivalent |
|
(iii) |
Travellers
proceeding to Islamic Republic of Iran, Russian Federation and other
Republics of Commonwealth of Independent States. |
Full
exchange released |
E. The form A2 relating to sale of foreign exchange for
travel abroad should be retained for a period of one year by the authorised
persons together with the related documents for the purpose of verification by
their Internal auditors.
A
person who has fallen sick after proceeding abroad may also be released foreign
exchange for medical treatment outside India in accordance with Rule 5 of
Government of India Notification No. GSR 381(E), dated 3rd May, 2000.
Dance
troupes, artistes, etc., who wish to undertake tours abroad for cultural
purposes should apply to Ministry of Human Resources Development (Department of
Education and Culture), Government of India, for recommendation regarding their
foreign exchange requirements. Authorised dealers may release foreign exchange,
on the strength of the sanction from the Ministry, to the extent and subject to
conditions indicated therein.
Foreign
exchange for private visit can also be released to a person who is availing of
foreign exchange for travel outside India for any purpose.
Where
an authorised dealer has released exchange on the basis of estimates, e.g., for
medical treatment or medical check up abroad, etc., the authorised dealer is
required to follow up and ensure that the details of actual expenses are
invariably submitted by the applicant to the branch of the authorised dealer
which released foreign exchange, within a fortnight of his returning to India.
Non-submission of the details within reasonable time should be reported to the
Regional Office of Reserve Bank under whose jurisdiction the applicant is
residing.
In
case the foreign exchange purchased for any purposes is not used for the
purposes or for any other purpose for which purchase or acquisition of foreign
exchange is permitted under the provisions of FEMA 1999 or Rules or Regulations
made thereunder, the same or the unused portion thereof is required to be
surrendered to an authorised person within a period of 60 (sixty) days from the
date of its purchase. (cf. Notification No. FEMA 9/2000-RB, dated 3rd May,
2000).
Note : In
cases where a person approaches an authorised person for surrendering foreign
exchange after 60 days, the authorised person should not refuse to purchase the
foreign exchange on the ground that the prescribed period of 60 days has
expired.
Unspent
foreign exchange brought back to India by a traveller should be surrendered to
an authorised person against payment in rupees within 90 days from the date of return
of the traveller if the unspent foreign exchange is in the form of currency
notes. If such foreign exchange is in the form of traveller cheques, the same
should be surrendered to an authorised person within 180 days from the date of
return. Exchange so brought back can be utilised by then traveller or his
subsequent visit abroad during the period specified above. However, a returning
traveller is also permitted to retain with him, foreign currency travellers
cheques and Notes upto an aggregate amount of US $ 2,000 and foreign coins
without any ceiling. (cf. Notification No. FEMA 11/2000-RB, dated 3rd May,
2000). Foreign exchange so retained can be utilised by the traveller for his
subsequent visit abroad.
Note : Where
a person approaches an authorised person for surrender of foreign exchange
after the prescribed period authorised person should not refuse to purchase
the foreign exchange on the ground that the prescribed period has expired.
Remittances for Tour Arrangements, etc.
I. Authorised dealers may remit foreign exchange
upto a reasonable limit, at the request of a traveller towards his hotel
accommodation, tour arrangements, etc., in the countries proposed to be visited
by him, provided it is out of the foreign exchange purchased by the traveller
from an authorised person (including exchange drawn for private travel abroad)
in accordance with the Rules, Regulations and Directions in force.
II. Authorised dealers may effect remittances at
the request of agents in India who have tie up arrangements with
hotels/agents, etc., abroad for providing hotel accommodations or making other
tour arrangements for travellers from India provided the authorised dealer is
satisfied that the remittance is being made out of the foreign exchange
purchased by the concerned traveller from an authorised person (including
exchange drawn for private travel abroad) in accordance with the Rules,
Regulations and Directions in force.
III. Authorised dealer may open foreign currency
accounts in the name of agents in India who have tie up arrangements with
hotels/agents, etc., abroad for providing hotel accommodations or making other
tour arrangements for travellers from India provided :
(a) the credits to the account are by way of
depositing
I. collections
made in foreign exchange from travellers, and
II. refunds received from outside India on
account of cancellation of bookings/tour arrangements, etc., and
(b) the debits in foreign exchange are for
making payments towards hotel accommodation, tour arrangements, etc., outside
India, in accordance with (ii) above.
Authorised
dealers may accept payment in cash up to Rs. 50,000 (Rupees fifty thousand
only) against sale of foreign exchange for travel abroad (for private visit or
for any other purpose). Wherever the sale of foreign exchange exceeds the
amount equivalent to Rs. 50,000, the payment must be received only by a (i)
crossed cheque drawn on the applicant’s bank account, or (ii) crossed cheque
drawn on the bank account of the firm/company sponsoring the visit of the
applicant, or (iii) Banker’s Cheque/Pay Order/Demand Draft.
Note : Where
the rupee equivalent of foreign exchange drawn exceeds Rs. 50,000 either for
any single drawal or more than one drawal reckoned together for a single
journey/visit it should be paid by cheque or draft as explained above.