ap (dir series) (2003-04) circular no. 80, dated 18-3-2004
Liberalised Remittance Scheme of USD 25,000
for Resident Individuals - Investor Protection - Disclosure Requirements
Attention of the
Authorised Dealers is invited to the instructions contained in A.P. DIR
(Series) Circular No. 64 dated February 4, 2004, whereby Reserve Bank announced
a Scheme permitting resident individuals to make remittance for an amount not
exceeding USD 25,000 per calendar year. This facility is available for making
remittance up to USD 25,000 per calendar year for any current or capital
account transaction or a combination of both.
2. A number of foreign banks operating in India as well as
Indian banks have been subsequently soliciting foreign currency deposits from
residents under the above Scheme. It has been observed that several
advertisements/news items have appeared soliciting foreign currency funds/deposits
at certain interest rates to be placed at overseas centers or on behalf of
overseas mutual funds. These advertisements do not contain appropriate
disclosures to guide potential depositors. In the case of banks operating in
India concerns arise regarding adequate disclosures from the point of view of
protecting the interest of the resident individuals. Further, marketing in
India of schemes soliciting foreign currency deposits by foreign entities, not
having operational presence in India, also raises supervisory concerns.
3. It has therefore been decided in public interest, that all
banks, both Indian and foreign, including those not having an operational
presence in India, should seek prior approval from RBI for the schemes being
marketed by them in India to residents either for soliciting foreign currency
deposits for their foreign/overseas branches or for acting as agents for
overseas mutual funds or any other foreign financial services company. The
applications in this regard may be addressed to the Chief General
Manager-in-Charge, Department of Banking Operations and Development, Reserve
Bank of India, Central Office, Centre-1, World Trade Center, Cuffe Parade,
Mumbai-400005.
4. The above instructions do not restrict the freedom of
resident individual from investing in permissible capital account transactions
under the Scheme.
5. Reserve Bank has issued a press release in this regard, a
copy of which is enclosed for the guidance of the Authorised Dealers.
6. Authorised Dealers may bring the contents of this circular to
the notice of their constituents concerned.
7. The directions contained in this circular have been issued
under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42
of 1999).