EC.CO.PCD. No. 17/15.02.76/2001-02, dated 13-8-2001, issued by the Exchange Control Department, RBI
Master Circular - Release of Foreign Exchange for Travel outside India
As
you are aware Foreign Exchange Management Act, 1999 has been introduced with
effect from June 1, 2000. In terms of section 5 of the Act, any person may sell
or draw foreign exchange to and from authorised person for a current account
transaction. However, Central Government has been empowered to impose certain
restrictions for current account transactions in public interest and in
consultation with Reserve Bank. Accordingly, Government of India issued
Notification No. GSR 381(E) dated May 3, 2000 as amended vide its Notification
No. SO 301(E) dated March 30, 2001.
2. Reserve
Bank had issued various circulars containing directions for authorised persons
for release of foreign exchange for travel outside India.
3. In order
to enable the Authorised Dealers (ADs) and Full Fledged Money Changers (FFMCs)
to have all the existing instructions on the subject of “Release of Foreign
Exchange for Travel outside India” as on July 1, 2001, at one place, a Master
Circular has been prepared.
4. This
Master Circular supersedes the directions contained in the under noted
circulars, as on July 1, 2001.
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(i) |
A.P. (DIR Series) Circular No. 1 |
June 1, 2000 |
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A.P. (F.L. Series) Circular No. 1 |
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(ii) |
A.P. (DIR Series) Circular No. 19 |
October 30, 2000 |
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(iii) |
A.P. (DIR Series) Circular No. 20 |
November 16, 2000 |
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A.P. (F.L. Series) Circular No. 2 |
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5.
Any contravention or non-observance of the directions
consolidated in this circular will be liable to be proceeded against under the
provisions of the Act.
a. 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.
b. 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
15/2000-RB 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.
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.
Note :
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
:
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(i) |
Travellers proceeding to countries other than Iraq, Libya, |
not exceeding US $ 500 or its |
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Islamic Republic
of Iran, Russian Federation and other |
equivalent |
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Republics of Commonwealth of Independent States |
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(ii) |
Travellers proceeding to Iraq or Libya |
not exceeding US $ 5,000 |
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or its equivalent |
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(iii) |
Travellers proceeding to Islamic Republic of Iran, Russian
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Full exchange released |
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Federation and other Republics of Commonwealth of
Independent States |
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E. The
forms 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 the traveller for
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 for 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.
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.
Part III
Release of Foreign
Exchange by Full Fledged Money Changers (FFMCs)
Attention
of the Full Fledged Money Changers (FFMCs) is invited to para 4 to AD (MA
Series) Circular No. 11 dated 16th May, 2000 wherein it has been indicated that
the directions contained therein shall be applicable mutatis mutandis to money
changers and they shall continue to be governed by the provisions of FLM/RLM as
amended from time to time. In terms of FEMA, 1999, the current regulations
stand modified as under :
Quantum of exchange permitted to be released for the approved purposes
(a) Exchange
not exceeding US $ 5,000 or its equivalent per person in one calendar year for
one or more private visits to any country (except Nepal and Bhutan) as against
the quantum of exchange now allowed under BTQ (para 10 of FLM).
(b) Exchange
not exceeding US $ 25,000 to a person irrespective of period of stay for
business travel as against various scales of exchange existing as of now (para
11 of FLM).
The
Reserve Bank will not, henceforth, prescribe the documents which should be
verified by the Money Changers while releasing foreign exchange. In this
connection attention of Money Changers is drawn to sub-section (5) of section
10 of the Foreign Exchange Management Act, 1999 (42 of 1999) which provides
that an authorised person shall before undertaking any transaction in foreign
exchange on behalf of any person require that person to make such a declaration
and to give such information as will reasonably satisfy him that the
transaction will not involve and is not designed for the purpose of any
contravention or evasion of the provisions of the Act or any rule, regulation,
notification, direction or order issued thereunder. Money Changers are advised
to keep on record any information/documentation on the basis of which the
transaction was undertaken for verification by the Reserve Bank. The said
clause further provides that where the said person (applicant) refuses to
comply with any such requirement or makes unsatisfactory compliance therewith,
the authorised person shall refuse in writing to undertake the transaction and
shall if he has reasons to believe that any contravention/evasion is
contemplated by the person, report the matter to Reserve Bank.
Where
a person is going abroad for business purposes it is not mandatory for
authorised persons to endorse the amount of foreign exchange sold for the
purpose, on the traveller’s passport. Authorised persons may, however, if
requested by the travellers, record under their stamp, date and signature
details of foreign exchange sold for such travel. Wherever foreign exchange is
sold for a private visit it should invariably be endorsed on the traveller’s
passport under the authorised person’s stamp, date and signature.
FFMCs
shall continue to be governed by all other provisions of FLM.