SUMMARY OF certain IMPORTANT RBI CIRCULARS

1 Circular No.35 dated November 1, 2002 :

Re: Lifting of Lock-in-period for repatriation of sale proceeds of immovable property situated in India

In reference to Notification No 65 dated June 29, 2002 RBI through this circular permitted that it will be in order for authorized dealers to allow remittance of sale proceeds of immovable property in India acquired by NRIs/PIOs, irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the foreign exchange brought in to acquire the property.

2. Circular No.37 dated November 1, 2002 :

Re: Resident Foreign Currency (Domestic) Account - facility for Resident Individuals

In terms of Regulation 3(iii) of RBI Notification No.11 dated 3rd May 2002, residents are allowed to retain up to US $ 2000 or its equivalent in aggregate, provided that such foreign exchange in the form of currency notes, bank notes and travelers Cheques:

(a) was acquired by him while on a visit to any place outside India by way of payment for services not arising from any business in or anything done in India; or
(b) was acquired by him, from any person not resident in India and who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation; or
(c) was acquired by him by way of honorarium or gift while on a visit to any place outside India; or
(d) represents the unspent amount of foreign exchange acquired by him from an authorised person for travel abroad.
RBI through this circular has decided to allow a person resident in India to open, hold and maintain with an Authorised dealer in India a Foreign Currency Account to be known as Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, bank notes and travellers Cheques from the sources specified at items (a) to (d). Debits to the account shall be for payment towards current /capital account transactions in accordance with the existing foreign exchange regulations. The account will be maintained in the form of current account and shall not bear any interest, cheque facility will be available. There will be no ceiling on the balances held in the account.

3. Circular No.38 dated November 2, 2002 :
Re: Investments in Overseas Markets by Authorised Dealers

4. Circular No.39 dated November 5, 2002 :
Re: Investment by NRI's/OCB's in Non-Convertible Debentures - Redemption thereof

It has been clarified that, by Reserve Bank through this circular, hereafter no prior permission of the Reserve Bank is required to remit the redemption proceeds of the NCD's/PCD's issued by them, provided, they have complied with all other conditions stipulated in the relevant approval letter.

5. Circular No.40 dated November 5, 2002 :
Re: Issue of International Credit Cards to Non-Resident Indians (NRI's)/Persons of Indian Origin (PIO's)

This circular clarifies that authorised dealers may issue International Credit Cards (ICC's) to NRI's/PIO's, without prior approval of the reserve bank, subject to the condition that charges on the use of ICC's should be settled by the concerned NRI's/PIO's only out of inward remittances or balances held in their Non-Resident External (NRE) Accounts/ Foreign Currency Non-Resident (FCNR) Accounts.

6. Circular No.45 dated November 12, 2002:

Re: Repatriation of refund of funds received for purchase of shares.
RBI through this circular has delegated the authority to authorized dealers to allow repatriation of surplus funds/refund of remittance received for purchase of shares to a person resident outside India for the following cases: -

Refunds of funds received towards allotment of shares under Reg. 5(1) vide Notification No FEMA 20/2000-RB dated 3rd May 2000.

Remittance of Surplus funds received for purchase of shares offered on rights basis.

Remittance on account of surplus funds received for purchase of shares or on account of cancellation of trade, under two-way fungibility of ADRs/GDRs

Authorised Dealers can allow remittances representing refund of funds provided the Authorised Dealers are satisfied of certain conditions as specified in the circular.

7. Circular No.46 dated November 12, 2002:

Re: Refund of purchase consideration on account of non-allotment of flats/plots/cancellation of bookings/deals in respect of immovable property purchased by NRIs/PIOs in India.

This circular is in reference to Notification no 64 dated June 29,2002 which amended Notification no 5 dated May 3,2000.RBI has through this circular allowed NRIs/PIOs to credit refund of application/earnest money/purchase consideration made by the housing building agencies/seller on account of non-allotment of flat/plot/cancellation of bookings/deals for purchase of residential, commercial property, together with interest, if any (net of income tax payable thereon), to NRE/FCNR account, provided the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transaction.

8. Circular No.51 dated November 18, 2002

Re: Increase in release of Foreign exchange for private visits abroad

In terms of Item no 2 of Schedule III of GOI

notification no G.S.R 381(E) dated May 3, 2000 Authorised Persons (APs) are required to obtain prior permission of the Reserve Bank to release foreign exchange exceeding US $ 5,000 or its equivalent to resident individuals in one calendar year, for one or more private visits to any country (Except Nepal & Bhutan).

As a measure of further liberalization, the above limit has been enhanced to US $ 10,000.

9. Circular No.53 dated November 23, 2002

Re: Resident Foreign Currency Domestic Account - Facility for Resident Individuals

This circular is in reference to Notification No 74 dated November 1,2002 wherein RBI allowed a person resident in India to open hold and maintain with an Authorised dealer in India a foreign currency account to be known as Resident Foreign Currency (Domestic) Account out of foreign exchange acquired in the form of currency notes, bank notes and travelers Cheques

The circular specifies that it will be in order for the Authorised dealers to open, hold and maintain such account for a person resident in India, subject to compliance with the terms and conditions stipulated in the Notification No 74 and Circular No. 37

10. Circular No.54 dated November 25, 2002

Re: Remittance of Foreign Exchange for Miscellaneous Purposes

In reference to A.D. (M.A. Series) Circular No 11dated May 16, 2000 and the provisions of Exchange Control Manual (1993 Edition), RBI has allowed remittance of foreign exchange for miscellaneous purposes as described in the Annexure to this circular.

The Annexure to this circular also describes the clarification relating to remittance for certain Current Account Transactions under Miscellaneous purposes as described herein: -

a) Remittances towards cost of Euro Rail etc., passes/tickets, overseas hotel reservations etc for Indian travelers

b) Remittances on account of consolidated Tour Arrangements for foreign Tourists visiting Neighbouring Countries

c) Advertisements in television media abroad

d) Payments of collected subscription to overseas TV media company

e) Bids in Foreign Currency for projects to be executed in India

f) Sale of overseas telephone cards

g) Supply of Goods by a 100% EOU/EPZ unit to another 100% EOU/EPZ unit against payment in Foreign exchange

h) Supply of Goods by a 100% EOU/EPZs/EHTPs/STPs units in Domestic Tariff Area (DTA) against payment in Foreign exchange

i) Payment of fees in foreign currency - Embassy affiliated educational institutions.

11. Circular No.56 dated November 26, 2002

Re: Income Tax Clearance Certificate / No Objection Certificate from Income Tax Authorities - Revision of Format of undertaking and certificate

Circular No 27 dated September 28, 2002 refers regarding undertaking to be obtained from a person making remittance of Foreign exchange.

This circular is issued in reference to Circular No 10/2002 dated October 2, 2002 issued by the Central Board of Direct Taxes revising the format of undertaking and certificate to be issued for the above mentioned purpose.

The format of the undertaking and the certificate issued is also enclosed along with this circular.

12. Circular No.59 dated December 9, 2002

Re: Issue of International Credit Cards to Non-resident Indians (NRIs) / Persons of Indian Origin (PIOs)

NRIs/PIOs have to settle charges on the use of ICCs out of inward remittances or balances held in their NRE / FCNR Account. RBI has through this circular permitted settlement of credit card charges out of the funds held in the cardholders NRO (Rupee) Account as well. Accordingly, Authorised dealers may allow debits to NRO Account of their NRO /PIO constituents to the extent of the card limit for use of credit cards issued by Banks in India.

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