Merchant Trade ( MTT) : - The entire MTT shall be completed :-

 Within an overall period of 9 months.

 Outlay FX 4 months.
 Commencement date of MTT shall be the date of shipment/export leg receipt or
import leg payment whichever is first.
 Completion date shall be the date of shipment /export leg, receipt of import leg
payment whichever is the last.

A few limits :-

 Remittances exceeding USD 1,00,00,000 per project for any consultancy

services in respect of infrastructure projects
 USD 10,00,000 per project for any consultINancy services procured from
outside India.

ECL ( External commercial lending ) :- means lending by a person resident in India

to a borrower outside India in accordance with framework decided by RBI in
consultation with Government of India.

LEI ( Legal entity Identifier ) :-

 20 digit unique code to identify parties to financial transactions world wide.

 Entities can obtain LEI from LOUs ( Local Operating Units accredited by GLEIF
( Global Legal entity identifier )
 LEI code may be obtained from LEIIL (Legal entity Identifier India Ltd ), a
subsidiary of CCIL ( Clearing corporation of India Limited, recognized by RBI as
issuer of LEI.

SPECTRA:-Software Platform for ECB and Trade Credits Reporting and Approval.

Points to remember :-

 Only eligible receipts/payments to offshore accounts of the non-resident entity

holding the SNRR account are allowed.
 An EEFC account can be held only in the form of a current account. No interest
is payable on EEFC accounts.
 All ECB guidelines including those related to minimum equity holding, are to be
fulfilled during the whole tenure of the ECB and not only at the time of
contracting of ECB.
 LLPs are not eligible to receive FDI, they cannot raise ECBs.
 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 travellers cheques brought in
exceeds USD 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 (CDF), on arrival in
India.
 Any multilateral organization, of which India is a member nation, or its
subsidiary/ affiliate bodies and officials in India can open deposits with an
authorised dealer in India.
 A resident individual can export NIL Indian currency notes.
 On receipt of credit advise/statement of Nostro a/c and compliances of
guidelines, requirements of the bank and FEMA, the bank shall transfer funds
for the credit of exporter’s a/c within 2 working days.

If the above stipulated time limit not observed the bank shall pay compensation
for the delayed period @ 2% over the saving bank interest rate.

 No interest can be earned on SNRR balances or through term deposit

 Resident Individual may grant loan to a NRI relative upto LRS limit and credit to
NRO a/c only
 A resident individual can acquire property and other assets overseas under LRS
 Any person resident in India who had gone to Pakistan/ Bangladesh on temporary
visit, may bring into India at the time of return, currency notes of Govt of
India and RBI notes upto an amount not exceeding Rs 10,000 per person.
 Investment in Pakistan is allowed under the approval route.
 Investments in Nepal can be only in Indian Rupees
 Investments in Bhutan are allowed in Indian Rupees and in freely convertible
currencies.
 In certain cases ( agro based products Like HPS groundnut, defatted ander nd
deoiled cakes, tobacco, pepper, cardamom, cashew nuts, where PC required is in
excess of FOB value, PCFC would be available only for exportable portion of
produce.
  Under UCP 600, in dealing with discrepant documents, pay under reserve is
NOT the option available besides acting as per instructions on covering or hold
the documents and act as per article 16.
 Set off of export receivables against import payables. –The export /import
transactions with ACU countries should be kept outside the arrangement.
 Docdex Rules – the procedure is non adversial and fast method of resolution.
The costs of procedure is fixed and experts are bound by rules of evidence
 It is mandatory for the resident individual to provide his/her Permanent
Account Number (PAN) for all transactions under LRS made through Authorized
Persons.
 Bankers cannot open foreign currency accounts in India for residents under LRS.
 The residents can hold foreign coins without any limit.
 Trade transaction with Myanmar may be settled in any freely convertible
currency, in addition to the ACU mechanism.
 SEZ Units cannot open EEFC Accounts. However, a unit located in a Special
Economic Zone can open a Foreign Currency Account with an Authorised Dealer
in India subject to conditions stipulated in Regulation 4 (D) of Foreign Exchange
Management (Foreign Currency Accounts by a person Resident in India)
Regulations dated January 21, 2016.
 Cheque facility is available for operation of the EEFC account.
 Resident individuals are permitted to include resident relative(s) [as defined in
section 2(77) of the Companies Act, 2013] as joint holder(s) in their EEFC
account on ‘former or survivor’ basis.

Capital account timelines :-

 Allotment of shares on FDI receipt – 60 days from the date of credit.

 Reporting in FCGPR- in FIRMS – 30 days
 Reporting of transfer of shares – 60 days
 ODI- APR – Dec 31 of that account year closure.
 ECB2 – Within seven banking days to RBI
 Receivables in ODI- 60 days

Status Holder :- Existing foreign trade policy 2015-20 extended upto 31.03.2021.
Status certificate issued under FTP 2015-20 shall be valid for a period of 5 years from
the date on which application for recognition was filed or 31.03.2021 which ever is
later.

Export Performance status

category FOB /FOR ( as
Status Category
converted ) value in US $
million
 One star Export
3
House
Two star Export
25
House
Three star Export
100
House
Four star Export
500
House
Five star Export
2000
House

Loans to NRI by resident Individual :-

 Loan if free of interest and minimum of the loan is one year

 Loan amount should be with in overall limit under LRS Per FY available to
resident individual
 Loan amount shall not be remitted outside India but shall be credited to
the NRO a/c of borrower
 Repayment of loan shall be made by way of inward remittances from
outside India or by debit to the NRO/NRE /FCNR(B) a/c of the borrower
or out of the sale proceeds of the shares or securities or immovable
property against which such loan was granted.

Letter of credit – a non fund letter – contingent liability - Contingent liabilities are
those liabilities which are not a liability today but can become a liability tomorrow.
Letter of credit are non fund based advances, which of invoked becomes a liability
because it becomes a fund based advance.

Members of the ACU :- The Central Banks and the Monetary Authorities of
Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are
currently the members of the ACU.

Major accounts that can be opened in India by a non-resident

Foreign Currency
Non-Resident Non-Resident
(Non-Resident)
(External) Rupee Ordinary Rupee
Particulars Account (Banks)
Account Scheme Account Scheme
Scheme [FCNR (B)
[NRE Account] [NRO Account]
Account]
 (1) (2) (3) (4)

Who can NRIs and PIOs Any person resident

open an outside India for
account Individual/entities of Pakistan and Bangladesh putting through
shall requires prior approval of the Reserve bonafide
Bank of India transactions in
rupees.

Individuals/ entities
of Pakistan
nationality/ origin
and entities of
Bangladesh origin
require the prior
approval of the
Reserve Bank of
India.

A Citizen of
Bangladesh/Pakistan
belonging to
minority
communities in
those countries i.e.
Hindus, Sikhs,
Buddhists, Jains,
Parsis and Christians
residing in India and
who has been
granted LTV or
whose application
for LTV is under
consideration, can
open only one NRO
account with an AD
bank subject to the
conditions
mentioned
in Notification No.
FEMA 5(R)/2016-RB
dated April 01,
2016, as updated
from time to time.
 Post Offices in
India may maintain
savings bank
accounts in the
names of persons
resident outside
India and allow
operations on these
accounts subject to
the same terms and
conditions as are
applicable to NRO
accounts maintained
with an authorised
dealer/ authorised
bank.
Joint May be held jointly in the names of two or more May be held jointly
account NRIs/ PIOs. in the names of two
or more NRIs/
NRIs/ PIOs can hold jointly with a resident PIOs.
relative on ‘former or survivor’ basis (relative
as defined in Companies Act, 2013). The May be held jointly
resident relative can operate the account as a with residents on
Power of Attorney holder during the life time ‘former or survivor’
of the NRI/ PIO account holder. basis.
Currency Indian Rupees Any permitted Indian Rupees
currency i.e. a foreign
currency which is
freely convertible

Type of Savings, Current, Term Deposit only Savings, Current,

Account Recurring, Fixed Recurring, Fixed
Deposit Deposit

Period for From one to three For terms not less As applicable to
fixed years, However, banks than 1 year and not resident accounts.
deposits are allowed to accept more than 5 years
NRE deposits above
three years from their
Asset-Liability point of
view

Permissible Credits permitted to this account are inward Inward remittances

Credits remittance from outside India, interest from outside India,
accruing on the account, interest on legitimate dues in
 investment, transfer from other NRE/ India and transfers
FCNR(B) accounts, maturity proceeds of from other NRO
investments (if such investments were made accounts are
from this account or through inward permissible credits
remittance). to NRO account.

Current income like rent, dividend, pension, Rupee gift/ loan

interest etc. will be construed as a permissible made by a resident
credit to the NRE account. to a NRI/ PIO
relative within the
Care: Only those credits which have not lost limits prescribed
repatriable character under the
Liberalised
Remittance Scheme
may be credited to
the latter’s NRO
account.
Permissible Permissible debits are local disbursements, The account can be
Debits remittance outside India, transfer to other debited for the
NRE/ FCNR(B) accounts and investments in purpose of local
India. payments, transfers
to other NRO
accounts or
remittance of
current income
abroad.

Apart from these,

balances in the NRO
account cannot be
repatriated abroad
except by NRIs and
PIOs up to USD 1
million, subject to
conditions specified
in Foreign Exchange
Management
(Remittance of
Assets) Regulations,
2016.

Funds can be
transferred to NRE
account within this
 USD 1 Million
facility.
Repatriablity Repatriable Not repatriable
except for all
current income.

Balances in an NRO
account of NRIs/
PIOs are remittable
up to USD 1 (one)
million per financial
year (April-March)
along with their
other eligible
assets.
Taxabilty Income earned in the accounts is exempt from Taxable
income tax and balances exempt from wealth tax

Loans in India AD can sanction loans in India to the account Loans against the
holder/ third parties without any limit, subject to deposits can be
usual margin requirements. These loans cannot be granted in India to the
repatriated outside India and can be used in India account holder or
only for the purposes specified in the regulations. third party subject to
usual norms and
In case of loans sanctioned to a third party, there margin requirement.
should be no direct or indirect foreign exchange The loan amount
consideration for the non-resident depositor cannot be used for
agreeing to pledge his deposits to enable the relending, carrying on
resident individual/ firm/ company to obtain such agricultural/
facilities. plantation activities or
investment in real
In case of the loan sanctioned to the account holder, estate.
it can be repaid either by adjusting the deposits or
through inward remittances from outside India The term “loan” shall
through banking channels or out of balances held in include all types of
the NRO account of the account holder. fund based/ non-fund
based facilities.
The facility for premature withdrawal of deposits
will not be available where loans against such
deposits are availed of.

The term “loan” shall include all types of fund

based/ non-fund based facilities.
Loans outside Authorised Dealers may allow their branches/ Not permitted
India correspondents outside India to grant loans to or in
favour of non-resident depositor or to third parties
at the request of depositor for bona fide purpose
against the security of funds held in the NRE/ FCNR
 (B) accounts in India, subject to usual margin
requirements.

The term “loan” shall include all types of fund

based/ non-fund based facilities
Rate of As per guidelines issued by the Department of Regulation
Interest

Operations by Operations in the account in terms of Power of Operations in the

Power of Attorney is restricted to withdrawals for account in terms of
Attorney in permissible local payments or remittance to the Power of Attorney is
favour of a account holder himself through normal banking restricted to
resident channels. 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.
While making
remittances, the
limits and conditions
of repatriability will
apply.

Change in NRE accounts should be On change in residential NRO accounts may be

residential designated as resident status, FCNR (B) designated as resident
status from accounts or the funds deposits may be allowed accounts on the return
Non-resident held in these accounts to continue till maturity of the account holder
to resident may be transferred to at the contracted rate to India for any
of interest, if so desired purpose indicating his
the RFC accounts, at the
by the account holder. intention to stay in
option of the account
India for an uncertain
holder, immediately upon
Authorised dealers period.
the return of the account
should convert the
holder to India for taking FCNR(B) deposits on Likewise, when a
up employment or on maturity into resident resident Indian
change in the residential rupee deposit accounts becomes a person
status. or RFC account (if the resident outside
depositor is eligible to India, his existing
open RFC account), at resident account
the option of the account should be designated
holder. as NRO account.

Differences between SNRR account and NRO account are:

 Feature SNRR Account NRO Account

Who can open Any person resident outside Any person resident outside India
India, having a business for putting through bonafide
interest in India for putting transactions in rupees.
through bona fide
transactions in rupees. Individuals/ entities of Pakistan
nationality/ origin and entities of
Opening of SNRR accounts by Bangladesh origin require the prior
Pakistan and Bangladesh approval of the Reserve Bank of
nationals and entities India.
incorporated in Pakistan and
Bangladesh requires prior However, a citizen of
approval of Reserve Bank. Bangladesh/Pakistan belonging to
minority communities in those
countries i.e. Hindus, Sikhs,
Buddhists, Jains, Parsis and
Christians residing in India and who
has been granted LTV or whose
application for LTV is under
consideration, can open one NRO
account with an AD bank subject to
the conditions mentioned
in Notification No. FEMA 5(R)/2016-
RB dated April 01, 2016, as updated
from time to time.

Type of Non-interest bearing Current, Savings, Recurring or Fixed

Account Deposit;

Rate of interest – as per guidelines

issued by Department of Regulation.

Permissible Debits and credits specific/ Credits:

Transactions incidental to the business
proposed to be done by the Inward remittances, legitimate dues
account holder in India, transfers from other NRO
accounts and any amount received in
accordance with the
Rules/Regulations/Directions under
FEMA, 1999.

Debits:
 Local payments, transfer to other
NRO accounts, remittance of current
income, settlement of charges on
International Credit Cards.

Tenure Concurrent to the tenure of No such restrictions on tenure.

the contract / period of
operation / the business of
the account holder and in no
case should exceed seven
years, other than with
approval of the Reserve Bank.

Restriction of seven years is

not applicable to SNRR
accounts opened for the
purposes stated at sub.
paragraphs i to v of paragraph
1 of Schedule 4 of FEMA 5(R).

Repatriability Repatriable Not repatriable except for current

income; and remittances by NRIs/
PIOs up to USD 1 million per financial
year in accordance with the
provisions of FEMA 13(R).

Facilities under Schedule III of FEM (CAT) Amendment Rules, 2015 available for
persons other than individual :-

a. Donations up-to one per cent of their foreign exchange earnings during the previous
three financial years or USD 5,000,000, whichever is less, for- (a) creation of Chairs in
reputed educational institutes, (b) contribution to funds (not being an investment fund)
promoted by educational institutes; and (c) contribution to a technical institution or body
or association in the field of activity of the donor Company.
b. Commission, per transaction, to agents abroad for sale of residential flats or commercial
plots in India up to USD 25,000 or five percent of the inward remittance whichever is
less.
c. Remittances up to USD 10,000,000 per project for any consultancy services in respect
of infrastructure projects and USD 1,000,000 per project, for other consultancy
services procured from outside India.
d. Remittances up to five per cent of investment brought into India or USD 100,000
whichever is less, by an entity in India by way of reimbursement of pre-incorporation
expenses.
e. Remittances up to USD 250,000 per financial year for purposes stipulated under Para 1
of Schedule III to FEM (CAT) Amendment Rules, 2015. However, all residual current
account transactions undertaken by such entities are otherwise permissible without any
specified limit and are to be disposed off at the level of AD, as hitherto. It is for the
AD to satisfy themselves about the genuineness of the transaction.

Anything in excess of above limits requires prior approval of the Reserve Bank of India.

Foreign currency can be carried in cash for travel abroad :- Travellers going to all
countries other than (a) and (b) below are allowed to purchase foreign currency notes /
coins only up to USD 3000 per visit. Balance amount can be carried in the form of store
value cards, travellers cheque or banker’s draft. Exceptions to this are (a) travellers
proceeding to Iraq and Libya who can draw foreign exchange in the form of foreign
currency notes and coins not exceeding USD 5000 or its equivalent per visit; (b)
travellers proceeding to the Islamic Republic of Iran, Russian Federation and other
Republics of Commonwealth of Independent States who can draw entire foreign exchange
(up-to USD 250,000) in the form of foreign currency notes or coins.

For travellers proceeding for Haj/ Umrah pilgrimage, full amount of entitlement (USD
250,000) in cash or up to the cash limit as specified by the Haj Committee of India, may
be released by the ADs and FFMCs.

Close relatives as per company’s act 2013 :-

 Father ( Including step father )

 Mother ( Including step mother )
 Son ( Including step son )
 Son’s wife
 Daughter
 Daughter’s husband
 Brother ( including step brothers )
 Sister ( including step sister )