13 July, 2015
Foreign Exchange Management (Permissible Capital Account Transactions)(Third Amendment) Regulations, 2015
Regulation 4 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 (FEMA Capital Account Regulations) has been amended to allow a resident individual to draw foreign exchange from an authorised person upto USD 250,000 per financial year for a capital account transaction as against the existing limit of USD 125,000 per financial year.
Foreign Currency (Non-Resident) Account (Banks) (FCNR (B)) Scheme
The circular dated May 14, 2015 clarifies that at the time of closure of FCNR (B)deposits and subsequent remittance of funds, submission of the Form A2 is not required. It also directed banks to devise alternatives with the help of technology for ensuring thebonafides of a transaction, rather than insisting on the physical presence of the account holder.
Card Payments – Relaxation in requirement of Additional Factor of Authentication for small value card present transactions
The requirements for additional factor of authenticationfor small value card present transactions using only contact-less cards,for a maximum value of Rs 2000 (USD 32 approx.) per transaction, have been relaxed by the circular dated May 14, 2015. Any transaction beyond Rs. 2000 (USD 32 approx.)would require authentication with personal identification number. Banks have the discretion toset a lower per transaction limit.
Framework for dealing with loan frauds
Pursuant to its circular dated May 7, 2015, the RBI has introduced a framework for dealing with loan frauds based on the recommendations of aninternal working group of the RBI and other stakeholders. The framework deals with early detection, reporting and pre-sanction measures and is to be read in conjunction with Master Circular on Frauds- Classification and Reporting dated July 1, 2014.
Rationalisation under Liberalised Remittance Scheme (LRS) for Current and Capital Account Transactions
Pursuant to the a circular dated June 1, 2015, the RBI permitted individuals to remit upto USD 250,000 per financial year as against the existing limit of USD 125,000 for any permitted current or capital account transaction. The RBI has also clarified that any remittance made by an individual under LRS would be included within the overall limit of USD 250,000.
Appointment of Non-Deposit Accepting Non-Banking Financial Companies as sub-agents under Money Transfer Service Scheme
Pursuant to the circular dated August 12, 2014, non-deposit accepting NBFCS with an asset size of INR 100,00,00,000 (USD 15,728,230 approx.) were permitted to act as sub-agents under the RBI's Money Transfer Service Scheme (MTSS) with the prior approval of the RBI. The circular dated June 25, 2015 now permits all non-deposit accepting NBFCs to act as sub-agents under MTSS without the prior approval of RBI.
For further information, please contact:
Abhishek Saxena, Partner, Phoenix Legal
abhishek.saxena@phoenixlegal.in
