RBI Issues Master Direction on Deposits, Accounts for Overseas Branches

Mumbai, Apr 17 (PTI) The RBI on Thursday said banks can open/close rupee accounts (non-interest bearing) in the name of their overseas branches or correspondents without prior reference to the central bank.

However, the opening of rupee accounts in the name of branches of Pakistani banks operating outside Pakistan requires specific approval of the Reserve Bank, said the Master Direction - Deposits and Accounts issued by the apex bank.

It further said credit to the account of a non-resident bank is a permitted method of payment to non-residents and is, therefore, subject to the regulations applicable to transfers in foreign currency.

The debit to the account of a non-resident bank is in effect an inward remittance in foreign currency, it added.

On funding of accounts of non-resident banks, the RBI said banks may freely purchase foreign currency from their overseas correspondents/ branches at ongoing market rates to lay down funds in their accounts for meeting their bonafide needs in India.

However, transactions in the accounts should be closely monitored to ensure that overseas banks do not take a speculative view on the Indian Rupee (INR). Any such instances should be notified to the Reserve Bank.

The RBI also said forward purchase/sale of foreign currencies against the rupee for repatriation/ funding is prohibited.

Offer of two-way quotes in rupee to non-resident banks is also prohibited, it added.