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Foreign Currency Accounts For Residents And Other Aspects

JAIIB Paper 2 (PPB) Module B Unit 10: Overseas Foreign money Accounts For Residents And Different Points (New Syllabus) 

The Institute of Indian Banking and Finance (IIBF) has not too long ago introduced the revised syllabus and examination format for the JAIIB Examination 2023. The upcoming examination will comprise of 4 papers, with Paper 2 (Rules & Practices of Banking) overlaying Unit 10Overseas Foreign money Accounts For Residents And Different Points. This specific unit holds vital significance for candidates, as it would enormously affect their efficiency within the examination.

To help candidates in comprehending the subject, we are going to present all the required particulars associated to Unit 10: Overseas Foreign money Accounts For Residents And Different Points of JAIIB Paper 2 (PPB) Module B: Features of Banks. We strongly suggest candidates to check with this text and likewise make the most of our On-line Mock Check Collection to boost their understanding of Overseas Foreign money Accounts for Residents and different associated features.

For candidates showing for the JAIIB Certification Examination 2023, it’s important to understand every unit within the syllabus, together with the Advertising and marketing unit. This unit holds nice significance within the banking business, and candidates should put together totally to excel within the examination and set up a profitable profession within the banking sector.

Overseas Foreign money Denominated Accounts In India

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Alternate Earner’s Overseas Foreign money Account (EEFC)

Permitted Credit

  • 100% overseas change earnings by means of inward remittance by means of regular banking channel.
  • Funds acquired for the aim of counter commerce.
  • Advance remittance acquired in direction of export of products or providers.
  • Skilled earnings acquired by knowledgeable rendering providers in particular person capability.
  • Curiosity earned on the funds held within the account.
  • Re-credit of unutilised overseas foreign money earlier withdrawn from the account.
  • Reimbursement of commerce associated loans/ advances.
  • Disinvestment proceeds acquired by the resident account holder on conversion of shares held by him to ADRs/ GDRs.
  • Funds acquired in overseas change by an Indian startup arising out of gross sales/ export made by the startup or its abroad subsidiaries.

Permitted Debits

  • Cost outdoors India for capital or present account transactions.
  • Cost in overseas change for items bought from a 100% Export Oriented Unit or a Unit in an Export Processing Zone.
  • Cost of customs obligation as per Export Import Coverage.
  • Commerce associated loans/ advances, by an exporter account holder to his importer buyer outdoors India.
  • Cost in overseas change to an individual resident in India for provide of products/ providers together with funds for air fare and lodge expenditure.

Different Situations

  • Withdrawal in rupees is permitted however the quantity can’t be re-credited.
  • The account will probably be a non-interest bearing account.
  • The claims settled in rupees by ECGC/insurance coverage firms can’t be credited.
  • Fund-based/non-fund based mostly credit score services shouldn’t be granted towards these balances.
  • Can be utilized to repay packing credit score advances in any foreign money as much as precise exports made.

Resident Overseas Foreign money Account (RFC)

Permitted Credit

The account will be opened from overseas change acquired or acquired by him:

  • As pension or superannuation advantages or different financial advantages from his abroad employer.
  • By changing property acquired by him as a non-resident or inherited from or gifted by an individual resident outdoors India and repatriated to India.
  • Earlier than July 8, 1947 or any earnings arising/ accruing thereon and held outdoors India as per of a basic/ particular RBI permission.
  • As proceeds of LIC claims/ maturity/ surrendered worth settled in foreign exchange from an Indian insurance coverage firm.

Permitted Debits

The stability in RFC account will be totally utilised outdoors India, and transformed to Indian Rupee.

Different Situations

  • Can have resident relative as joint holder on ‘former or survivor’ foundation, who can not function the account in the course of the life time of the account holder.
  • The balances within the NRE/FCNR (B) Account will be credited to RFC account when the residential standing of the NRI/ PIO modifications to a Resident.

Resident Overseas Foreign money Home Account (RFC(D))

Permitted Credit

The account will be opened from overseas change acquired within the type of foreign money notes, financial institution notes and travellers cheques from abroad sources equivalent to:

  • Cost on a go to overseas for providers not arising from any enterprise or something performed in India.
  • Honorarium or reward or for providers rendered or in settlement of any lawful obligation from any individual not resident in India and who’s on a go to to India.
  • Honorarium or reward whereas on a go to to anyplace outdoors India.
  • Present from a relative
  • Unspent overseas change acquired from an authorised individual for journey overseas.
  • Representing the disinvestment proceeds acquired by the resident account holder on conversion of shares held by him to ADRs/ GDRs.
  • By the use of earnings acquired because the proceeds of life insurance coverage coverage claims values settled in overseas foreign money from an insurance coverage firm in India.

Permitted Debits

  • Balances within the account can be utilized for permitted present or capital account transactions.

Corporations and firms which adjust to the eligibility standards stipulated within the Overseas Commerce Coverage of the Authorities of India might open DDA accounts.

  • Realisation of export proceeds and native gross sales (in USD) of tough, reduce, polished diamonds; and pre and submit cargo finance availed in USD will be credited.
  • Funds for buy of tough, reduce and polished diamonds will be made. Funds will be transferred to rupee account.
  • The account needs to be a non-interest bearing present account.

Diamond Greenback Account Scheme – DDA Account

Corporations and firms which adjust to the eligibility standards stipulated within the Overseas Commerce Coverage of the Authorities of India might open DDA accounts.

  • Realisation of export proceeds and native gross sales (in USD) of tough, reduce, polished diamonds; and pre and submit cargo finance availed in USD will be credited.
  • Funds for buy of tough, reduce and polished diamonds will be made. Funds will be transferred to rupee account.
  • The account needs to be a non-Curiosity bearing present account.

Different Situations for Overseas Foreign money Accounts

For EEFC, RFC(D), DDA Accounts:

  • The sum whole of the accruals throughout a calendar month needs to be transformed into Rupees on or earlier than the final day of the succeeding calendar month after adjusting for utilization for permitted functions or ahead commitments.

For EEFC and RFC (D) Accounts:

  • Balances could also be credited to NRE/ FCNR (B) Accounts, consequent upon change of standing to non- resident.

Different Particular Classes Permitted to Keep Overseas Foreign money Accounts

  • Indian agent of delivery or airline firms included outdoors India.
  • Ship-manning/ crew managing companies in India.
  • Mission workplaces of overseas firms
  • Organisers of worldwide Seminars, Conferences, Conventions,
  • Exporters of specified items or providers on deferred fee phrases.
  • Models situated in a Particular Financial Zone (SEZ)
  • An Indian firm receiving overseas funding beneath FDI route
  • Re-insurance and Composite Insurance coverage Brokers Registered with IRDA

Permitted Overseas Foreign money Accounts Exterior India

Permission to keep up overseas foreign money accounts with a financial institution outdoors India has been given for particular functions.

  • For enterprise associated functions.
  • For research overseas, in the course of the keep there. On returning, the account is deemed to be beneath LRS.
  • Throughout keep overseas on a go to to a overseas nation. The stability needs to be repatriated on returning.
  • Collaborating in an exhibition/ commerce honest – for crediting the sale proceeds of products.
  • By a resident for sending remittances beneath LRS.
  • For elevating ECB, GDR, ADR and many others.
  • Indian startup, having an abroad subsidiary, for crediting the earnings out of exports/ gross sales.

Remittance Of Property By Overseas Nationwide Not Being PIOs

ADs are permitted to permit remittance of property by a overseas nationwide the place:

  • The individual has retired from employment in India
  • The individual has inherited from an individual referred to in part 6(5) of the Act
  • The individual is a non-resident widow/ widower and has inherited property from the deceased partner who was an Indian nationwide resident in India.
  • A overseas scholar in India has accomplished research in India.

Modes Of Buying Property Exterior India By a Resident

A resident in India can purchase immovable property outdoors India in any of the next conditions.

  • If such property was acquired, held owned or inherited when resident outdoors India
  • By the use of reward or inheritance: An individual resident in India had acquired such property on or earlier than July 8, 1947 and continued to be held by him with RBI permission or has acquired such property as per FEMA.
  • Buy out of overseas change in RFC account, or beneath LRS.
  • Purchase collectively with a relative resident outdoors India, with no outflow of funds from India.

Overseas Contribution (Regulation) Act 2010

Overseas Contribution

The time period ‘overseas contribution’ contains the donation, supply or switch made by a overseas supply of  any article, foreign money (whether or not Indian or overseas) or any safety.

Overseas Hospitality

The time period ‘overseas hospitality’ means any provide, made in money or variety by a  overseas supply for offering an individual with the prices of journey to any overseas nation or territory or with  free boarding, lodging, transport or medical therapy.

  • Acceptance of contribution from overseas sources and overseas hospitality by sure kinds of organisations ike non-government organisations, political organisations, media homes, and many others. are regulated beneath the
  • The Overseas Contribution (Regulation) Modification Invoice, 2020 was launched in Lok Sabha on September 20, 2020. The Invoice amends the Overseas Contribution (Regulation) Act, 2010.
  • The Act regulates the acceptance and utilisation of overseas contribution by people, associations and firms

Prohibition on Acceptance of Overseas Contribution

FCRA prohibits beneath talked about courses of individuals from receiving ‘overseas contribution’. 

  • Candidate for election
  • Correspondent, columnist, cartoonist, editor, proprietor, printer or writer of a registered newspaper
  • Public servant, Choose, Authorities servant or worker of any company or every other physique managed or owned by the Authorities
  • Member of any Legislature
  • Political get together or workplace bearers thereof
  • Organisations of a political nature
  • Associations or firms engaged within the manufacturing or broadcast of audio information or audio visible information or present affairs program’s by means of any digital mode
  • Correspondent or columnist, cartoonist, editor, proprietor of the affiliation or firm referred to in (g) above

Restrictions on Acceptance of Overseas Hospitality

Below talked about individuals, whereas visiting any nation or territory outdoors India, shall not settle for any overseas hospitality,  besides with the prior permission of the Central Authorities.

  • A member of a Legislature
  • An office-bearer of a political get together
  • A Choose
  • A Authorities servant
  • An worker of any company or every other physique owned or managed by the Authorities.

Overseas Contribution to be acquired by means of State Financial institution of India

With impact from September 2020, the process for receiving and coping with overseas contribution is as follows.

  • An individual shall obtain overseas contribution solely in an account designated as “FCRA Account” opened in New Delhi Fundamental Department of State Financial institution of India
  • Such individual might open one other “FCRA Account” in any of the scheduled financial institution of his selection for retaining or utilising the overseas contribution transferred from the “FCRA Account” in SBI.
  • Such individual might open a number of accounts in a number of scheduled banks of his choice to which he might switch for utilising any overseas contribution acquired in his “FCRA Account” in SBI or  held within the “FCRA Account” in one other scheduled financial institution.
  • No funds aside from overseas contribution shall be acquired or deposited in any such account.

NOTE: Each individual receiving overseas contribution shall submit a replica of a press release indicating therein the particulars of overseas contribution acquired duly licensed by officer of the financial institution or authorised individual in  overseas change and furnish the identical to the Central Authorities together with the intimation.

Disclosures of Overseas Contribution Acquired

  • An individual who has been granted a certificates of registration or prior permission shall place on its official web site the audited assertion of accounts on receipts and utilisation of the overseas contribution, together with earnings and expenditure assertion, receipt and fee account and stability sheet for each monetary 12 months starting on the primary day of April inside 9 months of the closure of the monetary 12 months.
  • A individual receiving overseas contribution in 1 / 4 of the monetary 12 months shall place particulars of overseas contribution acquired on its official web site or on the web site as specified by the Central  Authorities inside fifteen days following the final day of the quarter by which it has been acquired  clearly indicating the main points of donors, quantity acquired and date of receipt.

Unutilised Overseas Contribution in FCRA Account

  • The quantity of overseas contribution mendacity unutilised within the unique overseas contribution checking account of an individual whose certificates of registration has been cancelled shall vest with the banking authority involved until the Central Authorities points additional instructions within the matter.
  • In case an individual whose certificates of registration has been cancelled has transferred the overseas contribution to every other individual, the above situation would apply to the individual to whom the fund has been transferred.

Reporting by Banks of Receipt of Overseas Contribution

  • The financial institution shall report back to the Central Authorities inside 48 hours any transaction in respect of receipt or utilisation of any overseas contribution by any individual.
  • Central Authorities – Ministry of House Affairs (MHA), Authorities of India has developed a software program for submission of on-line experiences of receipt of overseas contribution by banks. Accordingly, any transaction in respect of receipt of overseas contribution must be reported on-line by means of the software program developed for the aim.

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