AD Banks Can Allow Interest-Bearing Accounts for Non-Residents to Post/Collect Margins for Derivative Contracts
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- Last Updated on 8 May, 2024
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Notification No. F. No. FEMA 5(R)/(4)/2024-RB; Dated: 06.05.2024
The Reserve Bank of India (RBI) has notified Foreign Exchange Management (Deposit) (Fourth Amendment) Regulations, 2024. An amendment has been made in Regulation 7 of the Foreign Exchange Management (Deposit) Regulations, 2016. A new sub regulation 6 has been added in Regulation 7 which deals with the ‘Other deposits made or held by authorised dealer’.
Previously, an Authorized Dealer in India could only allow a Foreign Portfolio Investor and a Foreign Venture Capital Investor, both registered with the Securities and Exchange Board of India (SEBI) under the relevant SEBI regulations, to open and maintain a non-interest bearing foreign currency account.
This was solely to make investments in accordance with the erstwhile Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017[ Repealed by Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 vide notification no. S.O. 3732(E) [F.NO.1/14/EM/2015], dated 17-10-2019 ], as amended from time to time.
However, with the new amendment, a person resident outside India can now open, hold and maintain an interest-bearing account in Indian Rupees and/or foreign currency for the purpose of posting and collecting margin in India for a permitted derivative contract entered into by such person in terms of Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020.
Click Here To Read The Full Notification
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