IFSCA Eases SNRR Account Rules for IFSC Financial Institutions

The International Financial Services Centres Authority (IFSCA) has amended its Circular titled ‘Permissible Transactions through Special Non-Resident Rupee Accounts (SNRR) of IFSC Units’ to provide greater operational flexibility to financial institutions operating in International Financial Services Centres (IFSCs).

The amendment permits financial institutions to receive funds arising from business-related transactions outside IFSC through their SNRR accounts, subject to specified conditions.

1. Receipt of Funds Through SNRR Accounts Permitted

Under the amended framework, all financial institutions operating in IFSCs may:

• Undertake transactions through SNRR accounts; or
• Receive monetary consideration, including funds, fees and other amounts,

arising from business-related transactions conducted outside the IFSC.

This expands the scope of permissible transactions through SNRR accounts and facilitates smoother fund flows for IFSC-based institutions.

2. Mandatory Remittance to IBU Account

The permission is subject to a specific condition regarding the utilisation of funds received through the SNRR account.

The amendment requires that:

• Funds received in the SNRR account must be remitted to an account maintained by the institution with an International Banking Unit (IBU); and
• Such remittance must be made in a foreign currency.

3. Timeline for Remittance

The prescribed remittance must be completed within:

30 working days

from the date of receipt of the funds in the SNRR account.

This condition ensures timely transfer of funds into the foreign currency banking framework applicable to IFSC entities.

4. Objective of the Amendment

The amendment seeks to:

• Facilitate ease of doing business for IFSC-based financial institutions;
• Enable efficient receipt of fees and other business-related payments from outside IFSC;
• Provide greater operational flexibility in handling cross-border transactions; and
• Strengthen the attractiveness of IFSCs as international financial centres.

5. Impact on Financial Institutions

The revised framework will benefit financial institutions operating in IFSCs by allowing them to receive business-related monetary consideration through SNRR accounts while maintaining regulatory oversight through the requirement of timely remittance to IBU accounts.

The measure is expected to improve operational efficiency and support cross-border financial activities undertaken by IFSC entities.

6. Key Takeaway

IFSCA has amended the SNRR framework to permit financial institutions in IFSCs to receive funds, fees and other monetary consideration arising from business transactions outside IFSC through their SNRR accounts. However, such funds must be remitted to an account maintained with an IBU in foreign currency within 30 working days of receipt.