RBI Mandates 3-Year Trade Record to Open Diamond Dollar Account

1. Background

On 29 April 2025, the Reserve Bank of India (RBI) issued Notification F. No. FEMA 10 (R)(6)/2025-RB, effectuating the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Sixth Amendment) Regulations, 2025. The principal regulations govern the opening and operation of foreign currency accounts by Indian residents, including exporters who maintain Diamond Dollar Accounts (DDAs) to facilitate their trade in diamonds and coloured gemstone‐studded jewellery.

2. Key Amendment to Schedule II (Annexure: Application for Opening Diamond Dollar Account)

• Change to Eligibility Tenure

1. 1. Previous Requirement – Exporter firms and companies needed a minimum 2-year track record in the import/export of diamonds and coloured gemstone-studded jewellery.
   2. Revised Requirement – This minimum tenure is now increased to 3 years.

• Scope of Amendment

1. 1. Applies only to the annexure/form used to apply for the opening of a Diamond Dollar Account under Schedule II of the FEMA (Foreign Currency Accounts) Regulations.
   2. All other eligibility criteria—such as documentation of consignments, KYC norms, and compliance with Import–Export Code (IEC) requirements—remain unchanged.

3. Rationale Behind the Amendment

1. Enhanced Trade Vigilance: By extending the track record requirement, the RBI aims to ensure that only established and experienced entities gain access to foreign currency accounts dedicated to high-value gemstone exports, thereby reducing the risk of misuse.
2. Mitigating Fraud and Money Laundering: A longer vintage in the trade serves as an additional safeguard against newly formed shell entities that could exploit DDAs for illicit fund flows.
3. Alignment with International Best Practices: Many global financial jurisdictions impose stringent longevity and track‐record requirements on accounts facilitating the trade of high-value commodities; this amendment brings India’s regime closer to those standards.

4. Implications for Exporters

• Exporter Firms & Companies

1. 1. Those with less than 3 years of diamond or gemstone jewellery trading experience will no longer qualifyto open a new DDA.
   2. Existing DDA holders are unaffected, provided they continue to comply with ongoing operational and reporting requirements.

• New Applicants: Must furnish three years’ audited trading records, including export invoices, shipping bills, and GST returns, to demonstrate compliance with the revised eligibility criteria.

• Banking Correspondents

1. 1. Authorised banks should update their DDA application checklists and KYC procedures to reflect the new tenure requirement.
   2. Staff training and system‐based validations must be adjusted so that applications from firms with under-three-year histories are automatically flagged for ineligibility.

5. Next Steps & Compliance Timeline

1. Regulatory Communication: Banks and Authorized Dealer Category-I branches to issue internal circulars by mid-May 2025 informing relationship managers and compliance teams of the change.
2. System Updates: Core banking platforms and DDA onboarding modules should be updated by 30 June 2025 to enforce the 3-year track record rule.
3. Applicant Guidance: Exporters planning to apply for a DDA should begin compiling and certifying their three-year export history files immediately to avoid delays.
4. Effective Date: The Sixth Amendment Regulations took effect on 29 April 2025, and any DDA applications submitted on or after this date must satisfy the new three-year requirement.

By increasing the minimum experience threshold for Diamond Dollar Accounts, the RBI strengthens oversight of valuable gemstone exports, promotes seasoned market participation, and bolsters India’s foreign exchange regulatory framework.

Click Here To Read The Full Notification