RBI Allows Cat II
Banks to Open Nostro Accounts to Issue Forex Pre-paid Cards to Residents Travelling Abroad
[RBI
Circular No. 104 dated 4th April 2012]
Sub: Authorised Dealer Category II – Permission for additional activity
and opening of Nostro account
Attention of all the Authorised Persons in foreign exchange is
invited to Para 3 and Para 5 of Annex I to the A. P. (DIR Series) Circular No. 25 [A.P.
(FL/RL Series) Circular No. 02] dated March 6, 2006.
2. At present, only
Authorised Dealer Category – I (AD Category-I) banks are permitted to issue forex pre-paid cards to residents travelling on private /
business visit abroad. It has now been decided to permit Authorised Dealers
Category-II also to issue forex pre-paid cards to
residents travelling on private/business visits abroad, subject to adherence to
KYC / AML / CFT requirements. However, the settlement in respect of forex pre-paid cards may be effected through AD Category-I
banks.
3. To ensure greater
flexibility in sending remittances, it has now also been decided to allow
Authorised Dealers Category-II to open Nostro
accounts subject to following terms and conditions:
i) Only one Nostro account for each currency may be opened;
ii) Balances in the account
should be utilized only for the settlement of remittances sent for permissible
purposes and not for the settlement in respect of forex
prepaid cards;
iii) No idle balance shall
be maintained in the said account; and
iv) They will be subject to reporting
requirements as prescribed from time to time.
4. All the other
instructions contained in the A.P.(DIR Series)
Circular No.25 {A.P.(FL/RL Series ) Circular No.2} dated March 6, 2006 shall
remain unchanged.
5. Authorised Persons may
bring the contents of this circular to the notice of their constituents
concerned.
6. The directions contained
in this Circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions/approvals if any, required under any other law.