Executive Summary:
This notification, issued by the Reserve Bank of India, outlines the regulations for the manner of receipt and payment in foreign exchange under the Foreign Exchange Management Act, 1999. It supersedes previous notifications related to receipt and payment, including transactions with Nepal and Bhutan. The regulations took effect from the date of their publication in the Official Gazette (May 02, 2016) and has been amended upto March 04, 2020.
Key Points / Main Content:
Manner of Receipt in Foreign Exchange:
* Receipts for exports from Asian Clearing Union (ACU) member countries (Bangladesh, Myanmar, Pakistan, Sri Lanka, Republic of Maldives) can be made via debit/credit to ACU Dollar, Euro, or Japanese Yen accounts.
* Receipts from Nepal and Bhutan can be in Rupees; receipts for exports to Nepal can be in free foreign exchange if permitted by Nepal Rashtra Bank, but not through the ACU mechanism.
* Receipts from Islamic Republic of Iran can be in any freely convertible currency and or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time.
* Receipts from other countries can be in Rupees from a bank account in that country or in any freely convertible currency.
* Export receipts should be in a currency appropriate to the final destination, regardless of the buyer's residence.
* Authorized dealers can allow export receipts from a third party other than the buyer, as per RBI guidelines.
Manner of Receipts in Certain Cases:
* Export receipts can be in the form of bank drafts, cheques, foreign currency notes, or travelers cheques from a buyer visiting India if surrendered to an authorized dealer within the specified period.
* Receipts are allowed via debit to FCNR/NRE/SNRR accounts maintained by a person resident outside India.
* Receipts are allowed in rupees from credit card servicing banks in India against the buyer's charge slip.
* Receipts are allowed from a rupee account held by an Exchange House with an authorized dealer, up to fifteen lakh rupees per export transaction or an amount prescribed by RBI, in consultation with Government of India in this regard.
* Receipts can be in accordance with arrangements between the Central Government and a foreign government or by Exim Bank credit arrangements.
* Receipts can be in the form of precious metals (gold, silver, platinum) for jewellery exports from Special Economic Zones and Export Oriented Units, if the sales contract allows and the value is declared.
* Payments other than exports can be received via postal or postal money order.
* Payments may also be received in rupees from SNRR Account of person resident outside India after ensuring that the underlying transactions are in conformity with the provisions of the Foreign Exchange Management Act, 1999 and the rules, regulations and directions issued thereunder
Manner of Payment in Foreign Exchange:
* Payments for imports from ACU member countries can be made via credit/debit to ACU Dollar, Euro, or Japanese Yen accounts.
* Payments to Nepal and Bhutan can be in Rupees.
* Payments to Islamic Republic of Iran can be in any freely convertible currency and or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time.
* Payments to other countries can be in Rupees from a bank account in that country or in any freely convertible currency.
* For imports, if goods are shipped from an ACU member but the supplier is not, payment follows rules for non-ACU countries.
* Payment should be in a currency appropriate to the country of shipment.
* Authorised Dealers have been permitted to allow payments for import of goods software to be made to a Third Party a party other than the supplier as per the guidelines issued by the Reserve Bank.
Manner of Payment in Certain Cases:
* Payments for imports can be made via international cards held by the resident in rupees, provided the transaction complies with the Act and related rules, and the import aligns with the Foreign Trade Policy.
* Payments in rupees are allowed for boarding, lodging, services, and travel expenses within India for foreign visitors.
* Payments can be made via crossed cheque/draft for gold or silver purchases imported under relevant government orders.
* Indian companies can pay non-whole-time directors (resident outside India) sitting fees, commission, remuneration, and travel expenses in rupees, as per company regulations and applicable laws.
* Payments by credit to SNRR account maintained by a person resident outside India.
* Payments may also be made in rupees to SNRR Account of person resident outside India after ensuring that the underlying transactions are in conformity with the provisions of the Foreign Exchange Management Act, 1999 and the rules, regulations and directions issued thereunder
Impact Analysis:
Authorised Dealers:
* Impact: Must adhere to the revised guidelines for processing foreign exchange receipts and payments.
* Action Required: Update internal procedures and systems to comply with the new regulations and any directions issued by the Reserve Bank of India.
Exporters and Importers:
* Impact: New rules on permissible currencies and methods for receiving export proceeds and making import payments.
* Action Required: Ensure transactions comply with the specified currency and routing requirements, and provide necessary documentation to Authorised Dealers.
Persons Resident Outside India:
* Impact: Revised regulations regarding receipts and payments through NRE/FCNR/SNRR accounts.
* Action Required: Comply with the updated regulations for transactions involving their accounts in India.
Exchange Houses:
* Impact: Regulations on receipt of export payments from rupee accounts held with authorized dealers.
* Action Required: Ensure that the amount does not exceed fifteen lakh rupees per export transaction or an amount prescribed by RBI, in consultation with Government of India in this regard.
Companies in India:
* Impact: Regulations for payments to non-whole-time directors resident outside India
* Action Required: Ensure compliance with Memorandum of Association or Articles of Association or in any agreement entered into by it or in any resolution passed by the company in general meeting or by its Board of Directors, provided the requirement of any law, rules, regulations, directions applicable for making such payments are duly complied with.
Key Entities Referenced
Reserve Bank of India: The central bank of India, which is issuing this notification.
Foreign Exchange Management Act, 1999: The primary legislation governing foreign exchange transactions in India, under which the regulations are issued.
Foreign Exchange Management Manner of Receipt and Payment Regulations, 2016: The title of the regulations being issued and amended by this notification.
Asian Clearing Union: A payment arrangement among countries in the Asia-Pacific region, used for settling international transactions.
Nepal Rashtra Bank: The central bank of Nepal, referenced in the context of payments for exports to Nepal.
Exim Bank: Export-Import Bank of India, which provides financial assistance to exporters and importers.
Myanmar: A country mentioned in the context of receipt and payment regulations.
Bhutan: A country mentioned in the context of receipt and payment regulations.
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
Notification No. FEMA 14(R)/2016-RB May 02, 2016
(Amended upto March 04, 2020)
(Amended upto November 13, 2019)
Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016
In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in
supersession of Notification No. FEMA.14/ 2000-RB dated May 3, 2000, as amended from time to time, dealing with
Manner of Receipt and Payment, Notification No. FEMA.16/2000-RB dated May 3, 2000, as amended from time to
time, dealing with Receipt from and Payment to a person Resident outside India and Notification No. FEMA. 17/ 2000-
RB dated May 3, 2000, as amended from time to time, dealing with Transactions in Indian Rupees with Residents of
Nepal and Bhutan, the Reserve Bank of India makes the following Regulations in respect of Manner of Receipt and
Payment, namely
1. Short title and commencement :
(i) These Regulations may be called the Foreign Exchange Management (Manner of Receipt and Payment)
Regulations, 2016.
(ii) They shall come into effect from the date of their publication in the Official Gazette.
2. Definitions :
In these Regulations, unless the context requires otherwise, -
(i) 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) 'Authorised Dealer' means a person authorized as an authorized dealer under subsection (1) of Section 10 of
the Act
(iii) 'Authorised Bank' means a bank, other than an authorized dealer, authorized by the Reserve Bank to accept
deposits from persons resident outside India;
(iv) 'FCNR / NRE account' means an FCNR or NRE account opened and maintained in accordance with the
Foreign Exchange Management (Deposits) Regulations, 2016;
(v) 1‘SNRR account’ means a Special Non- Resident Rupee account referred to in sub. regulation (4) of regulation
5 of Foreign Exchange Management (Deposit) Regulations, 2016.
The words and expressions used but not defined in these Regulations shall have the same meaning respectively assigned
to them in the Act.
3. Manner of Receipt in Foreign Exchange : -
(1) Every receipt in foreign exchange by an authorized dealer, whether by way of remittance from a
foreign country or by way of reimbursement from his branch or correspondent outside India against
payment for export from India, or against any other payment, shall be as mentioned below:
(A) 2Members of the Asian Clearing Union (ACU)
(i) Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives -
1 Inserted vide FEMA 14(R)/(1) /2019-RB dated November 13, 2019
2 Inserted vide Notification FEMA 14(R)/(2) /2020-RB dated March 04, 2020a) Receipt for export of eligible goods and services by debit to the ACU Dollar account and / or
ACU Euro account and / or 2ACU Japnese Yen account in India of a bank of the member
country in which the other party to the transaction is resident or by credit to the ACU Dollar
account and / or ACU Euro Account and / or 2ACU Japnese Yen account of the authorized
dealer maintained with the correspondent bank in that member country;
b) Receipt may also be made in any freely convertible currency in all other cases.
c) In respect of exports from India to Myanmar, payment may be received in any freely
convertible currency or through ACU mechanism from Myanmar.
(ii) Nepal and Bhutan –
(a) Receipt may be in Rupees
(b) Receipts for export of goods to Nepal may be made in free foreign exchange,
provided the importer resident in Nepal has been permitted by the Nepal Rashtra Bank to
make payment in free foreign exchange. However such receipts shall not be routed through
the ACU mechanism.
(iii) Islamic Republic of Iran
(a) Receipt for export of eligible goods and services, in any freely convertible
currency and / or in accordance with the directions issued by the Reserve Bank
to the authorized dealers from time to time.
(b) Receipt in any freely convertible currency and / or in accordance with the
directions issued by the Reserve Bank to the authorized dealers from time to
time in all other cases.
(B) All countries other than those mentioned in A above
(i) Receipt in rupees from the account of a bank situated in any country other than a member
country of the Asian Clearing Union.
(ii) Receipt in any freely convertible currency.
(2) (a) In respect of an export from India, receipt shall be made in a currency
appropriate to the place of final destination as mentioned in the declaration form irrespective
of the country of residence of the buyer.
(b) Any other mode of receipt of export proceeds for an export from India in accordance with
the directions issued by the Reserve Bank of India to authorized dealers from time to time.
(3) Authorised dealers have been permitted to allow receipts for export of goods/ software to be
received from a Third party (a party other than the buyer) as per the guidelines issued by the
Reserve Bank.
4. Manner of Receipts in certain cases : -
(1) Notwithstanding anything contained in Regulation 3, receipt for export may also be made by the
exporter as under, namely :
(i) in the form of a bank draft, cheque, pay order, foreign currency notes/ travelers cheque from
a buyer during his visit to India, provided the foreign currency so received is surrendered
within the specified period to the authorized dealer of which the exporter is a customer ;(ii) 3by debit to FCNR/ NRE/ SNRR account maintained by a person resident outside India
(overseas buyer) with an Authorised Dealer or an Authorised Bank in India, as specified in
Foreign Exchange Management (Deposits) Regulations, 2016;
(iii) in rupees from the credit card servicing bank in India against the charge slip signed by the
buyer where such payment is made by the buyer through a credit card;
(iv) from a rupee account held in the name of an Exchange House with an authorized dealer if the
amount does not exceed fifteen lakh rupees per export transaction or an amount prescribed
by RBI, in consultation with Government of India in this regard;
(v) In accordance with the directions issued by the Reserve Bank to Authorised Dealers, where
the export is covered by the arrangement between the Central Government and the
Government of a foreign country or by the credit arrangement entered into by the Exim Bank
with a financial institution in a foreign state;
(vi) in the form of precious metals i.e. gold/ silver/ platinum equivalent to value of jewellery
exported by Gem & Jewellery units in Special Economic Zones and Export Oriented Units
on the condition that the sale contract provides for the same and the value is declared in the
relevant EDF.
(2) In addition to 4 (1) (i) & (iii) above, any person resident in India may also receive any payment for
other than exports by means of postal order issued by a post office outside India or by a postal money
order issued by such post office.
(3) 4Payment may also be received in rupees by a person resident in India from SNRR Account of person
resident outside India after ensuring that the underlying transactions are in conformity with the
provisions of the Foreign Exchange Management Act, 1999 and the rules, regulations and directions
issued thereunder
5. Manner of payment in foreign exchange : -
(1) A payment in foreign exchange by an Authorised Dealer, whether by way of remittance from India or
by way of reimbursement to his branch or correspondent outside India against payment for import
into India, or against any other payment, shall be as mentioned below :
(A) 5Members of the Asian Clearing Union (ACU)
(i) Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives –
(a) Payment for import of eligible goods and services by credit to ACU Dollar account and / or
ACU Euro account and / or 5ACU Japnese Yen account in India of a bank of the member
country in which the other party to the transaction is resident or by debit to the ACU Dollar
account and / or ACU Euro account and / or 5ACU Japnese Yen account of the authorized
dealer maintained with the correspondent bank in that member country;
(b) Payment may also be made in any freely convertible currency in all other cases.
(c) In respect of imports to India from Myanmar, payment may be made in any freely
convertible currency or through ACU mechanism from Myanmar.
3 Substituted vide FEMA 14(R)/(1) /2019-RB dated November 13, 2019. Prior to amendment it read as “by debit to
FCNR/NRE account maintained by the buyer with an Authorised Dealer or an Authorised Bank in India”
4 Inserted vide FEMA 14(R)/(1) /2019-RB dated November 13, 2019
5 Inserted vide Notification FEMA 14(R)/(2)/2020RB dated March 04, 2020(ii) Nepal and Bhutan –
Payment may be in Rupees
(iii) Islamic Republic of Iran
(a) Payment for import of eligible goods and services, in any freely convertible
currency and / or in accordance with the directions issued by the Reserve Bank
to the authorized dealers from time to time.
(b) Payment in any freely convertible currency and / or in accordance with the
directions issued by the Reserve Bank to the authorized dealers from time to time in all other
cases.
(B) All countries other than those mentioned in A above.
(i) Payment in rupees from the account of a bank situated in any country other than a member
country of the Asian Clearing Union
(ii) Payment in any freely convertible currency.
(2) In respect of import into India –
(a) Where the goods are shipped from a member country of the Asian Clearing Union (other
than Nepal and Bhutan) but the supplier is resident of a country other than a member
country of the Asian Clearing Union, payment may be made in a manner specified for
countries in Group B of Regulation 5;
(b) In all other cases, payment shall be made in a currency appropriate to the country of
shipment of goods;
(c) Any other mode of payment in accordance with the directions issued by the Reserve Bank of
India to authorized dealers from time to time.
(3) Authorised Dealers have been permitted to allow payments for import of goods/ software to be made
to a Third Party (a party other than the supplier) as per the guidelines issued by the Reserve Bank.
6. Manner of Payment in certain cases :-
(1) Notwithstanding anything contained in Regulation 5, a person resident in India may make payment
for import of goods.
In foreign exchange through an international card held by him/ in rupees from international credit
card/ debit card through the credit/ debit card servicing bank in India against the charge slip signed by
the importer/ as prescribed by Reserve Bank from time to time.
Provided that –
(a) the transaction for which the payment is so made is in conformity with the
provisions of the Act, rules and regulations made thereunder; and
(b) the import is also in conformity with the provision of the Foreign Trade Policy in force.
(2) Any person resident in India may also make payment as under :
(i) in rupees towards meeting expenses on account of boarding, lodging and services related
thereto or travel to and from and within India of a person resident outside India who is on a
visit to India;
(ii) by means of a crossed cheque or a draft as consideration for purchase of gold or silver in any
form imported by such person in accordance with the terms and conditions imposed under
any order issued by the Central Government under the Foreign Trade (Development andRegulations) Act, 1992 or under any other law, rules or regulations for the time being in
force;
(iii) a company or resident in India may make payment in rupees to its non whole time director
who is resident outside India and is on a visit to India for the company's work and is entitled
to payment of sitting fees or commission or remuneration, and travel expenses to and from
and within India, in accordance with the provisions contained in the company's
Memorandum of Association or Articles of Association or in any agreement entered into by
it or in any resolution passed by the company in general meeting or by its Board of Directors,
provided the requirement of any law, rules, regulations, directions applicable for making
such payments are duly complied with.
(iv) 6by credit to SNRR account maintained by a person resident outside India (overseas seller)
with an Authorised Dealer or an Authorised Bank in India for imports into India, as specified
in Foreign Exchange Management (Deposit) Regulations, 2016
(v) 4in rupees to SNRR account of the person resident outside India after ensuring that the
underlying transactions are in conformity with the provisions of the Foreign Exchange
Management Act, 1999 and the rules, regulations and directions issued thereunder.
(Ajay Kumar Misra)
Chief General Manager-in-Charge
Foot Note: The Principal Regulations were published in the Official Gazette vide No. G.S.R. 480(E) dated May 3, 2016
and subsequently amended as under:-
No. FEMA 14(R)/(1)/2019-RB dated November 13, 2019
No. FEMA 14(R)/(2)/2020-RB dated March 04, 2020
_____________________________
6 Inserted vide FEMA 14(R)/(1) /2019-RB dated November 13, 2019