**Policy Summary: Foreign Exchange Management (Manner of Receipt and Payment) Second Amendment Regulations, 2020**
This notification, No. FEMA 14R22020RB, issued by the Reserve Bank of India (RBI), Foreign Exchange Department, Central Office, Mumbai, on March 04, 2020, introduces amendments to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 (Notification No. FEMA 14R2016 RB dated May 02, 2016).
The amendments, enacted under the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), pertain to regulations 3 and 5, specifically addressing transactions involving members of the Asian Clearing Union (ACU).
Key changes include:
* **Regulation 3 (1A):** Modifies the provisions related to receipt for export of eligible goods and services by clarifying that payments can be made via debits to ACU Dollar, Euro, or Japanese Yen accounts in India of a bank of the member country where the other party resides. Alternatively, payments can be credited to the ACU Dollar, Euro, or Japanese Yen account of the authorized dealer maintained with the correspondent bank in that member country.
* **Regulation 5 (1A):** Amends the provisions concerning payment for import of eligible goods and services, stipulating that payments can be made via credits to ACU Dollar, Euro, or Japanese Yen accounts in India of a bank of the member country where the other party resides, or by debits to the ACU Dollar, Euro, or Japanese Yen account of the authorized dealer maintained with the correspondent bank in that member country.
These regulations are effective from the date of their publication in the Official Gazette.
The notification was published in the Official Gazette of India [Extraordinary, Part III, Section 4] dated 06.03.2020.
The Principal Regulations were previously published vide No. G.S.R. 480(E) dated May 3, 2016, and subsequently amended by Notification No. FEMA 14R12019RB dated November 13, 2019.
For further information, contact Ajay Kumar Misra, Chief General Manager-in-Charge, Reserve Bank of India.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the country's monetary policy and foreign exchange.
Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for matters connected therewith or incidental thereto.
Foreign Exchange Management Manner of Receipt and Payment Regulations, 2016: Regulations pertaining to the manner of receiving and making payments in foreign exchange, as governed by the Reserve Bank of India.
Foreign Exchange Management Manner of Receipt and Payment Second Amendment Regulations, 2020: An amendment to the Foreign Exchange Management Manner of Receipt and Payment Regulations, 2016.
Asian Clearing Union: A payment arrangement whereby the participants settle payments for intra-regional transactions among the participating countries on a multilateral basis.
ACU Dollar account: A Dollar denominated account used for transactions within the Asian Clearing Union.
ACU Euro account: A Euro denominated account used for transactions within the Asian Clearing Union.
ACU Japnese Yen account: A Japanese Yen denominated account used for transactions within the Asian Clearing Union.
Reserve Bank of India
Foreign Exchange Department
Central Office
Mumbai
Notification No. FEMA 14(R)/(2)/2020-RB March 04, 2020
Foreign Exchange Management (Manner of Receipt and Payment) (Second Amendment) Regulations, 2020
In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the
Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Manner of Receipt
and Payment) Regulations, 2016 [Notification No. FEMA 14(R)/2016- RB dated May 02, 2016] (hereinafter referred
to as 'the Principal Regulations'), namely:
1. Short title and commencement: -
i. These Regulations may be called the Foreign Exchange Management (Manner of Receipt and Payment)
(Second Amendment) Regulations, 2020.
ii. They shall come into force from the date of their publication in the official Gazette.
2. In the Principal Regulations,
(i) in sub-Regulation 1 (A) of Regulation 3, the following shall be substituted, namely:
“Members of Asian Clearing Union (ACU)”
(ii) in sub-Clause (a) of Clause (i) of sub-Regulation (1)(A) of Regulation 3, the following shall be substituted,
namely:
“Receipt for export of eligible goods and services by debit to the ACU Dollar account and / or ACU
Euro account and / or ACU 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 ACU Japnese Yen account of the authorized dealer maintained with the
correspondent bank in that member country;”
(iii) in sub-regulation 1(A) of Regulation 5, the following shall be substituted, namely:
“Members of Asian Clearing Union (ACU)”
(iv) in sub-Clause (a) of Clause (i) of sub-Regulation (1)(A) of Regulation 5, the following shall be substituted,
namely:
“Payment for import of eligible goods and services by credit to ACU Dollar account and / or ACU
Euro account and / or ACU 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 ACU Japnese Yen account of the authorized dealer maintained with the correspondent
bank in that member country:”
(Ajay Kumar Misra)
Chief General Manager-in-Charge
Published in the Official Gazette of
India- Extraordinary -Part III, Section 4
dated 06.03.2020
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:
i. No. FEMA 14(R)/(1)/2019-RB dated November 13, 2019