RBI Guidelines for Foreign Exchange Transactions Explained | DBS Bank (2024)

FAQs

RBI Guidelines for Foreign Exchange Transactions Explained | DBS Bank? ›

You can remit in foreign currency for an RBI-approved purpose. You can buy FOREX up to USD 25,000 only. If you bring FOREX beyond a specified limit to India, you must declare it. You may keep a maximum of USD 2,000 (or equivalent) in cash notes or Traveller's Cheques.

The extant RBI guidelines on the subject are as under : (i) Banks are required to issue travellers cheques, demand drafts, mail transfers, and telegraphic transfers for Rs. 50,000 and above only by debit to customers' accounts or against cheques and not against cash (Circular DBOD.

Indian banks:

The RBI regulated banks are legally permitted to buy or sell foreign currencies. You are eligible to exchange Foreign Currency only If you have an NRO Account, with any Indian bank. If you have an NRO Account with ICICI Bank, you can easily get the Foreign Exchange in India.

These regulations in India are governed by the Foreign Exchange Management Act ('FEMA') and the Regulations thereunder. The apex body on these matters in India is the Reserve Bank of India ('RBI') which regulates the law and is responsible for all key approvals.

The Reserve Bank of India (RBI) has set a financial year limit of $2,50,000 (INR2. 04L) for foreign remittances, which applies to both personal and international business- payments. If the remittance amount exceeds this limit, prior permission from the RBI is necessary.

A multicurrency account is typically an account at a bank or financial tech firm that lets you spend, receive and hold multiple currencies. It can work like an international checking account with multiple subaccounts, each with a different currency.

“In respect of borrowers having aggregate fund based working capital limit of ₹ 150 crore and above from the banking system, a minimum level of 'loan component' of 40% shall be effective from April 1, 2019," RBI said, adding that the component will increase to 60% from 1 July.

Within 4-7 days: If you register your complaint after 3 days and between 7 days of the fraudulent transaction, then you will have to bear the limited liability of INR 5,000 to INR 25,000, whichever is lower. After deducting the lowest amount, the rest of it will be returned to you.

Can I deposit foreign currency in my bank in India? ›

A non-resident who is an OCI or NRI can open a foreign currency non-resident account in India. The Foreign Currency Non-Resident account is only allowed to be a term deposit, versus a savings or current account for residents. The term deposit is required to be a minimum of 1 year and have a maximum time of 5 years.

Foreign exchange option transaction refers to the buying and selling of a right. After paying a certain amount of option fees, the buyer has a right to exchange a particular currency at the agreed rate on a pre-determined settlement date in the future.

For travellers from India to the United States, the legal limit for liquid cash is set at USD 3,000 per person per trip. Amount greater than this can be carried in the form of travellers' cheque, Forex Card or bank transfers.

The Reserve Bank's exchange rate policy focusses on ensuring orderly conditions in the foreign exchange market. For the purpose, it closely monitors the developments in the financial markets at home and abroad. When necessary, it intervenes in the market by buying or selling foreign currencies.

Main Features of Foreign Exchange Management Act, 1999 (FEMA Act) It gives powers to the Central Government to regulate the flow of payments to and from a person situated outside the country. All financial transactions concerning foreign securities or exchange cannot be carried out without the approval of FEMA.

Example of Forex Transactions

The trader buys the EUR/USD at 1.2500 and purchases $5,000 worth of currency. Later that day the price has increased to 1.2550. The trader is up $25 (5000 * 0.0050). If the price dropped to 1.2430, the trader would be losing $35 (5000 * 0.0070).

Maximum Limit

In accordance with the Liberalised Remittance Scheme, all Indian residents are allowed to remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

No, it is not illegal to keep foreign currency in India. However, there are certain limits and restrictions on how much foreign currency you can keep and how you can use it. Residents of India can keep up to USD 2,000 (or equivalent) in cash notes or traveler's cheques.

An NRI coming into India from abroad can bring with him foreign exchange without any limit provided if foreign currency notes, travellers cheques, Forexplus Card exceed US$ 10,000/ - or its equivalent and/or the value of foreign currency exceeds US$ 5,000/- or its equivalent, it should be declared to the Customs ...