CHAPTER 39 UNION SMART RUPEE DEPOSIT SCHEME

Transcription

1 CHAPTER 39 UNION SMART RUPEE DEPOSIT SCHEME 1

2 CHAPTER 39 UNION SMART RUPEE DEPOSIT SCHEME INDEX Para No TOPIC Page No 39 Introduction Salient features of the scheme Modalities of the Scheme Branches permitted to implement this scheme Account Opening Form and Undertaking Deposit Receipt Illustration Operational Guidelines Guidelines to 'C category Branches Guidelines to 'B' category Branches 8 2

3 39. INTRODUCTION With the introduction of LIBOR related interest rate payable on NRE deposits the Union Smart Foreign Currency scheme is not attractive to the depositors. Since forward premium is also looking up, so bank has devised a new scheme for NRIs in the name of 'UNION SMART RUPEE DEPOSIT SCHEME' Salient features of the scheme NRIs desiring to open NRE rupee account, will be encouraged to open FCNR (B) Deposit Scheme for 1 year Simultaneously, they will be advised to book a Forward Contract corresponding to the maturity of the deposit and for the maturity value of FCNR(B) deposit. On maturity, the FCNR (B) maturity proceeds will be converted into rupees at the contractual rate and place the same in his NRE account. [The scheme will be beneficial as long as interest offered on FCNR (B) deposit plus forward premium is more than the interest payable on NRE Rupee deposits for the corresponding maturity period] Modalities of the scheme Who can open the account Non-Resident Indians of Indian Nationality/Origin (NRI/P10) Purpose To enable the NRIs to maximise the yield on the Rupee Deposits Period of Deposit 1 year. 3

4 Currency and Minimum Foreign Currency Amount Inward Remittance in USD or in any convertible foreign Currency equivalent to or eligible Rupee funds minimum amount USD 10,000/ Rate of Interest As applicable to FCNR (B) - Term deposit Other Conditions i. The Deposit should be placed under FCNR (B) Scheme only. ii. All rules relating to NRI deposits viz Joint Accounts, Nominations, Addition /Deletion of names, Interest application etc are the same as applicable to FCNR (B) Term Deposits. iii. No premature extension is permitted. iv. Premature withdrawal of the deposit will not be permitted. Under exceptional circumstances (to be decided by the branch head), if premature withdrawal is permitted then the depositor will be required to bear the losses both by way of penalty for premature closure and on account of cancellation of forward contract in addition to other charges/fees incurred by the bank. However, gains, if any, made by the bank on account of cancellation of forward contract will not be passed on to the depositor. v. Branch (which has accepted the subject deposit) should arrange to send the forward contract confirmation agreement received from Treasury Branch, Mumbai to the depositor for his/her/ their signature, with a request to return the same after signing by return post. vi. Further; branches should ensure that within 30 days of receipt of signed forward contract confirmation agreement from the depositor, it should be got stamped according to the state stamp act. 4

5 39.3. Branches permitted to implement this scheme i. All NRI Branches ii. All 'B' category branches iii. Other branches designated to accept FCNR (B) deposits Account Opening Form and undertaking i. Branches should obtain the usual NRI account opening form containing the undertaking and ensure that the necessary details are filled up in the undertaking at the time of opening the account. All the depositors should sign the undertaking, in case of Joint Deposits. ii. Branches should simultaneously obtain request for booking forward contracts Deposit Receipt i.deposit Receipt as applicable to FCNR(B) should be used for this deposit scheme. ii. Branches should get a rubber stamp prepared mentioning "UNION SMART RUPEE DEPOSIT SCHEME" This should be affixed on the face of the Deposit Receipt. Branch should retain in its possession a photocopy of the subject Deposit Receipt ILLUSTRATION Sr.No. Procedure Invoiced Illustration 1. Inward Remittance by TT is received. OR Clear credit is received in our NOSTRO account. 2. Foreign Currency is placed in FCNR (B) rate as on Foreign Currency so placed in FCNR (B) maturity value is arrived at 4. On the date of deposit, book a forward contract for conversion of maturity value at Sr.No.3 to INR At maturity of FCNR (B) Say USD 10,000. (Spot FCNR (B) for 1 year 1.84 FCNR (B) for 1 year deposit rate Maturity Value USD 10, Forward rate for 1 yr as on USD = Rs Current Maturity Value of FCNR (B) i.e. USD 10, = Rs 6,68,

6 deposit at for contract rate into RUPEE (USD 10, X 65.60) 6. If the deposit is kept in DRC-NRE for 1 year at spot rate ( 1 USD= Rs 61.00) 7. Net effective return to depositor Rs 8.95 Maturity value Rs 6,66, Marurity Value of NRE dep. for 1 yr Rs 6,68, Maturity Value of FCNR (B) for 1 yr Rs 6,67, Additional yield at the end of one year (6,68,238 6,66,455) = 1,783 The above illustration is for the purpose of guidance only. Branches should therefore make fresh calculations taking into account NRE/FCNR (B) deposit interest rates, spot / forward USD - Rupee rate ruling on the date of deposit Actual return to the customer will depend on the interest rate on deposit an prevailing rupee / USD forward rates as on the date of deposit. (Branches may take the help of UNION SMART SCHEME chart which is loaded on UBINET on daily basis. It clearly indicates the arbitrage available for different currencies and under which scheme and currency, there will be gain or loss) Branches should ensure that the maturity date of the deposit as well as. delivery date under the Forward Contract does not fall on Saturday/ Sunday or any public holidays Operational Guidelines After receipt of funds in Nostro Account and on receiving Account Opening Form containing the undertaking/authorisation from NRI customer the designated branches to follow the procedures stated below i.place the amount in FCNR(B) deposit for 1 year ii.calculate the maturity value of the FCNR(B) deposit amount. 6

7 iii. Simultaneously book a forward contract on the date of deposit for re conversion of the maturity value into Rupees by informing the following details to the dealing room. Deposit Account Number/Receipt Number Name of the Depositor Maturity Value in USD Period 1 year Due date Mention the B Cat Branch which will control the contract GUIDELINES TO 'C' CATEGORY BRANCHES (Designated to Accept FCNR (B) deposits): 1. Branches should take the rate directly from Dealing room (mentioning the name of the B category branch which will control the amount) and calculate the yield as per the illustration. In case of any doubt, they should get the same confirmed through B category branches through whom their foreign exchange transactions are routed. The yield is only for the purpose of explaining the customer and actual yield will be based on the forward contract booked. 2. After taking the rate and booking the forward contract, C category branches will report the same to the B category branch through whom their forex transactions are routed, inter alia, informing them the following details: Deposit Account Number/Receipt Number Name of the Depositor Maturity Value Period 1 year 7

8 Due date Contract No. Forward Rate On due date the maturity proceeds will be sent to the 'B' category with appropriate instructions for the disposal of RUPEE amount GUIDELINES TO 'B' CATEGORY BRANCHES: They will hold confirmation received from 'C' category branches stating that the branch is holding the FCNR (B) deposit receipt duly marked in their records. Diarise the due date for fulfilment of the contract. 'B' category branches will also ensure that statement of outstanding forward contracts received from A category Branch on a monthly basis is also reconciled and follow up is also done for contracts falling due in the immediate future with the respective C category branch. Branch can dispose of Rupees so obtained by way of i. Fresh NRE deposit or transfer to NRO account ii.converting at spot rate for creating FCNR ibi to continue under Union Smart Rupee Deposit Scheme C' category branches should ensure that forward contract and confirmation agreement duly signed by the Depositor is obtained, stamped with appropriate value and sent to Treasury branch for their record. 8