INTERNATIONAL BANKING. Quick Success Series. (UPDATED UP TO 30 November, 2017)

Transcription

1 Quick Success Series - Technology April 24, 2010 Quick Success Series (UPDATED UP TO 30 November, 2017) INTERNATIONAL BANKING QUICK SUCCESS SERIES an initiative of SBLC Deoghar to facilitate the preparation of promotion seeking personnel of our Bank, appears to have succeeded in its objective to a large extent as the readers are still approaching us for its revision/updation despite availability of plenty of other study materials. We would not have been able to sustain this unique effort of ours, without the active support and continuous encouragement of our DGM cum Circle Development officer Sri Bijayananda Padhi. We are deeply indebted to him for his co-operation and guidance. Sri Kumar Priyank, Chief Manager (Training), Sri J K Arun, Manager (Training) and Sri S K Sharma, Manager (Training) at this SBLC have owned up this project and have taken pains to keep it relevant to the users by updating & improving it. Though every care has been taken while updating the contents, we request our readers to point out any lapses at the earliest. Needless to mention that this book is not a substitute of circular instructions issued by the Bank from time to time. For detailed guidelines please refer to Bank s latest circulars. Soft copy of this edition is available on our ftp:// in QSS folder and on SBI TIMES>PATNA CIRCLE>SBLC Deoghar site. Team SBLC Deoghar is humbled by the response and recognition; it is receiving from readers within and beyond the circle. Our Team wishes the readers grand success in their endeavors. Updated By: Kumar Priyank Chief Manager Training, SBLC Deoghar Mobile k.priyank@sbi.co.in Kumar Umeshwar Singh Assistant General Manager, State Bank Learning Centre, Deoghar Phone Fax agmstc.deoghar@sbi.co.in [Type text] Page 1

2 FOREIGN EXCHANGE RESERVE (AS ON 08/12/17) ITEMS Rs. (billion) USD (Million) Total Reserves 25, ,897.6 Foreign Currency 24, ,428.0 Assets Gold 1, ,703.4 SDRs ,497.0 Reserve Position ,269.2 in the IMF FEMA (Foreign Exchange Management Act) came into force on It is an Act to consolidate and amend the law relating to foreign exchange in India, with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India Liberalised Remittance Scheme (LRS) for resident individuals (increase in the limit from USD 125,000 to USD 250,000) The Liberalized Remittance Scheme (LRS) is a facility provided by the RBI for all resident individuals including minors to freely remit upto a certain amount in terms of US Dollar for current and capital account purposes or a combination of both. The Scheme was introduced on February 4, 2004, as a liberalization measure to facilitate resident individuals to remit funds abroad for permitted current or capital account transactions or combination of both. A. Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals 1. Under the Liberalised Remittance Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 2, 50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both. The Scheme is not available to corporate, partnership firms, HUF, Trusts, etc. 2. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. During the period from February 4, 2004 till date, the LRS limit has been revised as under: DATE LRS LIMIT (USD) Feb 4, ,000 Dec 20, ,000 May 8, ,00,000 Sep 26, ,00,000 Aug 14, ,000 Jun 3, ,25,000 May 26, ,50, The Scheme is available to all resident individuals including minors. In case of remitter being a minor, the Form A2 must be countersigned by the minor s natural guardian. 4. Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. However, clubbing is not permitted by other family members for capital account transactions such as opening a bank account/investment/purchase of property, if they are not the co-owners/co-partners of the overseas bank account/ investment/property. Further, a resident cannot gift to another resident, in foreign currency, for the credit of the latter s foreign currency account held abroad under LRS. 5. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed under the Scheme 6. The permissible capital account transactions by an individual under LRS are: opening of foreign currency account abroad with a bank; purchase of property abroad; making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; acquisition of qualification shares of an overseas company for holding the post of Director; acquisition of shares of a foreign company towards professional services rendered or in lieu of Director s remuneration; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes; Page 2

3 setting up Wholly Owned Subsidiaries and Joint Ventures (with effect from August 05, 2013) outside India for bonafide business subject to the terms & conditions stipulated in Notification No FEMA.263/ RB-2013 dated March 5, 2013; Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, The limit of USD 2, 50,000 per Financial Year (FY) under the Scheme also includes/subsumes remittances for current account transactions (viz. private visit; gift/donation; going abroad on employment; emigration; maintenance of close relatives abroad; business trip; medical treatment abroad; studies abroad) available to resident individuals under Para 1 of Schedule III to Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015 dated May 26, Release of foreign exchange exceeding USD 2, 50,000, requires prior permission from the Reserve Bank of India a. Private visits For private visits abroad, other than to Nepal and Bhutan, any resident individual can obtain foreign exchange up to an aggregate amount of USD 2, 50,000, from an Authorised Dealer or FFMC, in any one financial year, irrespective of the number of visits undertaken during the year. Further, all tour related expenses including cost of rail/road/water transportation; cost of Euro Rail; passes/tickets, etc. outside India; and overseas hotel/lodging expenses shall be subsumed under the LRS limit. The tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveler. b. Gift/donation Any resident individual may remit up-to USD 2, 50,000 in one FY as gift to a person residing outside India or as donation to an organization outside India. c. Going abroad on employment A person going abroad for employment can draw foreign exchange up to USD 2, 50,000 per FY from any Authorised Dealer in India. d. Emigration A person wanting to emigrate can draw foreign exchange from AD Category I bank and AD Category II up to the amount prescribed by the country of emigration or USD 250,000. Remittance of any amount of foreign exchange outside India in excess of this limit may be allowed only towards meeting incidental expenses in the country of immigration and not for earning points or credits to become eligible for immigration by way of overseas investments in government bonds; land; commercial enterprise; etc. e. Maintenance of close relatives abroad A resident individual can remit up-to USD 2, 50,000 per FY towards maintenance of close relatives [ relative as defined in Section 6 of the Indian Companies Act, 1956] abroad. f. Business trip Visits by individuals in connection with attending of an international conference, seminar, specialised training, apprentice training, etc., are treated as business visits. For business trips to foreign countries, resident individuals can avail of foreign exchange up to USD 2, 50,000 in a FY irrespective of the number of visits undertaken during the year. However, if an employee is being deputed by an entity for any of the above and the expenses are borne by the latter, such expenses shall be treated as residual current account transactions outside LRS and may be permitted by the AD without any limit, subject to verifying the bonafides of the transaction. g. Medical treatment abroad Authorised Dealers may release foreign exchange up to an amount of USD 2,50,000 or its equivalent per FY without insisting on any estimate from a Page 3

4 hospital/doctor. For amount exceeding the above limit, Authorised Dealers may release foreign exchange under general permission based on the estimate from the doctor in India or hospital/ doctor abroad. A person who has fallen sick after proceeding abroad may also be released foreign exchange by an Authorised Dealer (without seeking prior approval of the Reserve Bank of India) for medical treatment outside India. In addition to the above, an amount up to USD 250,000 per financial year is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up. h. Facilities available to students for pursuing their studies abroad. AD Category I banks and AD Category II, may release foreign exchange up to USD 2, 50,000 or its equivalent to resident individuals for studies abroad without insisting on any estimate from the foreign University. However, AD Category I bank and AD Category II may allow remittances (without seeking prior approval of the Reserve Bank of India) exceeding USD 2, 50,000 based on the estimate received from the institution abroad. SALE OF EXCHANGE Authorised Persons may release foreign exchange for travel purposes on the basis of a declaration given by the traveller regarding the amount of foreign exchange availed of during the financial year. Out of the overall foreign exchange (USD 250, 000) being sold to a traveller, exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below: (i) travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States - not exceeding USD 3000 or its equivalent. (ii) travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its equivalent. (iii) travellers proceeding to Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States - full exchange may be released. (iv) travellers proceeding for Haj/Umrah pilgrimage- full amount of entitlement in cash or up to the cash limit as specified by the Haj Committee of India may be released. Period of surrender of foreign exchange (i) In case the foreign exchange purchased for a specific purpose is not utilized for that purpose, it could be utilized for any other eligible purpose for which drawal of foreign exchange is permitted under the relevant Rules / Regulation. (ii) General permission is available to any resident individual to surrender received / realised / unspent / unused foreign exchange to an Authorised Person within a period of 180 days from the date of receipt / realisation / purchase / acquisition / date of return of the traveller, as the case may be. Note: Where a person approaches an Authorised Person for surrender of unspent/ unutilized foreign exchange after the prescribed period of 180 days, Authorised Person should not refuse to purchase the foreign exchange merely on the ground that the prescribed period has expired. (iii) The liberalised uniform time limit of 180 days is applicable only to resident individuals and in areas other than export of goods and services. In all other cases, the regulations / directions on surrender requirement shall remain unchanged. Unspent Foreign Exchange A returning traveller is permitted to retain with him, foreign currency, travellers cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins without any ceiling beyond 180 days. Foreign exchange so retained, can be utilized by the traveller for his subsequent visit abroad. Page 4

5 Redemption of unutilized balance on prepaid travel cards: Resident Indians, who purchase their travel cards, are permitted refund of the unutilized foreign exchange balance only after 10 days from the date of last transaction. All such Authorised Persons shall redeem the unutilized balance outstanding in the cards immediately upon request by the resident Indians to whom the cards are issued subject to retention of: I) Amounts that are authorized and remain unclaimed/ not settled by the acquirers as of the date of redemption till the completion of the respective settlement cycle; ii) A small balance not exceeding US$ 100, for meeting any pipeline transactions till the completion of the respective settlement cycle; and iii) Transaction fees / service tax payable in India in Rupees. iv) For the amount that are authorized but unclaimed/ not settled by the acquirer, the issuer of such cards can hold such amounts until such transactions are processed/ settled by the acquirers within the prescribed settlement timeframe. Authorised Person It means an authorized dealer, money changer, off-shore banking unit or any other person for the time being authorized under sub-section (1) of section 10 to deal in foreign exchange or foreign securities. Authorized Dealers Authorized Dealers can take all types of foreign exchange transactions. Types of Authorised Dealer: AD Category- I: Who can take all current and capital account transactions according to RBI directions issued from time-to-time. Entities: commercial banks, State Co-op Banks, Urban Co-op Banks. AD Category II: Upgraded FFMC with minimum net owned funds of Rs. 10 cr and functioning for last 2 years. RRBs can undertake specified non trade related current a/c transactions, as also all the activities permitted to Full Fledged Money Changers. Any other activity as decided by the Reserve Bank. Entities: Upgraded FFMCs, Coop. Banks, Regional Rural Banks (RRBs), Others. AD Category III: Transactions incidental to the foreign exchange activities undertaken by select financial institutions. Entities: Select Financial and other Institutions. Full Fledged Money Changers (FFMC): These can purchase of foreign exchange and sale for private and business visits abroad. Entities: Dept. of Posts, Urban Co-op. Banks, Other FFMCs. Categories of Bank Branches dealing with forex transactions : Category A: Branches authorized to maintain Foreign Currency accounts including ACU accounts and would handle all types of forex transaction. Category B : Branches authorised to handle trade-related and Service-related transactions denominated in foreign currencies and Indian rupees and authorised to operate on Bank's Foreign Currency accounts. Category C-1: Branches authorized to handle and report all types of transactions, as B Category Branch does, through their Link Office (designated B Category Branch). However, those C1 Category Branches, authorized to handle FCN transactions can directly report through Mfx (for FCN only) for immediate positioning. Handle trade and service related transactions in foreign currencies and rupees through designated link office; report transaction to a nearby B category branch. Category C-2: Branches authorized to handle service -related transactions denominated in Page 5

6 Indian rupees including opening and maintenance of NRE accounts. RBI is entrusted with the responsibility of enforcing the rules and regulations in respect of foreign transactions. Foreign Exchange Dealers Association of India, Bombay (FEDAI) is an association of all ADs, who issues guidelines to its members for conduct of forex business and ancillary. SBI Organizational set up International Banking Group, Mumbai supervises forex business of State Bank. It is responsible for opening and control of foreign branches, International Borrowings, correspondent relationship etc. Global Market Unit, Kolkata (GMUK) (previously known as FD Kolkata) is responsible for maintaining Nostro A/C, rate list for few currencies, Barter Deal, compliance with exchange control requirements. Review of categorization of branches are also done by GMU Kolkata. Global Market Unit, Mumbai provides online exchange rates to the forex branches under Mercury FX report and control and coordinates transactions on foreign currencies affected by forex branches. Direct quotation method: The domestic currency per unit of the foreign currency. In other words, it involves quoting in fixed units of foreign currency against variable amounts of the domestic currency. eg. USD 1 = INR 67. Indirect quotation method: the amount of foreign currency required to buy or sell one unit of the domestic currency. An indirect quote is the opposite or reciprocal of a direct quote. eg. INR 100 = JPY 45. Cross Rate: the exchange rate between 2 foreign currencies without the intervention of the home currency. eg. GBP 1=USD 1.5. Cash rate: The exchange of currencies take place on the date of deal. Tom rate: The exchange of currencies takes place on the next working day. Spot rate: The exchange of currencies is effected on second working day from the date of quoting the rate. Forward rate: The exchange of currencies is effected on a future day from the date of quoting the rate. When a currency is costlier in forward market compared to the spot rate, it is at Premium and when it is cheaper in forward market, it is at Discount. Based on Sodhani Committee recommendations on forex markets, each bank is now allowed to fix its own over-night open position limit, with the specific approval of RBI. Nostro Account: A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. An a/c maintained by our Bank with a correspondent Bank. (our a/c with you) Vostro account: An a/c maintained by a Correspondent Bank with us. (Your a/c with me). Loro account: The a/c of the third bank in the books of the Correspondent Bank will be referred to by us as Loro a/c (their a/c with you). T.T selling rate is quoted for clean transactions such as T.T issued, finest selling rate for customer also rupee is received in advance. E.g. a draft in USD issued to the customer. T.T buying rate is quoted for TTs received in favor of the customer. E.g. a draft in USD paid to the customer. Bill selling rate is quoted for import bills realized. Bill buying rate quoted for negotiation of export bills. E.g an export bill for GBP Page 6

7 drawn under LC is to be negotiated. E.g. a bill for collection drawn in USD received from our Newyork office is retired by the customer. Forward Contract is a contract with a customer/another bank for an exchange transaction to be put through at some future date at an agreed rate of exchange. Exporters and Importers enter into forward contract agreement with AD to protect against forex fluctuations. Arbitrage: When a currency is purchased at one centre and immediately sold at another centre to take the advantage of exchange rate difference is called Arbitrage. Hedging: Buying foreign currency forward at current price so as to cover for the unpredicted change in the market. L.C (Letter of Credit) is an assurances or guarantees by a bank, on behalf of the buyer (importer), to the beneficiary (seller) of the credit that it would honor bills drawn in terms of the credit. Most letters of credit are import/export letters of credit, which, as the name implies, are letters of credit that are used in international trade. The same letter of credit would be termed an import letter of credit by the importer and an export letter of credit by the exporter. In most cases, the importer is the buyer and the exporter is the beneficiary. Irrevocable letter of credit only allows change or cancellation of the letter of credit by the issuing bank after application by the buyer and approval by the beneficiary. All letters of credit governed by the current UCP are irrevocable letters of credit. Revocable letter of credit can be changed at any time by either the buyer or the issuing bank with no notification to the beneficiary. The most recent version of the UCP, UCP 600, did away with this form of letter of credit for any transaction under their jurisdiction. A confirmed letter of credit is one where a second bank agrees to pay the letter of credit at the request of the issuing bank. While not usually required by law, an issuing bank might be required by court order to only issue confirmed letters of credit if they are in receivership. A unconfirmed letter of credit is guaranteed only by the issuing bank. This is the most common form with regard to confirmation. A letter of credit may also be a transferrable letter of credit. These are commonly used when the beneficiary is simply an intermediary for the real supplier of the goods and services or is one of a group of suppliers. It allows the named beneficiary to present its own documentation but transfer all or part of the payment to the actual suppliers. An un-transferrable letter of credit does not allow transfer of payments to third parties. Standby Letter of Credit: One bank advises another bank to pay only if a transaction agreed to by the opener of the credit with the beneficiary is not performed. Revolving Letter of Credit: On payment of bill the LC shall be reinstated by the value of the bill negotiated but within the original value of the LC and before its validity. The validity of such LCs should not be more than one year. A red clause letter of credit allows the beneficiary to receive partial payment/funding/loan necessary to buy, manufacture or transport the goods involved in the transaction. Originally, these terms were written in red ink, hence the name. In practical use, issuing banks will rarely offer these terms unless the beneficiary is very creditworthy or an advising bank agrees to refund the money if the shipment is not made. Green Clause Letter of Credit: Green clause letter of credit provides an arrangement for the storage of goods at the port. Preshipment finance and storage facility are available to the exporter. Back to Back Letter of Credit: When an inland LC is backed by the Foreign Letter of Credit for Page 7

8 supply of goods by the manufacturer to the exporter for onward exporting the goods to foreign country. It is used in a trade involving an intermediary, such as a trading house. It is actually made up of two letters of credit, one issued by the buyer's bank to the intermediary and the other issued by the intermediary's bank to the seller. A letter of credit may also be at sight, which is payable as soon as the documentation has been presented and verified or payment may be deferred. Deferred letters of credit are also called a usance letter of credit and may be put off until a certain time period has passed or the buyer has had the opportunity to inspect or even sell the related goods. Demand/sight bill under import LC shall be crystallized if not retired by the customer on the 10 th day from the date of receipt thereof by converting the foreign currency amount in to rupees at the Bank s Bill selling rate. (Crystallization) UCP (600) (Uniform Custom and Practices for Documentary Credits): UCP is the short form of Uniform Customs and Practice for Documentary Credits. UCP is the set of international rules that govern the letter of credit transactions throughout the world. It would be necessary to state that some practicers mistakenly use UCPDC abbreviation instead of UCP. Correct usage should be UCP for the Uniform Customs and Practice for Documentary Credits not UCPDC. Codified by ICC (International Chambers of Commerce) Paris and the latest version is effective from There are 39 articles in the UCP 600(2007). Earlier version: 1933 version, 1962 version,1974 version, 1983 version (UCP 400), 1993 version (UCP 500). DOCDEX: ICC DOCDEX is a dispute resolution procedure specifically designed for the world of trade finance, whereby a panel of three independent and impartial experts renders a decision on a dispute arising out of a trade finance instrument, undertaking or agreement. Bill Of Lading is a document issued by the shipper. It is as evidence of contract to carry goods and receipt of good received. If a Bill of lading is submitted to the bank for collection or negotiation after 21 days from the date of shipment, this is regarded as Stale. R-Return enables RBI to arrive at Balance of Payment (BoP) position of the country. GMUK consolidates R return of all branches and submits fortnightly (within 7 days of corresponding fortnight) to RBI in respect of foreign exchange transactions. Two types: R-Return (Nostro)- submitted by A and B branches and R-Return (Vostro)- to be submitted by branches which are maintaining the Vostro a/c of foreign banks. ENC: report of all export bills negotiated and sent for collection forms basis of assessing export performance of the country compared with DGFT s figures on Exports as a cross check. XOS: Export receivables outstanding for more than prescribed period. To be submitted to RBI at half yearly interval (30 th june and 31 st Dec). BEF: Non submission of Bills of Entry in respect of Imports made (To be submitted to RBI quarterly). NRD CSR: Detailed return on NRI deposits. IBS Statistics: Detailed return on external liabilities and assets of banks. Export Credit is priority sector advance now for Indian banks and foreign banks in India with 20 or more branches. But it has no separate target.(rbi guidelines) Crystallization of export bills: All export bills not realized within stipulated period should be reversed. Different periods are reckoned for crystallization depending on the credit risk rating of the customer. GR Form is an export declaration form in which the exporter has to declare the value and quantity of the shipment. The exporter submits the duplicate GR form along with other shipping Page 8

9 documents to AD within 21 days from the date of shipment. SDR (Special Drawing Rights) are issued by IMF (also known as liquid gold), is a device to increase international liquidity. Non-resident Indian (NRI): An individual shall be deemed to be a non-resident in following cases, as per FEMA and Income Tax act: a. When he / she stays in India for less than or up to 182 days during the preceding financial year. The period of stay may not be 'continuous' and the same shall be calculated by adding up the days of his / her stay in India during that financial year. b. When he / she go or stay outside India for any one of the following purposes. In such cases, the person becomes a 'non-resident' irrespective of the period of his stay in India. i. For taking up employment outside India ii. For carrying on outside India a business or vocation outside India iii. For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period. Person of Indian Origin (PIO): PIO is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who fulfils anyone of the following: i. at any time, held an Indian Passport ii. Who or either of their parents / grandparents / great grandparents was born and permanently resident in India as defined in Government of India Act, 1935 iii. Who is a spouse of a citizen of India or PIO Resident but not ordinarily resident (RNOR): A Non Resident who has returned to India for good is covered under the provisions of section 6(6) of the Income-tax Act. He / she is given a special status of Resident but not ordinarily resident (RNOR) if he / she satisfies one of the following conditions: a. The person is non-resident, as per the above provisions, for at least 9 out of 10 previous years prior to the previous year under consideration. b. The person's stay in India during the 7 previous years prior to the previous year under consideration should be 729 days or less. A person who is returning to India after 9 years of stay outside India (and who was non-resident for each of the 9 years under the Income Tax Act, 1961), shall remain RNOR for the period of two years only. Types of accounts & deposits for NRIs NRIs / PIOs / OCIs can open account in either of Indian Rupees or foreign currency, details of which are as under: Account Type of Account Name NRE Savings Bank Account NRO Current Account Term Deposit (TDR) Special Term Deposit (STDR) Recurring Deposit (RD) FCNR(B) RFC FCNB Premium Term Deposit (TDR) Special Term Deposit (STDR) Term Deposit (TDR) with Forward contract on maturity Special Term Deposit (STDR) with Forward contract on maturity Resident Bank account maintained by residents in India Joint holder liberalization RBI on review has been decided that AD banks may include an NRI close relative (relatives as defined in Section 6 of the Companies Act, 1956) in existing / new resident bank accounts as joint holder with the resident account holder on Either or Survivor basis subject to the certain conditions. (e-cir dtd ) Non Resident External (NRE) Account: A) Permissible Credits in NRE account are as per following: Transfer from another NRE / FCNR (B) account Transfer from another NRO account (subject to limit) Page 9

10 Fresh remittance from abroad through banking channel Personal cheques drawn on foreign account Proceeds of Foreign Currency Notes / Travelers cheques tendered by NRI / PIO / OCI, while visiting India. Amounts in excess of USD 5000 (or equivalent) in currency or USD 10,000/- (or equivalent) in Travelers cheques should be accompanied by a Currency Declaration Form Drafts issued by bank / exchange companies abroad Interest, dividend and maturity proceeds of investments made in India etc on repatriable basis B) Types of NRE Accounts & Deposits a) Savings Bank (SB) / Current Account Rupee denominated account Account can be opened with a zero balance Interest is paid quarterly on the daily balance in Savings Bank account. No interest is paid in Current Account. Minimum Deposit: In General Branches: No minimum amount In Personal Banking Branches: Minimum total customer account/deposit balance should be Rs. 1 lakh for Metro / Urban areas and Rs. 50,000 for Semi- Urban / Rural areas Principal & interest amount are fully repatriable Nomination facility available b) Term Deposits and Special Term Deposits Rupee deposits of fixed tenure Minimum Deposit: In General Branches: Rs. 1000/- In Personal Banking Branches: Minimum total customer account/deposit balance should be Rs. 1 lakh for Metro / Urban areas and Rs. 50,000 for Semi-Urban / Rural areas Principal & interest amount are fully repatriable Nomination facility available Loan/overdraft against deposit permissible Premature withdrawal permissible Automatic renewal on maturity for the same period but at the then prevailing rate of interest, if there are no instructions for renewal Minimum tenor is 1 year Maximum tenor is 10 years c) Recurring Deposits Minimum monthly installment of Rs.100/- Principal & interest amount are fully repatriable Nomination facility available Loan/overdraft against deposit permissible Premature withdrawal permissible No automatic renewal will happen, if there are no instructions for renewal Minimum tenor is 1 year Maximum tenor is 10 years C) Premature Withdrawals: A. For deposit below Rs. 1 crore:- No interest is payable if the deposit is withdrawn before one year. No penalty will be levied, for deposits opened or renewed from 10th April 2015 and withdrawn after completion of one year and deposit amount is up to Rs lacs. In all other cases, on pre-mature withdrawal of the deposit (after completion of 1 year), interest will be paid at applicable rate for the period the deposit has actually remained with the Bank or contracted rate less applicable penalty (as per table mentioned below), whichever is lower. NRE term deposits opened or Penalty renewed Before 1st January, % From 1st January, 2012 to 09th 0.50% April, 2015 From 10th April, % B. For deposit of Rs. 1 crore & above:- No interest is payable if the deposit is withdrawn before one year. On pre-mature withdrawal of the deposit (after completion of 1 year), interest will be paid at applicable rate for the period the deposit has actually remained with the Bank or contracted rate less applicable penalty (as per table mentioned below), whichever is lower. NRE term deposits opened or Penalty renewed Before 1st January, % From 1st January, 2012 to 09th 0.50% April, 2015 From 10th April, % 10

11 D) Tax Implications: Interest income is exempted from Indian income tax E) Joint account of Non- Residents with Residents: NRIs are permitted to open NRE account with their resident close relative (as mentioned below or they are members of a Hindu undivided family) as a joint holder on Former or Survivor basis (NRI being the former): 1. Father 2.Mother (including step-mother) 3.Husband or Wife 4.Son (including stepson) 5. Son s wife 6. Daughter (including stepdaughter) 7. Father s father 8. Father s mother 9. Mother s mother 10. Mother s father 11. Son s son 12. Son s Son s wife 13. Son s daughter 14. Son s daughter s husband 15. Daughter s husband 16. Daughter s son 17. Daughter s son s wife 18. Daughter s daughter 19. Daughter s daughter s husband 20. Brother s wife 21. Sister (including step-brother) 22. Sister (including step sister) 23. Sister s husband Non Resident Ordinary (NRO) Account: A) Permissible Credits permitted in NRO account are as per following: Transfer from another Resident Indian / NRE / FCNR (B) account Transfer from another NRO account but only for payment of legitimate dues in India Fresh remittance from abroad through banking channel Personal cheques drawn on foreign account Proceeds of Foreign Currency Notes / Travelers cheques tendered by NRI / PIO / OCI, while visiting India. Amounts in excess of USD 5000 (or equivalent) in currency or USD 10,000/- (or equivalent) in Travelers cheques should be accompanied by a Currency Declaration Form Interest, dividend and maturity proceeds of investments made in India etc on nonrepatriable basis B) Types of NRO Accounts & Deposits: a) Savings Bank (SB) / Current Account Rupee deposits of fixed tenure Interest is paid quarterly on the daily balance in Savings Bank account. No interest is paid in Current Account. Minimum Deposit: In General Branches: Rs. 1000/- In Personal Banking Branches: Minimum total customer account/deposit balance should be Rs. 1 lakh for Metro / Urban areas and Rs. 50,000 for Semi-Urban / Rural areas Principal & interest amount are partly repatriable, subject to overall ceiling of USD 1 million or equivalent in a financial year Nomination facility available Premature withdrawal permissible Automatic renewal on maturity for the same period but at the then prevailing rate of interest, if there are no instructions for renewal b) Term Deposits and Special Term Deposits Rupee deposits of fixed tenure Minimum Deposit: In General Branches: Rs. 1000/- In Personal Banking Branches: Minimum total customer account/deposit balance should be Rs. 1 lakh for Metro / Urban areas and Rs. 50,000 for Semi-Urban / Rural areas Principal & interest amount are partly repatriable, subject to overall ceiling of USD 1 million or equivalent in a financial year Nomination facility available Loan/overdraft against deposit permissible Premature withdrawal permissible Automatic renewal on maturity for the same period but at the then prevailing rate of interest, if there are no instructions for renewal Minimum tenor is 7 days (TDR) and 6 months (STDR) Maximum tenor is 10 years c) Recurring Deposits Minimum monthly installment of Rs.100/- Nomination facility available Loan/overdraft against deposit permissible Premature withdrawal permissible No automatic renewal will happen, if there are no instructions for renewal Minimum tenor is 1 year Maximum tenor is 10 years 11

12 C) Premature Withdrawals: For deposit below Rs. 1 crore:- No interest is payable if the deposit is withdrawn before 7 days. For single deposit of amount up to Rs lacs, there shall be no penalty for premature, provided it has remained with the bank for at least 7 days. In all other cases, on pre-mature withdrawal of the deposit (after completion of 7 days), interest will be paid at applicable rate for the period the deposit has actually remained with the Bank or contracted rate less applicable penalty (as per table mentioned below), whichever is lower. NRO term deposits Penalty opened or renewed Before 10th April, % From 10th April, % For deposit of Rs. 1 crore & above:- No interest is payable if the deposit is withdrawn before 7 days. On pre-mature withdrawal of the deposit (after completion of 7 days), interest will be paid at applicable rate for the period the deposit has actually remained with the Bank or contracted rate less applicable penalty (as per table mentioned below), whichever is lower. NRO term deposits opened Penalty or renewed Before 10th April, % From 10th April, % D) Tax implications Income Tax as per following will be deducted at source on interest earned in the NRO accounts: If interest income is less than or equal to Rs. 1 crore: 30.90% If interest income is more than Rs. 1 crore: % In case, depositor is resident of any of those countries with whom India has a DTAA, the tax will be deducted as per DTAA (Double Taxation Avoidance Agreement) agreed between India and the respective country. E) Joint Account of Non Residents with Residents NRIs are permitted to open NRO account with resident Indians on "former or survivor" basis only. (e-cir 1036 dt 07/11/2016) Foreign Currency Non Resident (Bank) Account: A) Permissible Credits permitted in NRO account are as per following: Transfer from another NRE / FCNR (B) account Transfer from another NRO account (subject to limit) Fresh remittance from overseas through banking channel Personal cheques drawn on foreign account Proceeds of Foreign Currency Notes / Travelers cheques tendered by NRI / PIO / OCI, while visiting India. Amounts in excess of USD 5000 (or equivalent) in currency or USD 10,000/- (or equivalent) in Travelers cheques should be accompanied by a Currency Declaration Form. B) Types of FCNR (B) Deposits: Term Deposits AND Special Term Deposits Interest is paid at a frequency of 180 days from date of Term Deposit (Term Deposit), For higher returns, with interest both on deposit and on the interest accrued i.e. interest gets compounded after every 180 days (Special Term Deposit) Foreign Currency deposits of fixed tenure Minimum Deposit of USD 1000, GBP 1000, EURO 1000, CAD 1000, JPY 1000 or AUD 1000 Principal & interest amount are fully repatriable Nomination facility available Loan/overdraft against deposit permissible Premature withdrawal permissible Automatic renewal on maturity for the same period but at the then prevailing rate of interest. Minimum tenor is 1 year Maximum tenor is 5 years C) Premature Withdrawals: No interest is payable, if the deposit is withdrawn before one year If the deposit is withdrawn after completion of one year, the interest paid shall be 1.00% below the rate applicable for the period deposit has remained with the Bank or 1.00% below the contracted rate, whichever is lower D) Tax implications Interest income is exempted from Indian income tax. However, on relocation back to In- 12

13 dia, tax is payable subject to person s tax status E) Joint Account of Non Residents with Residents NRIs are permitted to open FCNR (B) account with their resident close relative (as mentioned below or they are members of a Hindu undivided family) as a joint holder on Former or Survivor basis (NRI being the former)(list as per NRE account) Resident Foreign Currency Account: Discontinued e-cir no 762 dt 04/10/2017. FCNB Premium Account: The FCNB Premium Account combines the benefits of a FCNR (B) deposit with Forward Cover to give enhanced return to NRI customers. The principal and interest are payable in Indian Rupees and to be credited on maturity at a predefined forward rate. Features:- Deposit Tenor: 1 year Minimum deposit: USD 2000 / GBP 2000 / EUR 2000 / AUD 2000 / CAD 2000 / JPY 2, 00,000. FCNB Premium Account can be opened by (i) Conversion of existing balance of NRE Savings Bank/Fixed Deposit to FCNR (B) deposits (ii) Remittances from abroad Both principal and interest are payable in Indian Rupees and to be credited on maturity in NRE Savings bank account only. No auto renewal facility is available No interest is payable if the FCNR (B) deposit is closed before maturity In case of cancellation of Forward Contract by the customer, cancellation charges and exchange gain/loss has to borne by the customer at prevailing rate Maturity proceeds are fully repatriable from NRE Savings bank account Only authorized branches can open FCNB Premium Account Note: - The forward contract under FCNB premium account once cancelled, are not eligible to be rebooked. Foreign Tourist NRO Account Foreign Tourist who have come to India on a short visit, are permitted to open NRO account. However in terms of Regulatory requirements, the diligence and monitoring associated with such NRO accounts is different to the NRO accounts being opened for NRIs. Key features Type of Account: Savings Bank, Current Account Account maintained in: Indian Rupee Account can be opened with/credited with: a) Funds remitted from abroad through Banking Channel b) Sale of foreign exchange brought to India by the account holder Mode of Operation: Single Minimum balance/ amount: As applicable to NRO Account Maximum balance /amount: No limit Minimum/maximum Withdrawal: As applicable to NRO Account Cheque book facility: Available ATM Card: Domestic ATM cum Debit Card only Passbook: Savings Bank Account: Available, Current Account: Statement of account Rate of Interest: As applicable to NRO Account Number of Accounts: Only one Validity of the account: Till VISA expiry date of the account holder. However, it can be extended up to 12 months, if the VISA is extended. Restrictions: Account will not be credited with any local funds other than interest accrued on it i.e. source of funding will only be from foreign or interest earned in the account itself. If the account has been maintained for a period of six months or less than that, repatriation of funds to abroad is allowed without RBI approval. If the account has been maintained beyond six months, repatriation of funds to abroad is permitted only with the specific approval of RBI and with Supervisory Override (capability level is 9 - Branch Manager for Supervisory Override). For the purpose, of RBI approval, account holder has to make application for repatriation of balance on plain paper to the concerned Regional Office of RBI. Currencies Accepted for crediting the account: Any freely convertible currency 13

14 TDS applicable: No Power of Attorney (POA) for account operations POA can be granted by the NRIs to the resident Indian for following operation on their accounts. Bank has prepared a standard format of POA, which is uploaded on website. Please note that Letter of Authority (LOA) is not acceptable for operation of NRI accounts. Also, the POA can be prepared and executed as per following instructions only: When Power of Attorney (POA) is executed in India by a Non Resident Indian: a. Attorney should be a resident of India. b. Power of attorney is to be executed on a nonjudicial stamp paper of appropriate value as applicable in the state where it is executed and duly notarized. c. A Judicial Magistrate or Notary Public should attest the signature of the Executants (Account Holder). d. Executants (Account Holder) of the Power of Attorney must affix his/her signatures on every page of the Power of Attorney and initials wherever blanks are filled in. When Power of Attorney (POA) is executed outside India by a Non Resident Indian: a. The attorney should be a resident of India. b. The power of attorney should be executed on a stamp paper / plain paper and in manner as the case may be as applicable to the country in which the power of attorney is executed. c. The signature of the executant should be authenticated by any one of the below: i. SBI Foreign Office authorised official (with SS No), wherever it is permitted ii. Indian Embassy / Indian Consulate / High Commission of India in that country where the executant resides d. Stamp duty should be paid in India within three months of receipt in India, as applicable in the state where it is to be submitted. e. Executant (Account Holder) of the Power of Attorney must affix his/her signatures on every page of the Power of Attorney and initials wherever blanks are filled in. Conversion of existing resident account to NRO account or NRE / NRO account to resident account If any existing Resident Indian (domestic) account holder of SBI, wants to open a NRE / NRO account, then existing account needs to be converted into NRO account or to be closed down before opening a new NRE / NRO account, as an NRI cannot maintain a domestic account. Also, on return of NRI to India for good, then existing NRE or / and NRO accounts needs to be converted to resident Indian (domestic) account. Before changing the account, CIF status needs to be re-designated first. Both CIF and account can be converted by the home branch or related LCPC only. Following re-designation scenarios are permitted in CBS: From To Permitted/ Not permitted Domestic NRO Permitted NRO Domestic Permitted NRE Domestic Permitted Domestic NRE Not Permitted NRE NRO Not Permitted NRO NRE Not Permitted Transfer for funds from NRO to NRE Account Account holder can post / courier or submit in a person a request letter for transfer of funds from NRO account to NRE account. Transfer of funds from NRO to NRE account is permitted within the overall ceiling of USD 1 million or equivalent per financial year, subject to submission of necessary documents Re-KYC of NRI accounts All NRI accounts are categorized in High-Risk category. Therefore, as per RBI guidelines Bank has to obtain fresh documents for KYC from NRI account holders once in two years ago. For the purpose, customer can submit documents for re- KYC to his / her home branch, through post / courier or in person or through registered address. Inward Remittance Facilities SBI Rupee Instant / Flash / Express Rupee: Transfer money through any of our associated 14

15 Exchange Houses or Banks in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE to beneficiary's account in SBI in India SBI Express Remit UK: An online service to remit money from UK based bank account to the beneficiary s bank account in India through CIP (Customer Initiated Payments) mode. Minimum amount of remittance is GBP 50 and maximum amount is GBP 25,000. SBI Express Remit Canada: An online service to remit money from Canada based bank account to the beneficiary s bank account in India through the Canadian Automated Clearing Settlement System (ACSS). Minimum amount of remittance is CAD 50 and maximum amount is GBP 10,000 SBI Express Worldwide: It is a web-assisted remittance service, to remit money to beneficiary s account in India from number of countries across the world. Minimum amount of remittance in local currency is an equivalent of USD 50 and maximum amount is equivalent USD 10,000. Remittances can be sent in any of the below mentioned 39 currencies from across the world. Instant Transfer: Instant Transfer is a real time rupee remittance facility from SBI Foreign Offices in 16* countries across the world to beneficiary's account maintained with SBI in India at any of the over 19,000 Core Banking Branches of SBI and Associate Banks, as also to over 65,000 NEFT / RTGS enabled branches of other banks in India. Facility also available to non-account holders (of our foreign branches) at certain centers. * Australia, Bahrain, Belgium, Canada, China, France, Hong Kong, Israel, Japan, Maldives, Mauritius, Nepal, Oman, Singapore, South Africa and UK. SWIFT / Wire Transfer: NRIs can send remittance to their beneficiary s account in India from their overseas bank through SWIFT (MT 103). Draft, Cheque and International Money Order: a) Cashier's Cheque / International Money Order: Remittance by cashier's cheque or International money order, works on the same principles as a cheque drawn on a foreign bank. b) Draft: If a remittance is sent as a Demand Draft, the beneficiary can deposit it at the branch in India where beneficiary holds an account. The draft will be sent to the branch where it is payable. After collection, the proceeds will be deposited in the account. If there is a need for currency conversion, the currency conversion rate prevailing on the date of conversion is applied. Collection charges will be as applicable from time to time. c) Foreign Currency Cheques: Deposit personal cheques drawn on a bank abroad in foreign currency and credit the same to beneficiary s account with a branch in India. The cheques are sent to the respective countries for payment and on collection of funds, the amount is deposited in beneficiary s account. Collection period varies depending on the country, local clearing regulations and location of the bank on which the cheque is drawn. Collection charges are recovered as applicable from time to time. If the cheque amount is in foreign currency and the credit has to be offered in India rupees, the currency conversion rate prevailing on the date of conversion will be applicable. Outward remittances facility for NRIs A) From NRE or FCNR (B) account: The funds in NRE or FCNR (B) account and deposits are fully repatriable i.e. funds can be transferred to any overseas account. No documents are required to be submitted for the transfer of funds. Account holder can place a request for transfer of funds as per any of the following mode: a. Through Branch: By submitting a request letter in person or by sending it through post / courier to home branch for transfer of funds. b. Through Internet Banking (INB): For placing outward remittance or funds transfer request (forex) favoring a third party from NRE savings bank account to any account overseas through SWIFT mechanism. B) From NRO Account: Account holder can post / courier or submit in a person a request letter for transfer of funds from 15