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RBI eases acceptance norms for forex and travellers cheques from tourists, NRIs

The Reserve Bank of India has directed all authorised dealers in foreign exchange to accept unlimited foreign currency notes and travellers cheques from tourists and non-resident Indians visiting India where the proceeds are to be credited to the resident and non-resident accounts of the tenderers.

The authorised dealers can accept such foreign exchange without asking for documentation or enquiry into the source of instruments, provided they follow the normal safeguards prescribed for credits into non-resident accounts.

The RBI has also asked the authorised dealers in foreign exchange to accept cash payment at least to the extent of $ 1,000 or its equivalent per transaction in tourist centres and major towns. For smaller towns, the authorised dealers in foreign exchange may accept upto $ 500 or its equivalent.

While accepting such cash payments, however, authorised dealers may take the normal safeguards which they take against tender of forged or stolen traveller cheques. The RBI has in fact also indicated that the banks may even fix higher limits than those prescribed by the RBI for such cash payments.

The RBI asked the banks to ensure that the latest exchange rates are available at their branches and no encashment is refused on account of non-availability of current rates of conversion. To ensure this, the banks have been asked to put in place a speedy and efficient system.

According to the RBI instructions, the bank branches should obtain the rates from the next link branch where necessary and in exceptional circumstances. If obtaining the current rates through a link branch is not feasible, bank branches should use the latest available rate for conversion.

The bank branches authorised to deal in foreign exchange have also been asked to prominently display in their premises the rates and other charges along with rules for encashment and brand name of travellers' cheques accepted. The banks are free to load into the rates the cost of funds that would be required to be deployed in offering such service.

The RBI had, in 1994, permitted residents (individuals, shops, hotels) to receive payment in foreign currency notes and travellers cheques from the persons who are on a visit to India for service rendered or in settlement of local obligations.

The RBI endeavour in permitting residents to receive payment in foreign currency was to encourage residents (who receive such funds in foreign currency notes and travellers cheques in settlement of lawful obligations) to fearlessly encash such amounts through banking channels.

The tourists and Non-Resident Indians visiting India, however, some times experience difficulties in encashing travellers cheques and foreign currency notes. This was largely on account of different practices followed by banks and varying limits upto which the encashment was allowed by these banks.

The RBI has issued the present fresh instructions to authorised dealers after reviewing the entire procedure in consultation with the Foreign Exchange Dealers' Association of India.

UNI

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