The Reserve Bank of India has, on November 13, 2019, issued a notification bearing number FEMA 5(R)/(3)/2019-RB notifying the Notification of Foreign Exchange Management (Deposit) (Third Amendment) Regulations, 2019.

The amendment has been brought into force to enhance the scope of non-interest bearing Special Non-resident Rupee Account ("SNRR Account") by permitting persons resident outside India to open such accounts to facilitate rupee denominated ECB, trade credit and trade invoicing.

Pursuant to the said amendment, the SNRR Account can be opened and operated for business interest in India including the following INR transactions:

(i) Investments made in India in accordance with Foreign Exchange Management (Non-debt Instruments) Rules, 2019 dated October 17, 2019 and Foreign Exchange Management (Debt Instruments) Regulations, 2019 notified vide notification no. FEMA 396/2019-RB dated October 17, 2019, as applicable, as amended from time to time

(ii) External Commercial Borrowings in INR;

(iii) Trade Credits in INR;

(iv) Trade (Export/ Import) Invoicing in INR; and

(v) Business related transactions outside International Financial Service Centre (IFSC) by IFSC units at GIFT city like administrative expenses in INR outside IFSC, INR amount from sale of scrap, government incentives in INR, etc. The account will be maintained with bank in India (outside IFSC).

The restriction on the tenure of the SNRR Account of seven years shall not be applicable to SNRR Accounts used for the aforesaid purposes. It has been further provided that Indian banks shall maintain separate SNRR Account for each category of transactions or a single SNRR Account for a person resident outside India engaged in multiple categories of transactions provided it is able to identify/ segregate and account them category-wise.

Further, in the event of death of an account holder, apart from the Non-Resident Ordinary (NRO) Account of the nominee, the amount due/ payable to non-resident nominee from the account of a deceased account holder, can now be credited to the NRE Account of the nominee with an authorised dealer/ authorised bank in India or by remittance through normal banking channels.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.