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RBI has now mandated that the MICR code and IFSC code of a bank branch be made available on the passbook/statement of account of account holders. The MICR code is necessary for all Electronic Clearing Service (ECS – Credit and Debit) transactions. Similarly, the IFSC code is a pre-requisite for NEFT and RTGS  transactions.  Currently, the MICR code is available on the cheque leaf along with the IFSC code of the branch.  Once banks take action on this, the MICR code and IFSC code of bank branches will be readily available not only on cheque leafs but also on your passbook or statement of accounts.

In a move that would be helpful to many, RBI through a circular issued on May 7, 2012 has further liberalized the foreign exchange remittance limit. The limit for foreign exchange remittance for miscellaneous purposes without documentation formalities, has been raised from USD 5000 to USD 25000 with immediate effect.

The circular states that Authorised Dealers need not obtain any document, including Form A-2, except a simple letter (from the applicant containing the basic information, viz., names and the addresses of the applicant and the beneficiary, amount to be remitted and the purpose of remittance) as long as the foreign exchange is being purchased for a current account transaction, and the amount does not exceed USD 25000 or its equivalent and the payment is made by a cheque drawn on the applicant’s bank account or by a Demand Draft.

In a significant change announced on May 7, 2012 through a circular, RBI has said that the NRIs/PIOs may be permitted, subject to payment of applicable taxes, to transfer repatriable funds from their NRO account within the overall ceiling of US $ 1 million per financial year, for credit to their NRE account in India.  At present transfer of funds from NRO to NRE account is not permissible.

RBI through its circular announced the following:

On a review, it has been decided that henceforth NRI as defined in Foreign Exchange Management (Deposit) Regulations, 2000 contained in Notification No. FEMA.5/2000-RB dated 3rd May 2000, as amended from time to time, shall be eligible to transfer funds from NRO account to NRE account within the overall ceiling of USD one million per financial year subject to payment of tax, as applicable (i.e. as applicable if funds were remitted abroad). Such credit of funds to NRE account shall be treated as eligible credit in terms of paragraph 3(j) of Schedule-1 of Notification No. FEMA.5/2000-RB dated 3rd May 2000.

This is clearly great news for NRIs/PIOs who had funds in NRO accounts and wanted to move them into NRE accounts which are repatriable into foreign currencies.

SBI, ICICI and other banks have FCNR deposit accounts to NRIs have increased the interest rates being offered based on a RBI hike in ceiling on interest offered by such accounts. The rates have gone up by 75bps or 0.75% for FCNR deposits of  between 1 and 3 years. The rates have gone up by 175 bps or 1.75% for deposits with maturity periods of over 3 years. With this hike, FCNR deposits now give an interest rate of 3.67% for deposits of between 2 and 3 years, while deposits of 5 years duration now fetch an interest rate of 4.11%.