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May 2012

A.P. (DIR Series) Circular No. 104, dated 4-4- 2012 — Authorised Dealer Category-II — Permission for additional activity and opening of Nostro account.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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1. Issue of foreign exchange pre-paid cards

Presently,
only Authorised Dealers Category-I banks are permitted to issue foreign
exchange pre-paid cards to residents travelling on private/business
visit abroad.

This Circular now permits Authorised Dealers
Category-II also to issue foreign exchange pre-paid cards to residents
travelling on private/business visits abroad, provided:

 (1) AD Category-II adheres to KYC/AML/CFT requirements.

(2) Settlement in respect of foreign exchange prepaid cards is effected through AD Category-I banks.

2. Opening of Nostro Accounts

This Circular permits AD Category-II to open Nostro accounts subject to the following terms and conditions:

(i) Only one Nostro account for each currency must be opened.

(ii)
Balances in the account must be utilised only for the settlement of
remittances sent for permissible purposes and not for the settlement in
respect of foreign exchange prepaid cards.

(iii) Idle balance cannot be maintained in the said account.

(iv) Reporting requirements as prescribed are complied with.

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