The Reserve Bank of India (‘RBI’) has, by way of a Notification dated January 14, 2025, amended the Foreign Exchange Management (Deposit) Regulations, 2016 (‘Deposit Regulations’) incorporating the following key changes:

i.    Any person resident outside India having business interests in India can now open and maintain a Special Non-Resident Rupee Account (‘SNRR Account’) with the branch of an authorised dealer (‘AD’) bank situated outside India. Earlier, such person resident outside India could open an SNRR Account only with the Indian branch of the AD bank. For abundant clarity, an explanation to the effect has also been included in Schedule 4 of the Deposit Regulations to state that units in International Financial Services Centre (‘IFSC’) can open an SNRR Account with ADs in India (outside IFSC) for its business-related transactions outside IFSC;

ii.   Notwithstanding anything to the contrary contained in the Deposit Regulations, transfer of funds for all bona fide transactions are now permitted between repatriable Rupee accounts (which are opened and maintained in compliance with the Deposit Regulations). Earlier, the Deposit Regulations were silent on this subject;

iii.  Prior to the amendment, the tenure of an SNRR Account was concurrent with the tenure of the contract / period of operation / the business of the account holder, subject to a maximum limit of seven years. This limitation of seven years has now been done away with;

iv.   Consequent to the change made in (i) above, the following amendments have been incorporated:

a. only balances in SNRR Accounts in India will be eligible for repatriation;

b. all transactions in SNRR Accounts in India will be subject to payment of applicable taxes; and

c. if an SNRR account holder, subsequently becomes a resident, his / her SNRR account in India can be designated as a resident Rupee account;

v.    It has been clarified that the amount owed to a non-resident nominee from the account of a deceased account holder with an SNRR Account in India will be transferred to the nominee’s Non-Resident Ordinary (NRO) or Non-Resident External (‘NRE’) account in India or sent through normal banking channels.