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WHAT IS COOLING PERIOD?

Monday, 28 September 2009 09:58 Raghwendra Nath Pandey

When a foreign currency instrument is sent to the overseas correspondent bank for collection the proceeds of the instruments will be credited by the bank to our Nostro account immediately stating the value date also. Though the bank can act upon immediately on such credit the overseas bank reserves the right to debit our account with the amount of the returned instrument. Visualising such eventualities Ads in India prefer to wait for a certain consecutive period and then alone act upon by passing the proceeds of instruments. The interregnum period is known as cooling period.

NOTE:- No foreign inward remittance certificate should be issued for FCNR(B) deposits as they are Repatriable

WHAT ARE THE SALIENT FEATURES OF FCNR B?

Monday, 28 September 2009 09:53 Raghwendra Nath Pandey

• First the account should be opened by the account holder not through a power of attorney.
• Joint holding only if both are NRIs.
• No FCNR in the names of Pakistanis and Bangladeshi nationals though of Indian origin.
• Free inland movement of funds no charges.
• Loans/ods freely against FCNR B deposits. Other than for investments. Closure by way of fresh inward remittances by the proceeds of maturity of FCNR deposits. From NRO account also funds can be transferred for closure of loan account. Commercial rate of interest should be charged. No direct cash remittance into the loan account be permitted. All transactions for closure if through local funds must be routed through NRO account only.
• Nomination in favour of either a resident or a non resident may be made.
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• Form A4 should be completed if the transactions in rupee equivalent exceeds Rs 1 lac.
• For repatriation of deposits/interest form A2 should be completed as it is a sale of foreign exchange.
Ads are required to submit a monthly statement for the bank as a whole in form STAT5 showing the inflow and outflow and outstanding deposits under the FCNR B scheme during the month

IN WHAT TYPE FCNR B DEPOSIT CAN BE ACCEPTED?

Monday, 28 September 2009 09:49 Raghwendra Nath Pandey

Only under term deposits. Minimum period one year and maximum three years.

HOW ABOUT THE FCNR B INTEREST RATES EITHER VARIABLE OR FIXED RATE OF INTEREST CAN BE OFFERED?

Monday, 28 September 2009 09:51 Raghwendra Nath Pandey

It is based on LIBOR.(London inter bank offered rate)
Interest can be paid half yearly or compounded. Premature withdrawals attracts penal interest.IBD will be announcing the interest rates once in a week.

HOW DO FCNR B REPARTIATION?

Monday, 28 September 2009 09:47 Raghwendra Nath Pandey

Principal and due occurred interest are fully Repatriable.

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