The Reserve Bank of India (RBI) has taken a significant step towards enhancing the ease of doing business by removing the limits on the amount of remittance that can be made through the online submission of Form A2. This move is outlined in the recent RBI circular, RBI/2024-25/46, A.P. (DIR Series) Circular No. 12, dated July 03, 2024. The circular addresses all Authorised Dealers in Foreign Exchange, highlighting the new guidelines and the implications for remittances. This article provides a detailed analysis of the changes and their impact on the foreign exchange market.
Background
Form A2 is a crucial document used by individuals and businesses for making foreign exchange transactions. Previously, the submission of Form A2 was permitted through both online and physical modes, subject to certain conditions and limits. This was detailed in earlier circulars, specifically A.P. (DIR Series) Circular No. 50 dated February 11, 2016, and A.P. (DIR Series) Circular No. 02 dated April 12, 2023. These circulars allowed Authorised Dealer (AD) Category-I banks and AD Category-II entities to facilitate the submission of Form A2 by their customers, streamlining foreign exchange transactions under specific constraints.
Key Changes
The latest circular introduces the following key changes:
- Removal of Remittance Limits: The most notable change is the removal of any limits on the amount that can be remitted through the online submission of Form A2. This means that customers can now make unlimited remittances online, provided they comply with the conditions laid down in Section 10(5) of the Foreign Exchange Management Act (FEMA) 1999.
- Guidelines for Authorised Dealers: Authorised Dealers are required to develop appropriate guidelines for facilitating these remittances. These guidelines must be approved by their Board and must adhere to the existing statutory and regulatory framework. This ensures that while the remittance process is eased, it remains secure and compliant with all regulatory requirements.
- Continued Compliance: Authorised Dealers must continue to comply with relevant provisions of FEMA 1999 and the ‘Master Direction – Know Your Customer (KYC) Direction, 2016’, as updated by the RBI. This ensures that the enhanced remittance capabilities do not compromise the integrity and security of foreign exchange transactions.
- Reporting Obligations: The reporting of transactions in the Foreign Exchange Transactions Electronic Reporting System (FETERS) will continue as before. This is crucial for maintaining transparency and regulatory oversight of foreign exchange transactions.
- Notification to Constituents: Authorised Dealers are expected to inform their constituents about the contents of this circular. This ensures that all stakeholders are aware of the new guidelines and can take advantage of the eased remittance process.
Reserve Bank of India
RBI/2024-25/46
A.P. (DIR Series) Circular No. 12 Dated: July 03, 2024
To
All Authorised Dealers in Foreign Exchange
Madam / Dear Sir
Online submission of Form A2: Removal of limits on amount of remittance
Attention of Authorised Dealer (AD) Category-I banks and AD Category-II entities is invited to paragraph 4 of A.P. (DIR Series) Circular No. 50 dated February 11, 2016 (Compilation of R-Returns: Reporting under FETERS) and A.P. (DIR Series) Circular No. 02 dated April 12, 2023 (Authorised Dealers Category-II – Online Submission of Form A2), wherein AD Category-I banks and AD Category-II entities were permitted to allow submission of Form A2 through online mode by their customers, subject to certain conditions and limits.
2. On a review, and to improve ease of doing business, it is now decided to permit all Authorised Dealers (AD Category-I banks and AD Category-II entities) to facilitate remittances on the basis of online / physical submission of Form A2 and other related documents, if and as may be necessary, subject to the conditions laid down in Section 10(5) of FEMA 1999. Accordingly, there shall not be any limit on the amount being remitted on the basis of ‘online’ Form A2.
3. Authorised Dealers shall frame appropriate guidelines for the purpose, with the approval of their Board within the ambit of extant statutory and regulatory framework. The Authorised Dealers shall continue to comply with the relevant provisions of FEMA 1999 and ‘Master Direction – Know Your Customer (KYC) Direction, 2016’ as updated from time to time, issued by Department of Regulation, RBI, for all transactions. It may be further noted that reporting of transactions in FETERS shall continue, as hitherto, by the Authorised Dealer banks.
4. Authorised Dealers may bring the contents of this circular to the notice of their constituents.
5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully
(N. Senthil Kumar)
General Manager
