All transactions are to be routed through AD’s (Authorised Dealer).  Transactions can be classified into two categories i.e. Current A/c & Capital A/c.

A) Current A/c Transaction:

These transactions are those that are not capital in nature & mainly related to the Import & Export of goods & services.

There are 4 types of Current A/c Transactions:

1) Prohibitory Category

It Includes transactions with Nepal & Bhutan, remittance of earning from Lottery/Racing etc.

e.g. A person travel to Nepal &/or Bhutan or
A transaction with a person resident of Nepal or Bhutan

2) Schedule II

Transactions requiring government approval

3) Schedule III

The transactions where AD’s can allow remittance up to prescribed limits & RBI permission requirement will be for remittance exceeding the limit

4) All other current a/c transactions for which AD’s can allow remittance without monetary limit. The importers & exporters can get most of their transactions through the AD’s & there will be fewer cases of permission from RBI

Current A/c transaction includes transaction such as

i) Payment due in connection with foreign trade (Import/Export), other foreign business, services & short term banking & credit facilities in the ordinary course of business.

ii) Payment due as interest on loans & as net income from investments,

iii) Remittance for living expenses of parents, spouse & children residing abroad &

iv) The expense in connection with Foreign Travel, Education & Medical care of parent, Spouse & Children.

 

B) Capital A/c Transactions

It’s classified into two classes:

(i). Capital Account Transactions of a person resident in India.

  • Investment in foreign securities
  • Foreign Currency loans raised in India and abroad
  • Transfer of Immovable properties outside India
  • Guarantees issued by a person resident in India in favor of a person resident outside India.
  • Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India
  • Taking out an insurance policy from an insurance company outside India.
  • Loan to a person resident outside India
  • Remittance outside India of capital assets of a person resident in India.
  • Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad

(ii). Capital Account Transactions of a person resident outside India.

(a) Investment in India by way of

  • Issue of securities by a body corporate or an entity in India and investment therein by a person resident outside India; and
  • Investment by way of contributions by a person resident outside India to the capital of a firm or proprietorship concern or an association of person in India.

(b) acquisition and transfer of immovable property in India in favor of, on behalf of a person resident in India.

(c) Guarantee by a person resident outside India in favor of, or on behalf of a person resident in India,

(d) Import / Export of Currency/Currency Notes/ into/from India by a person resident outside India

(e) Deposit between a person resident in India and the person resident outside India.

(f) Foreign Currency Accounts in India of a person resident outside India

(g) Remittance outside India of capital assets in India of a person resident outside India.

 

 

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