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Banks line up forex accounts

Mumbai, Nov. 20: Banks have started responding in right earnest to the move allowing resident Indians to open and operate foreign currency (forex) accounts. Citibank today became the second, after Standard Chartered a couple of days back, to come out with such a deposit.

While others are likely to join the fray in the weeks ahead, the existing ones are promising that opening such an account will not be a tedious exercise even if a permission from the Reserve Bank of India (RBI) is to be secured. “You walk into a branch, fill in a form and complete other formalities just like opening any other account. After this, the bank will get the RBI permission for the account,” said an official with a foreign bank.

Sources said central bank approval is required as the government is yet to issue a notification clearing this facility. Once that comes through, there will be no need for RBI’s nod.

Standard Chartered Bank, which had earlier announced the opening of Resident Foreign Currency (Domestic) Account, says resident individuals can maintain accounts in dollars, pound sterling or euros. The minimum balance will be $ 500, £ 250 or euro 500; there is no upper limit on money kept in these accounts.

Citibank today announced the launch of Citibank International Account, which it said comes with the added advantage of a cheque book facility. This will help depositors make payments directly, sparing them the documentation currently required in making remittances abroad. No minimum balance has been specified.

The facility will allow Citi’s customers prevent losses that arise when there are intermittent forex conversions. Making payments through cheques will be easier too, allowing customers to use their foreign currency earnings and residual basic travel quota (BTQ) amounts efficiently.

According to the RBI’s notification, foreign currency to be deposited in such accounts would have to be earned through “permissible channels” like payments received for services on a visit abroad or remittances from a person who was not a resident of India. It also includes cash gifts and unspent foreign exchange acquired by a resident Indian during an overseas visit. The accounts will not carry any interest.

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