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ARTICLE · 26 APRIL 2016

New RBI Deposit Regulations Notified

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On 1 April 2016, the Reserve Bank of India has notified the Foreign Exchange Management (Deposit) Regulations 2016 in suppression of the erstwhile Foreign Exchange Management (Deposit) Regulations 2000.

IndiaFinance and Banking
Sharad Moudgal
Sharad Moudgal
Prashanth Ramdas
Prashanth Ramdas
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Introduction

On 1 April 2016, the Reserve Bank of India (RBI) has notified the Foreign Exchange Management (Deposit) Regulations 2016 (New Deposit Regulations) in suppression of the erstwhile Foreign Exchange Management (Deposit) Regulations 2000 (Old Deposit Regulations).

The New Deposit Regulations rationalise and consolidate the extant regulatory framework in relation to the acceptance of deposits and the various accounts that may be opened by non-residents in India.

The key changes introduced by the New Deposit Regulations and their likely impact are discussed below.

Key changes

Escrow Arrangements: In 2007, the RBI permitted non-resident acquirers to open escrow accounts and special accounts for the acquisition of shares and convertible debentures through open offers, delisting/exit offers and buybacks in accordance with regulations issued by the Securities and Exchange Board of India. Subsequently, the RBI allowed resident and non-resident acquirers

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