SNRR ACCOUNT: ER. AVINASH KULKARNI

Saturday Brain Storming Thought (232) 20/07/2024

SNRR ACCOUNT

SNRR Account

Special Non-resident Ruppe Account

Any person resident outside India, having a business interest in India, can open a Special Non-resident Ruppe Account (SNRR) with an authorised dealer for the purpose of putting through bonafide transactions in rupees which are in conformity with the provisions of the Act, rules and regulations made

Features of SNRR Account

1) Who can open an account

Any person resident outside India, having business interest in India

Opening of SNRR Accounts by Pakistan and Bangladesh nationals and entities incorporated in Pakistan and Bangladesh requires prior approval of RBI

2) Type of Account

Non-interest bearing

3) Permissible Transactions

Debits and credits specific/incidental to the business proposed to be done bty the account holder

4) Tenure

Concurrent to the tenure of the contract / period of operation / the business of the account holder and in no case should exceed seven years, other than with approval of the RBI

5) Repatriability

Repatriable

Process to be adopted for SNRR account transactions

1) Payments initiated to the debit of SNRR Accounts

2) Payments received for the credit of SNRR Accounts

3) AD banks shall ensure compliance with various FEMA provisions as contained in the FEMA or the Rules or Regulations framed there under or directions issued there under in respect of all such transactions involving SNRR Accounts

Responsible for FEMA compliance for trade transactions in SNRR Accounts

1) For Debit to SNRR Accounts

In case of receipt of Export proceeds by an Indian party by debit to SNRR account of the overseas buyer

2) For credit to SNRR account

In case of payment for Imports by an Indian party by credit to the SNRR account of the overseas seller

3) In the case of ECB, Trade credits, foreign investments etc, the designated AD bank maintains the resident customers account will be responsible

4) Banks involved in the transactions shall be responsible for sharing the details of the transactions

Whether interest can be earned on SNRR balances or through term deposit?

Permitted transactions in SNRR Accounts

1) Investments made in India in accordance with FEMA regulations 2019 (both debt and non-debt instruments)

2) Export / Import trade invoicing

3) External commercial borrowings in INR

4) Trade credits

5) Business related transactions undertaken by IFSC units at GIFT City

Whether LRS transactions are permitted through SNRR Accounts

No,

Liberalised transactions are not permitted through SNRR Accounts

Types of accounts through SNRR Accounts

Only Current Account can be opened through SNRR Accounts

Interest on SNRR Accounts

Unlike NRO, NRE, FCNR accounts, there is no interest income on the balances or term deposits, under SNRR Accounts

Repatriation for SNRR Accounts

Yes,

The balances in this account are eligible for repatriation subject to payment of due / applicable within India

Impact of SNRR Accounts if a person becomes Indian after some time

SNRR Accounts will be designated as resident rupee account when the account holder becomes Indian resident

Nomination facility for SNRR account

Yes,

The account holder can appoint nominee to this account, in case of his death

In case of death of SNRR account holder

The due / payable amount will be credited to the NRO account of the non-resident nominee from the account of deceased SNRR account holder

Inter SNRR fund transfer permission

Yes,

It is permitted only between SNRR Accounts of the same non-resident person for the purpose for undertaking different categories of transactions such as trade, ECB, Trade credits etc

Can rental income be credited in SNRR account

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