Updates on Special Non-Resident Rupee Accounts for IFSCs: Key Changes

Introduction

The International Financial Services Centres Authority (IFSCA) has released a circular that updates financial institutions operating within International Financial Services Centres (IFSCs) regarding the use of Special Non-Resident Rupee (SNRR) accounts. This circular outlines significant changes to the permissible transactions allowed under these accounts as defined by the amended Foreign Exchange Management (Deposit) Regulations, 2016.

Key Changes to SNRR Accounts

• Amendment Notification: Effective January 14, 2025, the regulations have expanded the scope of transactions permitted through SNRR accounts.

• Previously Allowed Transactions: Under the previous framework, SNRR accounts could only be utilized for specific purposes, including:

  • Administrative expenses in Indian Rupees (INR) outside IFSC
  • Proceeds from the sale of scrap in INR
  • Government incentives denominated in INR

• New Permissible Transactions: The amendment allows IFSC units to conduct all business-related transactions using their SNRR accounts, thus broadening their operational capabilities.

Opening SNRR Accounts

• Financial institutions can establish SNRR accounts with authorized dealers located in India outside the IFSC, in accordance with the new regulatory framework.

Conclusion

This circular signifies a positive development for financial institutions within IFSCs, providing greater flexibility in managing their transactions through SNRR accounts. The change is aimed at enhancing the operational landscape for these units and supporting their business activities.