SNRR Account Guidelines 2019: The Reserve Bank of India has decided to bring some changes in the Special Non-resident Rupee (SNRR) Account rules.
SNRR Account Guidelines 2019: The Reserve Bank of India has decided to bring some changes in the Special Non-resident Rupee (SNRR) Account rules. Any person living outside India having business interest in India can open an SNRR account with an authorised dealer. The account is necessary for making bona fide transactions in the Indian currency. The RBI has now decided to increase the scope of the SNRR account by allowing persons resident outside India to open such account for carrying out rupee-denominated external commercial borrowing, trade credit and trade invoicing.
In its bi-monthly statement on ‘Statement on Developmental and Regulatory Policies’ today, the RBI said, “It has been decided, in consultation with the Government of India, to enhance the scope of non-interest bearing Special Non-resident Rupee (SNRR) Account by permitting persons resident outside India to open such accounts to facilitate rupee-denominated ECB, trade credit and trade invoicing.”
The central bank has also proposed to remove the seven-year restriction on SNRR account. Clear guidelines in this regard will be issued in a month. “Further, restriction on the tenure of SNRR account, which is currently 7 years, is also proposed to be removed for the aforesaid purposes. Guidelines in this regard would be issued within a month,” RBI said.
Earlier, rules mandated that tenure of the SNRR Account should never exceed seven years. For renewal of such account, RBI’s approval is needed. However, the seven-year restriction does not apply to SNRR account opened by a person resident outside India for investing in the country as per the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2017, according to RBI website.
SNRR vs NRO Account
SNRR is a repatriable account. And it is different from the NRO Account, which is opened in India in the name of an NRI for managing his income in India. The income could be from rent, dividend, pension, interest etc. While the NRO account can earn interest, the SNRR is a non-interest earning account. The biggest difference between the two is that SNRR is a repatriable account. Which means, SNRR account holders can move their money from India to their country of origin.
The NRO account holders do not enjoy this facility. RBI says on its website, “The SNRR can be held only as a non-interest earning account, while an NRO account can earn interest. While the balances in a NRO account are non-repatriable (except for current income and to the extent permissible for NRIs/ PIOs under FEMA 13(R)), SNRR is a repatriable account.”