FCNR accounts under the scheme are openedand maintained in terms of Nonresident (External) Accounts Rules, 1970 (See Appendix II in Volume II). The provisions applicable to NRE accounts and detailed in paragraphs 13B 1 to 13B 16 apply, mutatis mutandis, to FCNR(B) accounts as well. The authorised dealers are allowed to accept deposits from NRIs and OCBs in such currencies as specified by Reserve Bank from time to time. At present, accounts are permitted to be maintained only in Pound Sterling, U.S.dollar, Deutsche Mark, Japanese Yen and Euro. The salient features of the scheme are as under :

(a)Reserve Bank will not provide exchange rate guarantee to banks for deposits of any maturity under the Scheme.

(b)FCNR(B) accounts are permitted to be opened only in the form of term deposits. The deposits may be accepted for three maturities viz. one year and above but less than 2 years, two years and above but less than 3 years and three years only.

(c)In respect of liabilities representing amounts received under the scheme authorised dealers are required to comply with CRR/SLR requirements as laid down by Reserve Bank from time to time.

(d)Lending of resources mobilised under the Scheme will not be subject to any interest rate stipulations.

(e)Advances outstanding against the accounts under this Scheme will not be considered as part of net bank credit for the purpose of determining priority sector lending.

NOTE:
A. Authorised dealers may accept deposits under FCNR(B) accounts scheme with the facility of automatic reinvestment of interest as and when it accrues, provided the compounding of interest on the deposits, period of deposit, etc. are otherwise in conformity with directives issued by Reserve Bank from time to time and subject to guidelines issued by Indian Banks Association/Foreign Exchange Dealers Association of India in this regard.

B. Premature withdrawal of NRE/FCNR(B) deposits for the purpose of opening NRNR Rupee Deposit accounts with a different authorised dealer will attract penalty as per the directions issued by Reserve Bank from time to time.