Related Topic in KAS Prelims Syllabus:
Economy and Planning [Paper-II]: Structure of Indian Banking and Non-Banking Financial Institutions and reforms
- RBI has enhanced the scope of ‘Special Non-resident Rupee’ (SNRR) Account by allowing persons residing outside India to open such accounts for purposes like external commercial borrowing and trade credit in INR (Indian Rupee).
- RBI, in consultation with the government, also decided to remove the restriction on the tenure of the SNRR account for the purposes given above.
- The decision was taken to popularise cross-border transactions in Indian rupee.
What is SNRR Account?
- 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.
- SNRR account will carry the nomenclature of the specific business for which it is opened and not earn any interest.
- Debits/ credits and the balances in the account should be incidental and commensurate with the business operations of the account holder.
- The operations in the SNRR account should not result in the account holder making available foreign exchange to any person resident in India against reimbursement in rupees or in any other manner.
- The balances in the SNRR account can be repatriated outside India.
- Transfers from any NRO account to the SNRR account are not permitted.
- All transactions in the SNRR account will be subject to payment of applicable taxes in India.
- Opening of SNRR accounts by Pakistan and Bangladesh nationals and entities incorporated in Pakistan and Bangladesh requires prior approval of Reserve Bank.
Difference between SNRR and NRO Account
- NRO Account 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.
- 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.
- It means that SNRR account holders can move their money from India to their country of origin.