The International Financial Services Centres Authority (“IFSCA”), vide Notification No. F. No. IFSCA – FMPP0BR/4/2024-Banking /1[1] dated February 18, 2025, issued an amendment to the Circular dated January 29, 2025, on Permissible transactions through the Special Non-Resident Rupee (“SNRR”) accounts of International Financial Services Centres (“IFSC”) units (“Original Circular”).
The key changes introduced to the Original Circular are as follows:
- Clause 2 of the Original Circular has been revised to reflect the updated scope of permissible transactions under the SNRR accounts. The provision now clarifies that the SNRR accounts may be utilized for a range of business-related transactions. These include, but are not limited to, administrative expenses in Indian Rupees (“INR”) outside the IFSC, the receipt of INR from the sale of scrap, and government incentives in INR. This revision aligns with the evolving regulatory framework and the operational needs of units in the IFSC.
- Clause 3 of the Original Circular has been amended to reflect a significant update following an amendment to the Foreign Exchange Management (Deposit) Regulations, 2016, allowing a unit in an IFSC, operating under Section 18 of the Special Economic Zones Act, 2005, to open an SNRR account with an authorized dealer in India, situated outside the IFSC, specifically for conducting business-related transactions beyond the jurisdiction of the IFSC. However, it is explicitly clarified that any monetary consideration, including funds, fees, or amounts related to the delivery of financial services, shall continue to be processed through accounts maintained with banking units within the IFSC.
- Further, it has been clarified that the Original Circular was issued in exercise of the powers vested in IFSCA under Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019. The purpose of these amendments is to regulate and facilitate the development of financial services and institutions operating within the IFSC, ensuring that such activities remain in line with evolving financial regulations and international best practices.
[1] https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Famendment-to-the-circular-on-transactions-through-snrr-accountsfinal18022025111928.pdf&Title=Amendment%20to%20the%20Circular%20on%20permissible%20transactions%20through%20the%20SNRR%20accounts%20of%20IFSC%20units&Date=18%2F02%2F2025