A Special Non-Resident Rupee (SNRR) Account is opened with Authorized Dealer (AD) banks in India for specified transactions related to trade, foreign investments, External Commercial Borrowings (ECBs), and more. It serves as an alternative to executing inward/outward remittances in convertible foreign currency for each transaction with residents in India.
This account allows non-residents with business interests in India to hold and transact in Indian Rupees (INR). Foreign Portfolio Investors (FPIs) can also maintain SNRR accounts for investments in India, import/export of goods and services, trade credit transactions, and lending under the ECB framework.
Key Features of SNRR Accounts
- No Interest on Deposits: SNRR accounts function as current accounts and do not earn interest.
- Tenure: The tenure of an SNRR account must align with the period of the contract, business, or operations of the account holder and should not exceed seven years.
Regulatory Compliance
Authorized Dealer (AD) banks are responsible for ensuring that SNRR transactions comply with FEMA regulations. They must exercise due diligence in identifying counterparties and ensure proper use of the SNRR account.
Transaction Procedures:
- Payments from SNRR Accounts: AD banks must inform the recipient bank of the transaction as an SNRR transaction, including purpose codes and country details, via electronic or manual communication.
- Credits to SNRR Accounts: AD banks must confirm that any domestic inward remittance is an SNRR transaction.
- Compliance: AD banks must adhere to FEMA provisions and associated rules for all SNRR transactions.
Trade Transaction Compliance under FEMA
- Export Inward Remittance: For export proceeds credited to an SNRR account, the AD bank must comply with export-related FEMA guidelines. This includes sharing complete KYC details with the exporter’s bank to facilitate proper reporting in the Export Data Processing and Monitoring System (EDPMS).
- Import Outward Remittance: For payments related to imports via SNRR accounts, the importer’s AD bank must ensure compliance with FEMA regulations and provide necessary details to the AD bank managing the overseas client’s SNRR account.
- ECB, Trade Credits, and Foreign Investments: AD banks are responsible for ensuring compliance with FEMA provisions, including issuing Foreign Inward Remittance Certificates (FIRCs) and sharing transaction details for reporting.
Reporting Requirements
- A2 Reporting: Required for both overseas remittances and domestic remittances credited to SNRR accounts.
- FETERS (R Return) Reporting: The AD bank managing the SNRR account must handle regulatory reporting.
- Transaction Reporting: Credits/debits involving offshore or domestic parties must be reported according to the nature of the transaction (import, export, trade credit, services, ECB, etc.).
Trade with ACU Countries
Transactions with Asian Clearing Union (ACU) countries must be settled under the ACU mechanism as governed by FEMA Notification 14 (R). These transactions are to be managed separately from SNRR arrangements.
Key Changes in the 5th Amendment to FEMA (Deposit) Regulations, 2025
- Expanded Scope: Non-residents with business interests in India can open SNRR accounts with authorized dealers in India or their branches abroad for permissible current and capital account transactions with residents and other non-residents.
- IFSC Inclusion: Units in International Financial Services Centres (IFSCs) under Section 18 of the SEZ Act, 2005, can open SNRR accounts with authorized dealers in India (outside IFSC) for business transactions.
- Terminology Update: The term “Indian bank” has been replaced with “bank” in Paragraph 2 of Schedule 4 of the principal regulations.
- Tenure Clarification: Paragraph 8 of Schedule 4 now specifies that the tenure of an SNRR account should match the contract/business operation period.
- Jurisdiction Specification: The words “in India” have been added after “SNRR account” in Paragraphs 9, 11, and 12 of Schedule 4.
- Account Holder Clarification: The phrase “having the SNRR account in India” has been added after “account holder” in Paragraph 13 of Schedule 4.