Certain instruments like International Debit Cards/Store Value Cards/Charge Cards/Smart Cards or any other instrument that can be used in India to create a financial liability, as ‘currency’. The banking regulator Reserve Bank of India observed that a few Authorised Persons are levying certain fees/charges, which are payable in India on such instruments, in foreign currency. Therefore, the Central Bank last Tuesday advised that fees/charges payable in India have to be denominated and settled in Rupees only.
Reserve Bank of India has, vide A.P. (DIR Series) Circular No. 73 dated January 24, 2003, that the restrictions contained in Rule 5 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 are not applicable for the use of International Credit Cards (ICCs) by residents for making a payment towards expenses while on a visit outside India, to the extent of the limit of the card.
It was also clarified by RBI that International Debit cards (IDCs ) can be used only for permissible current account transactions and the item-wise limits as mentioned in the Schedules to the Government of India Notification No.G.S.R. 381(E) dated May 3, 2000, as amended from time to time, are equally applicable to payments made through the use of these cards. It is further clarified that the IDCs cannot be used on the internet for the purchase of prohibited items like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., i.e. for such items/activities for which drawal of foreign exchange is not permitted.
As per RBI guidelines, International Banking Divisions/Foreign Exchange Departments of AD banks shall submit a statement of December 31, each year in case the aggregate forex utilization by the IDC holders exceeds USD 100,000 in a calendar year. The statement should reach the Chief General Manager, Foreign Exchange Department, External Payments Division, Central Office, Mumbai- 400 001 on or before 20th January of the succeeding year.
