All Authorised Dealers
in Foreign Exchange,

Dear Sirs,

SPECIAL CONVERTIBLE RUPEE ACCOUNT

Please refer to the instructions contained in para 8 of chapter XX of the Foreign Exchange Manual and para 'H' of F.E. circular 34 of 1998 regarding remittances out of Special Convertible Rupee Account.

With a view to further strengthen the confidence of foreign portfolio investors, it has since been decided to restore the powers of Authorized Dealers maintaining S.C.R.A. as well as offering custodial services to the same investors to allow outward remittances from S.C.R.A. of disinvestment proceeds, divident & broker's commission in respect of transactions taking place from the date of this circular, subject to their exercizing checks as prescribed in Annexure 'C'. Where foreign investors maintain custody services and S.C.R.A. with different institutions, appliation on form 'M' will be submitted through the Authorized Dealer maintaining the S.C.R.A. for prior approval of the State Bank.

In case of remittances out of balances already lying in S.C.R.A. up to the date of this curcular, application on form 'M' will continue to be submitted to the State Bank for prior approval along with the documents prescribed in this behalf.

It has also been decided that the commission earned by the international brokers from their overseas clients and credited net of taxes to the broker's S.C.R.A. will also be remitted by the Authorized Dealers provided the funds so credited have emanated from inward remittances or paid out of S.C.R.A. of the investor. Consequently following new sub-para may be added as para 8(a)(ii) chapter XX of the Foreign Exchange Manual.

"The commission earned by the international brokers from their overseas clients and credited net of taxes to the broker's S.C.R.A. account may be remitted by the Authorized Dealer provided the funds so credited have emanated from inward remittances or paid out of S.C.R.A. of the investor."

Existing sub para 8(a)(ii) will be renumbered as sub-para 8(a)(iii).

All remittances effected under this general authority will be reported on form 'M' along with the undertaking as per Annexure 'A' to this circular. The Authorized Dealers will also maintain a record of the all items enlisted in the checklist as per enclosed Annexures 'B' & 'C' for inspection/verification by the State Bank officials and will not be distroyed unless the inspection is completed.

Encl: As Above