• Currency: As per section 2 (h) of FEMA, 1999, word “currency” means and includes all currency notes, postal orders, money orders, drafts, cheques, Travellers cheques, letters of credit, bills of exchange, promissory notes, credit cards including debit cards, ATM cards or any other instrument which will create a financial liability.
• Authorized Person: He is a person who is authorized dealer, money changer or off-shore banking unit or any other person authorized by RBI from time to time to deal in foreign exchange or in foreign securities. (section 10 (1) of FEMA, 1999.
• Person of Indian Origin (PIO) : PIO means a citizen of any country other than Bangladesh or Pakistan if:
He at any time held Indian Passport, OR
He or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or Citizenship Act of 1955 (57 of 1955, OR
The person is a spouse of an Indian citizen.
• Foreign Currency: means any currency other than Indian currency.
• Capital Account Transactions: Section 2 (e) of FEMA, 1999 explains the capital account transactions as “transaction that alters the assets or liabilities, including contingent liabilities, outside India of person (s) resident in India or assets or liabilities in India of person (s) resident outside India i.e. abroad would all amount to Capital Account Transaction. RBI has the power under the Act to impose any restrictions on drawal of foreign exchange for the purpose of capital account transaction.
• Current Account Transaction: Section 20 of FEMA, 1999 explains current account transaction as one which is not a capital account transaction. It includes the following:
(a) all payments due in connection with foreign trade, other current business services, short term banking and credit services
(b) Interest payments due on loans and net income on investment,
(c) Expenses connected with travel, education, medical care etc.
(d) Maintenance expenses of dependents residing abroad.
In this regard Government of India has been empowered under the FEMA, 1999 to make rules and regulation to restrict drawal of foreign exchange for the purpose of any current account transaction. As such Government of India has made certain rules called Foreign Exchange Management (current Account Transaction) Rules, 2000. These rules prohibit certain transactions involving foreign exchange and prescribe the limit upto which foreign exchange can be remitted. These limits can be revised by Central Government / RBI from time to time.
Nostro Account: It means our account with you. In this case a bank in India maintains an account with bank abroad. Say, an ICICI bank having an account in Hongkong bank in London. This account shall be in pound sterling.
Vostro Account: It means your account with us. This is reverse of Nostro account. In this case a bank in London opens an account with an ICICI bank in India. Such account shall be in rupee. Bank in India would call such accounts as “Vostro” account.
LORO Account: It means their account with you. Here a bank in India if wants to refer to any account abroad (opened by a Indian Bank), it refers to such account as Loro Account. For instance, if an ICICI Bank has an account with Hong kong Bank in London. Now if State bank of India corresponds with Hongkong Bank in London it can refer ICICI bank’s account as Loro Account.
Mirror Account: Mirror account is also called a Shadow Account. For instance, an account of a foreign bank maintained in India with a bank in India, is called Mirror Account. Here all types of entries – both in foreign exchange as well as in Indian rupee are recorded.