RBI Increases Eligibility Requirement for Opening Diamond Dollar Accounts to Three Years of Trade Track Record

The Reserve Bank of India (RBI) has amended the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, increasing the eligibility requirement for opening a Diamond Dollar Account (DDA). The new regulations stipulate that firms and companies dealing in the purchase or sale of rough or cut and polished diamonds or precious metal jewelry must have a track record of at least three years in the business to be eligible to open a DDA. This is an increase from the previous requirement of two years. DDAs allow entities in the gem and jewelry sector to transact in US dollars, which helps them manage foreign exchange risks and facilitates international trade. The RBI's move to tighten the eligibility criteria is likely aimed at ensuring that only established and credible players in the industry have access to this facility, thereby strengthening the regulatory framework and reducing potential risks.