| Date: |
06-07-2002
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| Notification No: |
RBI A P D (Series)Circular No 3/2002
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
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| Subject: |
Branch/ Project/ Liaison Offices in India of person resident outside India
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Branch/ Project/ Liaison Offices in India of person resident outside
India
A.
P. (DIR Series) Circular No. 3 dated 6th July 2002
Attention
of Authorised Dealers is invited to Regulation 5 (iii) of Reserve Bank
Notification No. FEMA 22/2000-RB dated 3rd May 2000 in terms of which
Reserve Bank imposes certain terms and conditions while granting approval to a
person resident outside India to establish a branch/ project/ liaison office in
India. One of the conditions of the approval pertains to the permissible credits
and debits to the bank account in India of the resident outside India.
Authorised Dealers are also aware that in terms of Paragraph 4 of A.D. (M.A.
Series) Circular No. 10 dated 17th February 1998, a branch/ office in
India of foreign firm/ company may keep funds, which are rendered surplus
temporarily, in term deposits with a maturity not exceeding three months with
the same branch of the authorised dealer with whom the QA-22 account was
maintained prior to introduction of FEMA.
2.
Reserve Bank has been receiving requests from some branches/ offices to
allow branch/ project/ liaison offices in India of foreign firms/ companies for
keeping temporary surplus funds lying in their non-interest bearing account in
term deposits with any Authorised Dealer. Accordingly, it has now been decided
to permit Authorised Dealers to open term deposit account for a period not
exceeding 6 months in favour of a branch/ office of a person resident outside
India provided the Authorised Dealer is satisfied that the term deposit is out
of temporary surplus funds and the branch/office furnishes an undertaking that
the maturity proceeds of the term deposit will be utilised for their business in
India within 3 months of maturity. However, such facility may not be extended to
shipping/ airline companies.
3.
Authorised Dealers may bring the contents of this circular to the notice
of their constituents concerned.
4.
The directions contained in this circular have been issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of
1999).
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