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RBI/2015-16/430
A.P. (DIR Series) Circular No. 77 [(2)/10(R)]
June 23, 2016
To
All Category - I Authorised Dealers and Authorised Banks
Madam / Sir,
Foreign Exchange Management (Foreign Currency Accounts
by a person resident in India) Regulations, 2015
Attention of Authorised Dealers Banks is invited to the Foreign Exchange
Management (Foreign Currency Accounts by a person resident in India)
Regulations, 2015, notified vide
Notification No. FEMA 10(R)/2015-RB dated January 21, 2016, and
A.P (DIR Series) Circular No. 51 dated February 11, 2016 with
respect to regulatory relaxations for startups.
2. In line with the Government of India’s startup initiative, it has been
decided that an Indian startup, having an overseas subsidiary, may open a
foreign currency account with a bank outside India for the purpose of crediting
to the account the foreign exchange earnings out of exports/sales made by the
said startup or its overseas subsidiary. The balances held in such accounts, to
the extent they represent exports from India, shall be repatriated to India
within the period prescribed for realization of exports, in Foreign Exchange
Management (Export of Goods and Services) Regulations, 2015 dated January 12,
2016, as amended from time to time.
3. In addition, payments received in foreign exchange by an Indian startup
arising out of sales/ export made by the startup or its overseas subsidiaries
will be a permissible credit to the Exchange Earners Foreign Currency (EEFC)
account maintained in India by the startup.
4. A startup will mean an entity which complies with the conditions laid down
in Notification No. GSR 180(E) dated February 17, 2016 issued by Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Government
of India.
5. Further, the existing facility of opening foreign currency account outside
India, available to the Life Insurance Corporation of India or the General
Insurance Corporation of India and their subsidiaries for the purpose of meeting
the expenditure incidental to the insurance business carried on by them has now
been liberalised. Accordingly, any insurance/ reinsurance company registered
with the Insurance Regulatory and Development Authority of India (IRDA) may open
a foreign currency account with a bank outside India to carry out insurance/
reinsurance business.
6. AD Category – I banks may bring the contents of this circular to the
notice of their constituents and customers concerned.
7. Reserve Bank has since amended the subject Regulations accordingly through
the Foreign Exchange Management (Foreign Currency Accounts by a person resident
in India) (Amendment) Regulations, 2016 which have been notified vide
Notification No. FEMA 10(R)/(1)/2016-RB dated June 1, 2016, vide
G.S.R.No.570(E) dated June 1, 2016. Necessary amendments have also been carried
out in Master Direction No. 14 on Deposits and Accounts.
8. The directions contained in this circular have been issued under section
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions/ approvals, if any, required under any
other law.
Yours faithfully,
(A. K. Pandey)
Chief General Manager
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