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Maintenance of Foreign Currency Account Abroad by a Company/ Firm/ a Body
Corporate Registered or Incorporated in India
A.
P. (DIR Series) Circular No. 54 dated 29th June 2002
Attention
of authorised dealers is invited to the Reserve Bank Notification No. FEMA.10/
2000-RB dated 3rd May 2000 relating to Foreign Exchange Management
(Foreign Currency Accounts by a person resident in India) Regulations, 2000,
which has now been amended vide Notification No. FEMA 47/ 2001-RB dated December
5, 2001 (copy enclosed).
2.
Now an Indian entity has been permitted to open, hold and maintain in the
name of its office/branch set up outside India, a foreign currency account with
a bank outside India by making remittance for the purpose of normal business
operations of the said office/ branch or representative subject to conditions
stated in the Notification.
3.
The authorised dealers may, therefore, allow remittances for the purpose
of normal business operations of the office (trading/ non-trading)/ branch or
representative outside India as per the provisions of the Regulations in this
regard subject to the following terms and conditions: -
i)
The overseas office (trading/ non-trading)/ branch/ representative should
not create any financial liabilities contingent or otherwise for Head Office in
India.
ii)
The overseas office (trading/ non- trading)/ branch/ representative
should not invest surplus funds abroad without prior approval of Reserve Bank of
India. Any funds rendered surplus should be repatriated to India.
iii)
The overseas office/branch of software exporter company/ firm, may
repatriate to India 100% of the contract value of each `off-site� contract as
also at least 30% of the contract value of each `on-site� contract and may
utilise the balance amount (70%) of the contract value of `on-site� contracts
for contract related expenses including office/branch expenses abroad. A duly
audited yearly statement showing receipts under `off- site� and `on-site�
contracts undertaken by the overseas office, expenses and repatriation thereon
may be sent to the authorised dealer.
iv)
The details of bank account opened in the overseas country should be
promptly reported to authorised dealer.
4.
Authorised Dealers may bring the contents of the circular to the notice
of their concerned constituents.
5.
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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