1.    

(i)     These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India Second Amendment) Regulations, 2001.

(ii)    They shall come into force with immediate effect.

2.     In the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulation, 2000, in regulation 7 after sub-regulation (4), the following sub-regulation shall be inserted, namely:

�(4A) A firm or a company or a body corporate registered or incorporating India (hereinafter referred to as �the Indian entity�) may open, hold and maintain in the name of its office (trading or non-trading) or its branch set up outside India or its representative posted outside India, a foreign currency account with a bank outside India by making remittances from India for the purpose of normal business operations of the office/ branch or representative;

Provided that-

(a)      the overseas branch/ office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity;

(b)      The total remittances made under this sub-Regulation by the Indian entity, to all such accounts in an accounting year shall not exceed:

(i)    2 percent of the average annual sales/ income or turnover during last two accounting years of the Indian entity, where the remittances are made to meet initial expenses of the branch or office or representative, and

(ii)   1 percent of the such average annual sales/ income or turnover where the remittances are made to meet recurring expenses of the branch or office representative;

(c)      The overseas branch/ office/ representative shall not enter in any contract or agreement in contravention of the Act, Rules or Regulation made thereunder.

(d)      the account so opened, held or maintained shall be closed:

(a)   if the overseas branch/ office is not set up within six months of opening the accounts, or

(b)   within one month of closure of the overseas branch/ office, or

(c)   where no representative is posted for six months,

          and the balance held in the account shall be repatriated to India:

Provided further that the restriction contained in clause (b) of the first proviso shall not apply in a case where-

(a)      the remittances to the account maintained under this sub-Regulation are made out of funds held in EEFC account of the Indian entity, or