RBI/2011-12/481
A. P. (DIR Series) Circular No.101
April 02, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Overseas Direct Investments – Liberalisation /
Rationalisation
Attention of the Authorised Dealer (AD - Category I) banks
are invited to the
Notification No. FEMA 10/2000-RB dated May 3, 2000 [Foreign Exchange
Management (Foreign Currency Accounts by a person resident in India)
Regulations, 2000] (the Notification), as amended from time to time.
2. As per the extant provisions of FEMA, an Indian party (as
defined under
Notification No. FEMA 120/RB-2004 dated July 07, 2004, as amended from time
to time) is required to obtain prior permission of the Reserve Bank to open,
hold and maintain Foreign Currency Account in a foreign country for the purpose
of overseas direct investments in that country, in case the regulation of the
host country requires that the investment in the country is to be made through a
particular account to be opened with the commercial bank of the country.
3. To provide operational flexibility to the Indian party, it
has been decided to liberalise the regulations pertaining to opening / holding /
maintaining the Foreign Currency Account by Indian party outside India as under:
An Indian party will now be allowed to open, hold and maintain Foreign
Currency Account (FCA) abroad for the purpose of overseas direct investments
subject to the following terms and conditions:
-
The Indian party is eligible for overseas direct investments in terms of
Regulation 6 (Regulation 7, if applicable) of Notification No. FEMA
120/RB-2004 dated July 7, 2004, as amended from time to time.
-
The host country Regulations stipulate that the investments into the
country is required to be routed through a designated account.
-
FCA shall be opened, held and maintained as per the regulation of the
host country.
-
The remittances sent to the FCA by the Indian party should be utilized
only for making overseas direct investment into the JV / WOS abroad.
-
Any amount received in the account by way of dividend and / or other
entitlements from the subsidiary shall be repatriated to India within 30
days from the date of credit.
-
The Indian party should submit the details of debits and credits in the
FCA on yearly basis to the designated AD bank with a certificate from the
Statutory Auditors of the Indian party certifying that the FCA was
maintained as per the host country laws and the extant FEMA regulations /
provisions as applicable.
-
The FCA so opened shall be closed immediately or within 30 days from the
date of disinvestment from JV / WOS or cessation thereof.
4. Necessary amendments to the Foreign Exchange Management
(Foreign Currency Accounts by a person resident in India) Regulations, 2000 are
being issued separately.
5. AD - Category I banks may bring the contents of this
circular to the notice of their constituents and customers concerned.
6. The directions contained in this circular have been issued
under Sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA),
1999 (42 of 1999) and are without prejudice to permissions/approvals, if any,
required under any other law.
Yours faithfully,
(Dr. Sujatha Elizabeth Prasad)
Chief General Manager