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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