Regulation 7 - Opening, holding and maintaining a Foreign Currency Account outside India - Foreign Exchange Management (Foreign Currency Accounts By A Person Resident In India) Regulations, 2000

7. Opening, holding and maintaining a Foreign Currency Account outside India :- (1) An authorised dealer in India may open, hold and maintain with his branch or head office or correspondent outside India, a Foreign Currency Account for the purpose of transacting foreign exchange business and other matters incidental thereto, in accordance with the provisions of the Act or the rules or regulations made or the directions issued thereunder. (2) A branch outside India of a bank incorporated or constituted in India may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of carrying on normal banking business outside India, subject to compliance with the directions or guidelines issued from time to time by the Reserve Bank, and the regulatory authority in the country where the branch is located. (3) A shipping or airline company incorporated in India may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of undertaking transactions in the ordinary course of its business. (4) Life Insurance Corporation of India or General Insurance Corporation of India and its subsidiaries may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of meeting the expenditure incidental to the insurance business carried on by them and for that purpose, credit to such account the insurance premia received by them outside India. 2 (4A) A firm or a company or a body corporate registered or incorporated in 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 5 (i) 15 per cent of the average annual sales income or turnover of the Indian entity during the last two financial years or up to 25 per cent of the net worth, whichever is higher, where the remittances are made to meet initial expenses of the branch or office or representative. and 5 (ii) 10 per cent of such average annual sales/income or turnover during the last financial years where the remittances are made to meet recurring expenses of the branch or office or representative (w.e.f. 4 th Dec.2006) (c). the overseas branch/office/representative shall not enter in any contract or agreement in contravention of the Act, Rules or Regulations 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 account, 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 (b) the overseas branch/office is set up or representative posted by a 100% EOU or a unit in EPZ or in a Hardware Technology Park or in a Software Technology Park, within two years of establishment of the Unit. Explanation: For the purpose of this sub-Regulation, A. Purchase of acquisition of Office equipments and other assets required for normal business operations of the overseas branch/office/representative will not be deemed as a capital account transaction; B. Transfer or acquisition of immovable property outside India, other than by way of lease not exceeding five years, by the overseas branch/office/representative will be subject to the Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2000. (5) A person resident in India, being an exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a 3 Foreign Currency Account with a bank outside or in India, provided that - (a) approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2000 has been obtained for undertaking the contract/project/export of goods or services, and (b) Foreign Currency Accounts by a Person Resident in India the terms and conditions stipulated in the letter of approval have been duly complied with. (6) A person resident in India who has gone abroad for studies or who is on a visit to a foreign country may open, hold and maintain a Foreign Currency Account with a bank outside India during his stay outside India, provided that on his return to India, the balance in the account is repatriated to India : Provided that short visits to India by a person who has gone abroad for studies, before completion of his studies, shall not be treated as his return to India. (7) A person resident in India who has gone out of India to participate in an exhibition/ trade fair outside India may open, hold and maintain a Foreign Currency Account with a bank outside India for crediting the sale proceeds of goods on display in the exhibition/trade fair : Provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair. 1 [ (8) 7 [ (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture/group company in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture/group company in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act,1961 is paid on the entire salary as accrued in India.] (ii) A citizen of a foreign State resident in India being in employment with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian Rupees, to such account, for the services rendered to such an Indian company, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary in India. ] 8 [Explanation : For the purpose of this sub regulation, the expression company shall include a Limited Liability Partnership as defined under The Limited Liability Partnership Act, 2008 ] 6 [ (9) An Indian party may open, hold and maintain Foreign Currency Account (FCA) abroad for the purpose of overseas direct investments subject to the following terms and conditions: (i) The Indian party is eligible for overseas direct investments in terms of Regulation 6 or Regulation 7 , as the case may be, of Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 (notified in Notification No. FEMA 120/RB-2004 dated July 7, 2004 ) as amended from time to time. (ii) The host country regulations stipulate that the investment into the country is required to be routed through a designated account. (iii) FCA shall be opened, held and maintained as per the regulation of the host country. (iv) The remittances sent to the FCA by the Indian party should be utilized only for making overseas direct investment into the JV/WOS abroad. (v) 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. (vi) 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. (vii) The FCA so opened shall be closed immediately or within 30 days from the date of disinvestment from JV/WOS or cessation thereof. Explanation: For the purpose of this regulation, the expression Indian party shall have the same meaning as assigned to it in Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004. ] ****************************** Notes : 1. Sub-regulation 8 has been added vide Notification No. 034/2001 dated 22/1/2001 . Further substituted vide notification no. 199/2009-RB dated 30-9-2009, before it was read as, (8) 4 A national of a foreign state resident in India being an employee of a foreign company or a citizen of India employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and received the salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account; Provided that, i. the amount to be credited to such account shall not exceed 75 per cent of the salary accrued to or received by such person from the foreign company; ii. the remaining salary shall be paid in rupees in India; iii. Income tax chargeable under the Income Tax Act 1961 is paid on the entire salary as accrued in India. Further Substituted vide Notification No. FEMA 199/2009-RB, dated 30/09/2009, before it was read as:- [(8) (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary as accrued in India. (ii) A citizen of a foreign State resident in India being in employment with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian Rupees, to such account, for the services rendered to such an Indian company, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary in India. ] 2. Has been inserted vide Notification No. 047/2001 dated 5/12/2001 3. For the words Foreign Currency Account with a bank outside India , the words, Foreign Currency Account with a bank outside or in India has been substituted vide Notification No. 087/2003 dated 20/3/2003 4. For the words A national of a foreign State resident in India being an employee of a foreign company on deputation , the words A national of a foreign State resident in India being an employee of a foreign company or a citizen of India employed by a foreign company outside India and in either case on deputation has been substituted vide Notification No. 089/2003 dated 29/4/2003 5. Has been substituted vide Notification No. 154/2007 dated 7/6/2007 (w.e.f. 4/12/2006) , before it was read as, i.10 per cent 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. 5 per cent of such average annual sales/income or turnover where the remittances are made to meet recurring expenses of the branch or office or representative; (w.e.f 21st April, 2006 to 4/12/2006) , Originally for the figure 2 the figure 10 has been substituted and for the figure 1 the figure 5 has been substituted (w.e.f 21st April, 2006) vide Notification No. 154-RB-2007 dated 7/6/2007 6. Inserted vide Notification No. FEMA 275/2013-RB DATED 8-5-2013 7. Substituted vide Not. 328/RB-2014 - Dated 3-12-2014 before it was read as, (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act, 1961 is paid on the entire salary as accrued in India. 8. Inserted vide Not. 328/RB-2014 - Dated 3-12-2014