Amendments in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 - 047/2001 - Foreign Exchange Management

Amendments in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 RESERVE BANK OF INDIA EXCHANGE CONTROL DEPARTMENT CENTRAL OFFICE MUMBAI-400 001 Notification No.FEMA 47/2001-RB Dated December 5, 2001 Published in the Official Gazette of Government of India - Extraordinary - Part-II, Section 3, Sub-Section (i) dated 02.01.2002 - G.S.R. No. 5(E) In exercise of the powers conferred by clause (b) of Section 9 and clause (e) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in partial notification of its Notification No.FEMA.10/2000-RB dated 3 rd May, 2000, Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, namely : 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) Regulations, 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 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 i. 2 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. 1 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; 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'. ( K. J. Udeshi ) Executive Director Foot-note : The Principal Regulations were published in the official gazette vide G.S.R.No.393(E) dated 03.05.2000 in Part II, Section 3, Sub-section (I) and subsequently last amended vide G.S.R.No.2000(E) dated 27th February 2001. That as rectified and modified as aforesaid, the Principal Regulations shall remain in full force and effect. (Shyamala Gopinath) Executive Director 06.02.2004 G.S.R. No.120(E)/17.02.2004