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A “Foreign Currency Account” means an
account held or maintained in currency other than the currency of India or Nepal
or Bhutan.
In terms of Regulation No. 4, a person
resident in India may open, hold and maintain with an authorized dealer in
India the following accounts,:
(b) Resident Foreign
Currency (RFC) Account out of sources of receipt of foreign exchange;
(c) Resident Foreign
Currency (Domestic) [RFC(D)] Account out of sources of receipt of foreign
exchange;
(d) Diamond Dollar
Account (DDA) - firms and companies who comply with the eligibility criteria
stipulated in the Foreign Trade Policy of Government of India,
In addition, the following persons
resident in India can open foreign currency accounts with an authorized dealer
in India, subject to the conditions specified in the regulations:
(a) A unit in a
Special Economic Zone;
(b) An exporter who
is exporting services and engineering goods on deferred payment terms or has
undertaken a turnkey project or a construction contract abroad;
(c) Indian agents of
foreign airline or shipping companies;
(d) Ship-manning/
crew managing agencies in India;
(e) Project offices
set up in
India in terms
of FEMA Regulations, 2000;
(f) Indian companies
receiving Foreign Direct Investment.
(g) Organisers of
international seminars, conferences, conventions etc.
In terms of Regulation No. 5, the following
persons resident in India can open foreign currency accounts outside India:
(a) An authorized
dealer in India with its branch/ head office/ correspondent outside India;
(b) A branch outside
India of a bank incorporated or constituted in India;
(c) An Indian firm/
company/ body corporate in the name of its foreign office/ branch or its
representative posted outside India;
(d) An exporter who
is exporting services and engineering goods on deferred payment terms or has
undertaken a turnkey project or a construction contract abroad;
(e) An Indian
for making overseas direct investment provided the overseas regulator
requires the maintenance of such an account;
(f) A person raising
ECB or ADR/ GDR;
(g) Indian shipping
or airline companies;
(h) Life Insurance
Corporation (LIC) of
India or General
Insurance Corporation (GIC) of India and its subsidiaries for the
purpose of carrying on life/ general insurance business;
(i)
A
resident individual under the Liberalized Remittance Scheme;
(j)
A
person going abroad to participate in an exhibition/ trade fair;
(k) A person going
abroad for studies;
(l)
A
person who is on a visit to a foreign country provided the balances are
repatriated on return to India;
(m) A foreign
citizen resident in India, being an employee of a foreign company, or an Indian
citizen, being an employee of a foreign company, in either case on deputation
to the office/ branch/ subsidiary/ joint venture/ group company in India;
(n)
A
foreign citizen resident in India employed with an Indian company
Currency Account with an AD may be
opened, held and maintained singly or jointly in the form of
Individuals: current or
savings or term deposit account
Others: current account or term deposit
account.
The new regulations shall come into
force with effect from January 21, 2016.
Foreign currency accounts that
can be maintained by residents
I. Exchange
Earner’s Foreign Currency (EEFC) Account [Regulation 4(A)]
1)
The
account will be in the form of a non-interest bearing current account.
2)
The
claims settled in rupees by ECGC/ insurance companies should not be construed
as export realisation.
3)
Authorised
Dealers can allow SEZ developers to open, hold and maintain EEFC Account and
credit their foreign exchange earnings.
4)
The
total accruals in the account during a calendar month should be converted into
Rupees on or before the last day of the succeeding calendar month after
adjusting for utilization of the balances for approved purposes or forward
commitments.
5)
Credit Facilities: No Credit
facilities, should be granted against the balances held in EEFC Accounts.
6)
Exporters
can repay packing credit advances, from balances in their EEFC account to the
extent exports have actually taken place.
7)
Balances
may be credited to NRE/ FCNR(B) accounts, at the request of the account holders
consequent to the change of their residential status from resident to
non-resident.
II.
Resident Foreign Currency (RFC) Account [Regulation
4(B)]
1)
Resident
individuals are allowed to open a RFC Account with an AD bank in India out of
foreign exchange received as pension, superannuation benefits, conversion of
assets etc. The balances in the NRE Account and FCNR (B) Account can be
credited to the RFC account when the residential status of the NRI changes to
that of a Resident.
III.
Resident Foreign Currency (Domestic) Account (RFC(D))
1) To enable
resident individuals to keep in a bank account the foreign exchange they could
retain from the sources mentioned in terms of Regulation 3(iii) of RBI Notification No.FEMA.11(R)/ 2015-RB dated December 29, 2015, they are allowed to open a
Resident Foreign currency (Domestic) Account
[RFC(D)] with an AD bank in India. This facility is in addition to that
provided under of RBI Notification No.FEMA.11(R)/ 2015-RB dated December 29, 2015.
2)
The
total accruals in the account during a calendar month should be converted into
Rupees on or before the last day of the succeeding calendar month after
adjusting for utilization of the balances for approved purposes or forward
commitments.
3)
Balances
may be credited to NRE/ FCNR(B) Accounts, at the option/ request of the account
holders consequent to the change of their residential status from resident to
non-resident.
IV. A unit in a
Special economic Zone [Regulation 4(D)]
1)
A
unit located in a Special Economic Zone may open, hold and maintain a Foreign
Currency Account with an authorized dealer to credit all foreign exchange funds
received by the unit.
2)
The
account can be used for bona fide trade transactions between the unit and a
person resident in/ outside India.
V. Diamond Dollar
Accounts (DDA)
1)
The
sum total of the accruals in the account during a calendar month should be
converted into Rupees on or before the last day of the succeeding calendar
month after adjusting for utilization of the balances for approved purposes or
forward commitments.
VI.
Ship-manning/ crew managing agencies in India
1)
AD
Category – I banks may allow ship-manning/ crew managing agencies in India to
open and maintain non-interest bearing foreign currency accounts in India for
the purpose of undertaking transactions in the ordinary course of its business,
as detailed:
a.
Credits: Only by way of inward remittances from
the overseas principal.
c.
No
credit facility should be granted against security of funds held in the
account.
d.
The
bank should meet the prescribed Reserve Requirements in respect of such
accounts.
e.
No
EEFC facility should be allowed in respect of the remittances received in the
account.
f.
The
account will be maintained only during the validity period of the agreement.
VII.
Project Offices — Foreign Currency Accounts in India
1)
An
AD may open non-interest bearing foreign currency account for Project Offices
in India subject to the following:
a.
The
Project Office has been established in India, with the permission of Reserve
Bank, having the requisite approval from the concerned Project Sanctioning Authority,
b.
The
contract under which the project has been sanctioned, specifically provides for
payment in foreign currency,
c.
Each
Project has only one Foreign Currency Account.
d.
Debits:
i.
Payment
of project related expenditure.
e.
Credits:
i.
Foreign
currency receipts from the Project Sanctioning Authority, and
ii.
Remittances
from parent/ Group Company abroad or bilateral/ multilateral international
financing agency.
f.
The
Foreign Currency account may be closed at the completion of the project.
g.
Inter-project
transfer of funds will be permitted with the prior permission of the Reserve
Bank.
h.
In
case of disputes between the Project Office and the project sanctioning authority
or other Government/Non-Government agencies etc., the
balance held in such account shall be converted into INR and credited to a
special account which shall be dealt with as per the settlement of the dispute.
VIII.
Organisers of international Seminars, Conferences, Conventions etc.
1)
Organisers
of international Seminars, Conferences, Conventions etc. may hold temporary
foreign currency accounts with an AD in India subject to the following
conditions:
a.
Credits: All inward remittances in foreign
currency towards registration fees payable by overseas delegates, grant,
sponsorship fees and donations, received from abroad, in connection with the
conference, convention, etc.
b.
Debits: (i) Payment to foreign/ special
invitees attending the conference, etc., on the specific invitation of
the organisers, towards travel, hotel charges, etc., and honorarium to foreign
guest speakers; (ii) Remittance towards refund of registration fees to foreign
delegates and unutilised sponsorship/grant amount, if any; (iii) Bank charges,
if any; (iv) Conversion of funds into rupees.
c.
All
other credits/ debits would require the prior approval of the Reserve Bank.
d.
The account
should be closed
immediately, after the conference/event is over.
IX. An Indian
Corporate raising ECB
ECB
proceeds meant only for foreign currency expenditure, can be retained abroad
pending utilization. Till utilisation, these funds can be invested in the
following liquid assets (a) deposits or Certificate of Deposit or other
products offered by banks rated not less than AA (-) by Standard and Poor/
Fitch IBCA or Aa3 by Moody’s; (b) Treasury bills and other monetary instruments
of one year maturity having minimum rating as indicated above and (c) deposits
with overseas branches / subsidiaries of Indian banks abroad.
Based on RBI Circular dt 04/02/16. Please visit www.rbi.org.in for any further clarification if required….. Poppy
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