Now, firms need RBI nod to operate foreign currency a/c abroad

The Reserve Bank today said Indian companies would need to obtain its prior permission to open, hold and maintain foreign currency account (FCA) abroad for the purpose of overseas direct investments.

"An Indian party is required to obtain prior permission of the Reserve Bank to open, hold and maintain foreign currency account (FCA) in a foreign country for the purpose of overseas direct investments in that country..." the RBI said in a notification.

"The host country regulations stipulate that the investments into the country is required to be routed through a designated account," it said, adding that the FCA should be opened, held and maintained as per the regulation of the host country.

Last week, the RBI had relaxed various norms on overseas direct investments to offer more flexibility to the Indian companies as well as individuals.

It added that the remittances sent to the FCA by the Indian company should be utilised only for making overseas direct investment into the joint venture (JV) or wholly-owned subsidiaries (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," it added.

The Indian company, it said, should submit the details of debits and credits in the FCA on yearly basis to the designated bank with a certificate from the statutory auditors, certifying that the FCA was maintained as per the host country laws and extant FEMA regulations as applicable.

"The FCA so opened shall also be closed immediately or within 30 days from the date of disinvestment from JV or WOS or cessation thereof," it added.