RBI eases norms for BPO centres abroad

The Reserve Bank of India (RBI) has diluted norms for business process outsourcing (BPO) firms drawing foreign exchange to buy equipment for new overseas call centres, considerably easing their global expansion plans.

A recent central bank notification states that authorised banks may allow BPO firms to pay for equipment to be imported and installed at their overseas sites without physically bringing them to India, which was the requirement till now.

The RBI has modified the procedure following requests from BPO companies wanting to set up call centres overseas.

However, BPO companies will need to take necessary approvals from the Ministry of Information Technology in this regard.

BPO companies were earlier required to produce an exchange control copy of the bill of entry for home consumption as evidence of import of equipment before taking them to overseas locations, which importers were usually unable to furnish.

The notification follows RBI Governor Y V Reddy's annual credit policy proposal to relax foreign exchange regulations and provide greater flexibility for such transactions.

The move will also ease some pressure on the RBI which is looking for ways to properly utilise mounting foreign exchange reserves, which crossed $200 billion recently, and check the appreciating value of the rupee, analysts said.

In a bid to deal with the rising foreign exchange reserves, the RBI recently extended the time limit for individuals keeping foreign currency and increased the prepayment limit on external commercial borrowings to $400 million from $300 million.

Meanwhile, the RBI has also allowed the operation of a Non-Resident Ordinary (NRO) rupee account by an Indian resident on the basis of a power of attorney granted in his favour by a non-resident account holder.

It, however, restricted such transactions to local payments in rupees and remittances accruing from the current income of the account-holder.