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RESERVE BANK
OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001
Notification No.FEMA47/2001-RB
Dated December
5, 2001
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 3rd
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,
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
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)
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