PART B - MAINTENANCE OF BANK ACCOUNTS
(QA 22)

General

11B.1

(i)

Branches/offices in India of foreign firms companies or associations and foreign

nationals resident but not permanently resident in India are permitted to maintain and

operate bank accounts in India only with authorised dealers. The object behind subjecting the opening of and operations on such accounts to a certain degree of regulation is to bring to the notice of such account holders that it is illegal for them to provide any foreign exchange to other residents through their non-resident associates against reimbursement provided locally and to ensure that necessary approval of Reserve Bank has been obtained for their activities in India. While opening rupee accounts in the names of branches/offices in India of foreign companies and foreign nationals (resident in India), authorised dealers should obtain an undertaking in form QA 22 duly signed by all the persons (irrespective of nationality) who are authorised to operate on the accounts. Fresh declarations will be necessary in the event of any addition to the list of persons authorised to operate on the accounts. Form QA 22 should be carefully preserved by authorised dealers along with respective account opening forms.

NOTES :

A.

Form QA 22 need not be completed in respect of accounts to be opened in the names of Foreign Embassies, Consulates, Legations, Trade Representations and other Foreign Government establishments in India and the United Nations Organisation and its subsidiary/affiliate bodies in India or their officials in India. (This exemption is however not applicable to accounts maintained in the names of members of families of such officials and hence they may be required to furnish the undertaking in form QA 22).

B.

Form QA 22 need not be completed by foreign nationals of non-Indian origin permanently resident in India and foreign nationals of Indian origin (other than those who are residing in India for employment of specified duration irrespective of the length thereof or for a specific job or assignment, the duration of which does not exceed three years) and foreign-born wives of Indian nationals and of persons of Indian origin resident in India.

Status of QA 22 Accounts

11B.2

(i)

Accounts in the names of Indian branches/offices of foreign companies and

resident foreign nationals and in respect of which forms QA 22 have been

obtained are treated as resident accounts and operations thereon allowed freely provided credits to the account arise out of sources declared on the form. When the account holder ceases to be resident in India, the account may be converted into an Ordinary Non-resident Rupee (NRO) account.

While QA 22 accounts in the name of individuals can be maintained in any form such as current, savings and fixed deposits, the QA 22 accounts of foreign firms/companies can be maintained as current accounts only. There would, however, be no objection to funds in such accounts, held by firms/companies/associations, rendered surplus temporarily being placed in term deposits with a maturity not exceeding three months with the authorised dealer with whom the account is maintained.

(ii)

Authorised dealers may allow credits of refund of security deposit paid for securing

accommodation/reimbursement of vehicle insurance claims/loan repayments by the employees etc. to the QA 22 account of the Indian branches/offices of foreign companies and resident foreign nationals maintained with them provided authorised dealer is satisfied with reference to documentary evidence that the relevant original payment was made by debit to concerned QA 22 account. Authorised dealers should keep copies of documentary evidence so verified, on their records for inspection by their internal auditors/Reserve Bank.

Authorised Dealers' Responsibilities regarding QA 22 Accounts

11B.3

(i)

Authorised dealers should exercise caution and report to Reserve Bank any

ransactions which may appear to represent reimbursement in rupees against foreign

exchange made available to any person in India other than an authorised dealer. Any other transactions where authorised dealer has reason to believe that they relate to an activity of the account holder requiring Reserve Bank's approval but not approved by Reserve Bank, should also be reported.

(ii)

Where foreign companies/foreign nationals have given an undertaking not to

seek remittance facilities out of any income earned in India or where a condition has been imposed to that effect by Reserve Bank while granting approval, (this may be ascertained by calling for perusal the letter of approval granted by Reserve Bank at the time of opening of the account), a prominent note of this fact should be taken in the ledger folio, etc. so that no remittance facilities are extended to such account holders.

Loans in India to Foreign Nationals/Liaison Offices of Foreign companies

11B.4

(i)

Loans and advances to foreign nationals not permanently resident in India

should not be granted if required for investment or for dealing in stocks and shares.

Loans for personal purposes such as purchase of household articles may be given up to a maximum of Rs.5,00,000/-(Rupees Five lakhs). This limit applies to total borrowings from all banks of the borrower and his dependents. Applications in form LOV 2 for loans in excess of this limit should be referred to Reserve Bank for prior approval.

(ii)

Loans/overdrafts should not be granted to liaison offices of foreign companies

since entire expenses of such offices are required to be met out of funds remitted from abroad.

Diplomatic Bond Stores Account

11B.5

In order to facilitate payment by foreign diplomatic personnel in India for their

purchases from bonded stocks held by firms and companies which have been granted

special facilities for import of stores into bond, arrangements have been made for maintenance of special bank accounts styled as 'Diplomatic Bond Store Accounts' by such diplomatic personnel. Authorised dealers may open such accounts denominated in rupees subject to the following conditions :

(a)

Credits to the accounts may be effected only out of proceeds of remittances received from abroad through banking channels in any of the permitted currencies or in rupees from non-resident bank account.

(b)

Before allowing any cheques to be drawn on a special account, authorised dealer concerned should apply to Reserve Bank and obtain a code number for the account. Applications for code numbers should state name and designation of the account holder and manner in which credits are proposed to be made to the account. There is no objection to a single account being utilized for more than one official. In such cases details in respect of all the beneficiaries should be advised.

(c)

All cheque leaves issued to account holders in respect of the special accounts should be superscribed 'Diplomatic Bond Store Account No. .....'

(d)

Debits to the accounts may be freely permitted for local disbursements but remittance of funds outside India will require prior approval of Reserve Bank.

(e)

Authorised dealers maintaining such special accounts should forward to Reserve Bank by the 10th of each month a statement in form DBS, listing (1) credits to the accounts during the previous month together with source of each credit and (2) payments made, stating numbers of the cheques and names of the payees.