The Reserve Bank of India (RBI) has relaxed norms for overseas direct investment by Indian entities by waiving the need to seek its approval to open foreign currency accounts abroad.
The relaxation in norms pertaining to opening, holding and maintaining foreign currency accounts (FCA) will provide operational flexibility to Indian parties wanting to invest overseas, RBI said in a notification issued today.
Accordingly, an Indian party will now be allowed to open, hold and maintain foreign currency account abroad for the purpose of overseas direct investments subject to the following terms and conditions:
- The Indian party is eligible for overseas direct investments in terms of FEMA Regulations;
- The host country regulations stipulate that the investments into the country be routed through a designated account;
- FCA shall be opened, held and maintained as per the regulation of the host country;
- Remittances sent to the FCA by the Indian party should be utilised only for making overseas direct investment into the JV / WOS abroad;
- Dividend and / or other entitlements from the subsidiary should be repatriated to India within 30 days from the date of credit;
- The Indian party should submit the details of debits and credits in the FCA on yearly basis to the designated AD bank with a certificate from the statutory auditors of the Indian party certifying that the FCA was maintained as per the host country laws and the extant FEMA regulations / provisions as applicable;
- The FCA so opened should be closed immediately or within 30 days from the date of disinvestment from JV / WOS or cessation thereof.
RBI said it is issuing necessary amendments to the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations 2000 separately.
All other norms required to open, hold and maintain foreign currency accounts for overseas investment remain unchanged, the statement said.