RBI/2015-16/309

RBI/2015-16/309
A.P. (DIR Series) Circular No.44/2015-16 [(1)/10(R)]

February 04, 2016

To

All Category - I Authorised Dealers and Authorised Banks

Madam/ Sir

Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015

Attention of Authorised Dealers (ADs) is invited to A.D.(M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act). On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000, as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and replaced by the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015.

2. According to the regulations, a “Foreign Currency Account” means an account held or maintained in currency other than the currency of India or Nepal or Bhutan.

3. These regulations seek to regulate opening and maintenance of foreign currency accounts in and outside India by a person resident in India.

4. In terms of Regulation No. 4, a person resident in India may open, hold and maintain with an authorized dealer in India the following accounts, subject to the conditions specified in the regulations (details wherever necessary are given in Annex to this circular):

1. Exchange Earner's Foreign Currency (EEFC) Account subject to the terms and conditions of the Exchange Earner’s Foreign Currency Account Scheme (Schedule I to the regulations);
2. Resident Foreign Currency (RFC) Account out of sources of receipt of foreign exchange mentioned in sub-regulation (B) of the regulations;
3. Resident Foreign Currency (Domestic) [RFC(D)] Account with an authorised dealer in India out of sources of receipt of foreign exchange mentioned in sub-regulation (C) of the regulations;
4. Diamond Dollar Account (DDA) - firms and companies who comply with the eligibility criteria stipulated in the Foreign Trade Policy of Government of India, subject to the terms and conditions of the DDA Scheme (Schedule II to the regulations)

5. In addition, in terms of Regulation No. 4, the following persons resident in India can open foreign currency accounts with an authorized dealer in India, subject to the conditions specified in the regulations (details wherever necessary are given in Annex to this circular):

1. A unit in a Special Economic Zone;
2. An exporter who is exporting services and engineering goods on deferred payment terms or has undertaken a turnkey project or a construction contract abroad;
3. Indian agents of foreign airline or shipping companies;
4. Ship-manning/ crew managing agencies in India;
5. Project offices set up in India in terms of Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000 dated May 3, 2000, as amended from time to time;
6. Indian companies receiving Foreign Direct Investment.
7. Organisers of international seminars, conferences, conventions etc.

6. In terms of Regulation No. 5, the following persons resident in India can open foreign currency accounts outside India subject to the conditions specified in the regulations (details wherever necessary are given in Annex to this circular):

1. An authorized dealer in India with its branch/ head office/ correspondent outside India;
2. A branch outside India of a bank incorporated or constituted in India;
3. An India firm/ company/ body corporate in the name of its foreign office/ branch or its representative posted outside India;
4. An exporter who is exporting services and engineering goods on deferred payment terms or has undertaken a turnkey project or a construction contract abroad;
5. An Indian Party [as defined in Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004, as amended from time to time] for making overseas direct investment provided the overseas regulator requires the maintenance of such an account;
6. A person raising ECB or ADR/ GDR;
7. Indian shipping or airline companies;
8. Life Insurance Corporation (LIC) of India or General Insurance Corporation (GIC) of India and its subsidiaries for the purpose of carrying on life/ general insurance business;
9. A resident individual under the Liberalized Remittance Scheme;
10. A person going abroad to participate in an exhibition/ trade fair;
11. A person going abroad for studies;
12. A person who is on a visit to a foreign country provided the balances are repatriated on return to India;
13. A foreign citizen resident in India, being an employee of a foreign company, or an Indian citizen, being an employee of a foreign company, in either case on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India;
14. A foreign citizen resident in India employed with an Indian company

7. In terms of regulation 6, unless otherwise specifically stated, a Foreign Currency Account with an authorized dealer in India under these Regulations may be opened, held and maintained in the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases. The account can be held singly or jointly in the name of person eligible to open, hold and maintain such account.

8. The new regulations have been notified vide Notification No. FEMA 10(R)/2015-RB dated January 21, 2016, c.f. G.S.R. No.96 (E) dated January 21, 2016 and shall come into force with effect from January 21, 2016. The Master Direction No. 14 of 2015-16 (Deposits and Accounts) has been updated accordingly to incorporate the above changes.

9. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

10. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.

Yours faithfully

(B. P. Kanungo)
Principal Chief General Manager