Permission to Open Foreign Currency Account in India
Foreign Currency Account (FCA) is a transactional account. Which is denominated in a currency other than the home currency and maintained by a bank in the home country (onshore) or a bank in another country (offshore)?
In simple word, a Foreign Currency Account is an account held or maintained in currency other than the currency of India or Nepal or Bhutan.
Foreign Currency Account by a Resident of India:
Opening, holding and maintaining Foreign Currency Accounts in India:
Below is some list of accounts that can be opened by resident individuals with an Authorised Dealer bank in India.
- Relative as defined under Companies Act, 2013 (viz. members of HUF, spouse, parents, step-parents, son, step-son, daughter-in-law, daughter, son-in-law, brother/sister, step-brother/ step-sister).
- In addition to above Diamond Dollar Accounts, unit in SEZ, an exporter can open a bank account to maintain the foreign transaction subject to the certain condition laid down by RBI.
- The Indian agent of a shipping or an airline company incorporated outside India can open an FCA with an authorized dealer in India to meet the local expenses in India.
- Ship-manning/crew managing agencies in India can open and maintain non-interest bearing FCA in India to undertake transactions in the ordinary course of business.
- Project Office set up in India by foreign companies can open and maintain non-interest bearing one or more FCA in India to execute the project in India.
- An Indian company receiving foreign investment under FDI route can open and maintain FCA in India.
- Organizers of international seminars, conferences, conventions, etc. can open temporary FCA for the receipt of the delegate fees and payment towards expenses including payment to special invitees from abroad.
Under what circumstances a resident of India can open a foreign currency account outside India?
The Following are eligible to open, hold and maintain the foreign currency accounts outside India to undertake the respective Business.
- An authorized dealer and Bank incorporated in India having a branch or head office or correspondent outside India.
- A firm or a company or a body corporate registered or incorporated in India having its branch outside India which is subject to compliance with the remittance limits as prescribed.
- An exporter having site or project outside India.
- In the case of overseas direct investments.
- Life Insurance Corporation of India or General Insurance Corporation of India and its subsidiaries to meet the expenditure related to the insurance business carried on by them and for that purpose, credit to such account the insurance premier received by them outside India.
- A shipping or airline company incorporated in India.
- To remit under the Liberalised Remittance Scheme by the individual resident.
- A resident went out of India to participate in an exhibition/ trade fair outside India.
- A resident in India who has gone abroad for studies.
- A person resident in India who is on a visit to a foreign country.
- A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India.
What is the Restriction on holding foreign currency account by a person resident in India?
No person resident in India shall open or hold or maintain a foreign currency account:
Provided that a Foreign Currency Account held or maintained before the commencement of these Regulations by a person resident in India with special or general permission of the Reserve Bank, shall be considered to be held or maintained under these Regulations.
Provided further that the Reserve Bank, may on an application made to it, permit a person resident in India to open or hold or maintain a Foreign Currency Account, subject to terms and conditions.
What is the responsibility of authorized dealers?
An authorized dealer who hold foreign currency accounts (FCA) shall –
- conform with the directions issued by the Reserve Bank from time to time; and
- Submit periodic return or statement, if any, as may be stipulated by the Reserve Bank of India.