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.

PART C - REMITTANCE OF PROFITS/SURPLUS ETC. BY FOREIGN COMPANIES

Remittance of Profits by Foreign Companies (other than Banks)

11C.1

Applications for remittance of profits by the branches of the foreign companies should be accompanied by the following documents:

(a)

Certified true copy of audited Balance Sheet and Profit and Loss Account statement for the year to which the profit relates.

(b)

Certificate from the auditors covering the following:

(1)

manner of arriving at the remittable amount;

(2)

confirmation that the entire income of the branch office included in the accounts for the year had accrued from sources in India (In case any part of the income had accrued form sources outside India, the auditor's certificate should clearly indicate that this amount was repatriated to India immediately on realisation);

(3)

confirmation that the requirements of the Companies Act, 1956 have been complied with.

(c)

Certificate, citing RBI's approval number and date, from the auditors to the effect that the branch office has carried on business strictly in terms of the approval under Section 29(1)(a) granted by the Reserve Bank of India.

(d)

Certificate from the auditors that sufficient funds have been set aside to meet all Indian tax liabilities or that these liabilities have already been met.

(e)

Declaration from the applicant that the profit sought to be remitted is purely the profit earned in the normal course of business and does not include profit from any other source.

Authorised Dealers may scrutinize the above documents particularly with reference to -

(a)

source of income which should be out of activities approved by RBI and

(b)

calculations of the amount sought to be remitted with reference to the Profit and Loss account and the provision of tax.

If found in order, authorised dealers may allow the remittance.

Remittance of Profits by Foreign Banks Operating in India

11C.2

Indian branches of foreign banks operating in India may remit to their Head Offices

outside India net profit/surplus (net of taxes) arising out of their Indian business after

finalisation of the accounts for the respective year, in accordance with the provisions of the Banking Regulation Act, 1949 and directions issued by Reserve Bank in this regard. Full details of the remittances made should be advised to the Chief General Manager, Exchange Control Department (External Payments Division), Reserve Bank of India, Central Office, Mumbai 400 001 duly certified by their auditors imeditely after making the remittance.

Remittance of Surplus Passage/Freight Collections by Foreign Airline/Shipping Companies

11C.3

Regulations governing remittance of surplus freight and passage collections by

foreign airline/shipping companies operating in or through India are laid down in

Part B of Chapter 8.

Refund of Income-tax to Non-resident Firms/Companies

11C.4

Applications for remittances on account of refund of income-tax to foreign firms/companies

should be made to authorised dealers on form A2 supported by the following documents/particulars:

(a)

Original assessment order (together with certified copy) and copy of Income-tax Return for the corresponding assessment year.

(b)

Certificate from authorised dealer through whom the income-tax refund order has been encashed that the proceeds of the refund order are held by them in suspense account pending remittance abroad.

(c)

Source of funds from which tax was originally paid. If paid out of remittance from abroad, a bank certificate for the inward remittance; if tax was paid by deduction at source from dividend, interest on loans, royalty or other income which has already been remitted to the foreign firm/company, full details as under of the income on which tax was deducted should be furnished.

(1)

Nature of income i.e. dividend, interest, royalty, etc. amount and assessment year in which it accrued.

(2)

Name and address of Indian firm/company from which the income was derived.

(3)

The year/period to which the income related.

(4)

The date of remittance and other particulars of the amount originally remitted.

Authorised dealers may allow such remittances if they are satisfied that the tax amount of which the refund has been claimed was deducted from the amount remitted originally.

(See paragraph 11D.12 regarding remittance of income-tax refunds to individuals).

Remittance of Winding up Proceeds

11C.5

Applications for remittance of winding up proceeds abroad will be entertained by Reserve

Bank only after winding up has been completed and the actual net remittable surplus established.

Applications should be made on form A2 supported by following particulars/documents:

(a)

Number and date of Reserve Bank's approval for establishing the branch/office in India.

(b)

Number and date of Reserve Bank's approval for sale of immovable properties, if any, held by the branch/office.

(c)

Auditor's certificate containing the following:

(1)

manner in which remittable amount has been arrived at, duly supported by a statement of all assets and liabilities of the applicant, the manner of disposal of assets, name/s, and address/es of the purchaser/s, Reserve Bank's approval number/s and date/s under Section 31 of FERA 1973 for disposal of immovable properties etc.;

(2)

confirmation that all liabilities in India including arrears of gratuity, employee benefits, etc. in respect of the applicant have either been fully met or adequately provided for;

and

(3)

confirmation that no income accruing from sources outside India (including proceeds of exports) has remained unrepatriated to India.

(d)

No objection Certificate or Tax Clearance Certificate from Indian Income-tax Authorities for the remittance of net surplus.

(e)

Confirmation from applicants that no legal proceedings in Indian Courts or enquiries from Enforcement Directorate are pending against them and that after remittance of the net surplus, no further remittance facilities will be asked for.

PART D - REMITTANCE FACILITIES TO FOREIGN NATIONALS

General

11D.1

The regulations and procedures relating to remittance facilities available to foreign nationals

including those resident outside India are set out in this Part. Ordinarily, foreign nationals

who have taken up residence in India temporarily on account of their employment, profession or other activity with the intention of retiring eventually to their own or any other foreign country, will be considered as 'not permanently resident in India' and be eligible for various facilities explained in this Part, if the activity undertaken in India is in accordance with the general or special permission of Reserve Bank as required under FERA 1973. Foreign nationals permanently resident in India and persons of Indian origin other than those residing in India for employment of a specified duration (irrespective of the length thereof) or for a specific job or assignment the duration of which does not exceed three years, are treated on par with Indian nationals resident in India and will not be eligible for facilities for which foreign nationals not permanently resident in India are eligible, except as specifically provided in the Manual or where Reserve Bank's specific approval has been obtained.