Can an Exporter open Foreign Currency Account in Overseas?
RBI directions to exporters bank on opening a Foreign Currency account for Exporter in India is given below:
Can an exporter for exhibition purpose open Foreign exchange account temporarily? Can an Exporter with Indian entity open a Foreign Currency Account outside India as their overseas branch account? Do FEMA rules allow opening a Foreign Currency account at foreign country? How to open a Foreign Currency Account by a Service Exporter or Project Exporter of India?
Subjected to certain terms and conditions, a Foreign Currency account in Foreign country or domestic country by an exporter can be opened.
Temporary foreign currency account for International exhibitors can be opened either in India or overseas country. The Permission to open Foreign exchange account for International exhibitors has to be filed in EFC form with Authorized Dealer Bank.
As per FEMA regulations in India, a temporary foreign currency can be opened at foreign country for those who participate in international trade fare or international exhibition with prior permission. The amount of sale of exhibited goods can be deposited and transacted easily for such arrangements, if account can be transacted in foreign currency. According to RBI rules, the amount such received should be transferred to India through the normal banking channel in order to account such amount against the said purpose. As per FEMA regulations, an exporter with Indian entity can open a bank account in foreign country for their overseas branch normal transactions of import and export. Units under SEZ can also open a foreign currency account through proper banking cannel by applying for permit. Similarly, a service exporter or a Project Exporter also can open a Foreign Currency Account at overseas to transact their business account. All the above banking transactions should be in proper banking channel prescribed by Reserve Bank of India (RBI) under Foreign Exchange Management Act.(FEMA).
The extract of FEMA rules regulated by Reserve Bank of India about Foreign Currency Account for Exporters are read below:
A.4 Foreign Currency Account
(i) Participants in international exhibition/trade fair have been granted general permission vide 8Regulation 5(E)(5) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016 for opening a temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained by sale of goods at the international exhibition/ tn rade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category – I banks concerned.
(ii) Reserve Bank may consider applications in Form EFC from exporters having good track record for opening a foreign currency account with AD banks in India and outside India subject to certain terms and conditions. Applications for opening the account with a branch of an AD Category – I bank in India may be submitted through the branch at which the account is to be maintained. If the account is to be maintained abroad the application should be made by the exporter giving details of the bank with which the account will be maintained.
(iii) An Indian entity can also open, hold and maintain a foreign currency account with a bank outside India, in the name of its overseas office/branch, by making remittance for the purpose of normal business operations of the said office/branch or representative subject to conditions stipulated in 9Regulation 5 (B) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016.
(iv) A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with an AD Category – I bank in India subject to conditions stipulated in 10Regulation 4 (D) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016.
(v) A person resident in India being a project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum PEM.
The above information is about FEMA rules on opening a Foreign Currency account by an exporter. The details about Foreign Currency account answers on questions whether an exporter for exhibition purpose open Foreign exchange account temporarily, Can an Exporter with Indian entity open a Foreign Currency Account outside India as their overseas branch account, Do FEMA rules allow opening a Foreign Currency account at foreign country, How to open a Foreign Currency Account by a Service Exporter or Project Exporter of India etc.
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