Wednesday, October 13, 2010

Can a Resident or an Indian Company Accept Deposits from foreign national or Company?

There is a restriction for accepting deposits by a resident from a person outside India. As per FEMA Management of Deposits Regulation of 2000 vide circular FEMA 5/2000 dated 3-5-2007,

Save as otherwise provided in the Act or Regulations or in Rules , directions or orders made or issued under the Act , no person resident in India shall accept any deposits from , or make any deposits with , a person resident outside India ; Provided that RBI may , on an application made to it and on being satisfied that it is necessary so to do so, allow a person resident in India to accept or make deposit from or with a person resident outside India


Further , the master circular released on 1st Oct 2010 does not speak about any exemption the above and hence the restriction in accepting deposits continues.

Further , in case of listed companies , acceptance of deposits from overseas will need prior approval from RBI as deposit definition include under Laws relating to invitation & acceptance of fixeLaws relating to invitation & acceptance of fixed deposits by companiesd deposits by companies FEMA Management of Deposits Regulation of 2000 vide circular FEMA 5/2000 dated 3-5-2007,

v ) Deposit includes deposit of money with a bank , company ,proprietorship concern, partnership firm , corporate body , trust or any other person.


Alternatively  , a company may accept ECB by adhering the guidelines for accepting ECB under automatic route by satisfying ECB guidelines issued by RBI.

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