A.P. (DIR Series) (2003-2004) Circular No. 20, Dated 23-9-2003,
Issued by Exchange Control Department, RBI
Attention of
Authorised Dealers is invited to Regulation 7(5) of Notification No. FEMA.
10/2000-RB dated May 3, 2000 relating to opening, holding and maintaining
Foreign Currency Accounts outside India by project/service exporters. The
relevant provisions have been amended by Notification No. FEMA.87/2003-RB dated
March 20, 2003.
2. In terms of the aforesaid amendment, 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. Accordingly,
the Approving Authority of the overseas contract, i.e., Authorised Dealer/Exim
Bank/Working Group may approve the proposal of exporter, to open, hold and
maintain Foreign Currency Account in India subject to the terms and conditions
indicated in the annexure and the conditions mentioned below.
(i) Exporter will have
to open, hold and maintain a separate Foreign Currency Account for each project
under execution abroad.
(ii) Authorised Dealers
shall not avail of rupee loans against the security of balances held in such
accounts and no overdraft in the account shall be permitted.
(iii) The balance in the
account will be subject to SLR/CRR requirement as prescribed by Reserve Bank
(DBOD) from time to time.
3. Presently, project/service exporters are
required to obtain specific approval of Reserve Bank for making payment to
their Indian suppliers of goods/services in foreign currency in India out of
Foreign Currency Accounts opened/maintained in India for execution of projects
abroad. It has since been decided that Project Approving Authority may on
request allow such of the project/service exporters, as have been permitted to
open foreign currency accounts in India, to pay their Indian suppliers/service
providers in foreign currency from their Foreign Currency Accounts subject to the
following conditions :
(i) Project/service
exporter should not claim export benefits on the payment made to Indian
supplier/service provider.
(ii) Indian supplier of
goods/services should comply with export procedure as per
provisions/requirements of FEMA 1999.
4. Authorised Dealers may bring the contents of
this circular to the notice of their constituents concerned.
5. The directions contained in this circular
have been issued under section 10(4) and section 11(1) of the Foreign Exchange
Management Act, 1999 (42 of 1999).