FEMA- RBI - Foreign Multi-Currency Account

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Akshata (Querist)
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25 June 2021 Hi, We are a startup and provide software services to companies outside of India. Currently we are receiving our payments from US, UK and EU and we are paid via swift transfers in our Indian bank account. We also have outgoings in USD as some of our freelancers are based out of the US , Ukraine and Poland
We lose out a lot on FX conversions and our clients prefer to pay us locally in their own countries. So I was hoping you could advise:

1. if we need permission to open an overseas bank account to receive payments in US and UK local via local bank transfer? or what do we need to consider before opening a bank account overseas ?
2. We have come across a company that can offer overseas accounts to an Indian based company. Is holding an electronic money account overseas by an Indian company legal? the e-money account is opened with an Electronic Money Institution regulated by overseas regulator. They transfer the money deposited by the account holder to a tier-1 bank. This is called safeguarding.
3. We would like to collect the payments overseas in this e-money multicurrency account. Thereafter, we wish to pay the freelancers located abroad directly from the overseas account and remit the remaining money back to our Indian Bank Account. The money is received in India through an RBI approved OPGSP who has tied up with the multi-currency account provider.
4. do we need to be registered and recognized as an Exporter under Foreign Trade Policy? What if, we have been conducting our business so far without having to register our company as an exporter in India? Are there any legal implications? we offer software support services to overseas buyers/clients who then transfer our fees/charges/payments through normal banking channels to our Indian current account. recently, we thought of using Payoneer to receive money from our overseas clients, but they asked us to declare that we are duly registered as an exporter in India

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 June 2021 An Indian exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a Foreign Currency Account with a bank outside India, provided that:

a) approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2015 has been obtained for undertaking the contract/ project/ export of goods or services, and

b) the terms and conditions stipulated in the letter of approval have been duly complied with.

You need to register as an exporter.
See the link for online registration.
https://www.onlinelegalindia.com/services/online-iec-code-import-export-license/?gclid=Cj0KCQjw_dWGBhDAARIsAMcYuJxMDIUsmNmMDe0ycXqy7Y5dG4EBindDNP-OU-hE6GgA91l1j8cQ4RYaAoaEEALw_wcB

You have to register under GST and submit letter of undertaking in GST portal.

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Akshata

Akshata (Querist)
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28 June 2021 Thank you sir, for your response. This is very helpful. Do you think we need a permission from RBI for opening an e-money account overseas. Asking this question because electronic money accounts are slightly different from traditional bank accounts. these are maintained with an e-money institution registered with the UK Regulator.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 June 2021 Yes, permission is required.

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