Opening of Bank Account outside India of resident firm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2009 How to open a bank account outside india (bank account in any bank in a foreign country)by a partnership firm in India

Sunil

Sunil (Expert)
Follow

27 November 2009 It all depends on the country where you are opening the account. Everyone has their KYC Norms to follow. In USA they allow non-residents to open accounts using the overseas address for convenience of clearing USA payments. However, proper verification is done by them and minimum balances are upward of USD10,000.

Our RBI has delegated the AD with powers to approving your opening of a non-resident account abroad (for the other country you are non-resident)and will remit the money. However, they usually do it with their own branches established in the other country (SBI may help you open it with SBI New York if you need it in USA). You have to keep furnishing the report to them of all your transactions and the amount in excess of minimum balance has to be remitted to India. In USA you have to provide the bank with W8BEN form so that no witholding tax is applicable on the remittances you make to self. In USA mere fact of opening the account does not make your income taxable in USA as per their tax laws and it does not constitute a PE.

Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2009 Dear Sir,

Thank you very much for your reply.

Our bankers told me that the way to open a bank account in a foreign country by a partnership firm registered in India are only the following:-
1. Appointment of a representative in abroad
2. Estabilishing a non-trading office in abroad
3. Estabilishing a branch in abroad

Without going through any one of the mode above, there is no posibiity to open a bank account.

But, I don't want any representative or non-trading office or branch in abroad.

So,I want to know whether it is posibile to open a bank account in a foreign country just like we open bank account in a bank suituated in different cities/states in India.

Please reply.

Thanks,
Anbu

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
Follow

09 August 2024 Opening a bank account in a foreign country as an Indian partnership firm involves several steps and considerations. Generally, the process is more complex than opening an account within India due to international regulations and requirements. Here’s a comprehensive guide on how you might go about this, given your constraints:

### **1. **Regulatory Framework**

In India, the Reserve Bank of India (RBI) regulates the outward remittance and transactions of Indian entities. For opening a bank account abroad, you need to comply with various regulations:

- **Foreign Exchange Management Act (FEMA):** This governs foreign exchange transactions in India.
- **RBI Approval:** Any foreign investment or transactions involving Indian entities need RBI’s approval.

### **2. **Possible Routes for Opening an Account**

Given your constraints (not wanting to establish a representative office, branch, or non-trading office), opening a foreign bank account directly may be challenging. However, here are potential avenues you could explore:

#### **1. **Opening an Account through an Existing International Bank Relationship**

- **Existing Bank Relationships:** If your Indian firm has a relationship with an international bank that operates both in India and abroad (e.g., HSBC, Citibank), you might be able to leverage that relationship. Banks with global networks can facilitate the process of opening accounts in different countries.
- **Documentation:** Typically, you will need to provide various documents, including the firm's registration documents, proof of identity for partners, a resolution from the partnership firm authorizing the account opening, and other KYC (Know Your Customer) documents.

#### **2. **Utilizing a Correspondent Bank**

- **Correspondent Banks:** These are banks that maintain accounts with other banks in foreign countries to facilitate transactions and banking services. Your Indian bank might be able to help you open an account abroad through its correspondent banking relationships.

### **3. **Steps to Open an Account**

Even if you are not setting up a representative office or branch, here are general steps to follow:

1. **Identify the Bank:** Choose a bank in the foreign country where you wish to open an account. Research their requirements for opening accounts for foreign entities.

2. **Gather Documentation:** Prepare necessary documents such as:
- Partnership deed
- PAN card of the firm
- Proof of business address
- Identity proofs of partners
- Resolution from the partnership firm authorizing the account opening

3. **Bank Requirements:** Contact the foreign bank to understand their specific requirements. They may require certain documents to be notarized or attested.

4. **Compliance with RBI:** Ensure compliance with FEMA regulations. You may need to file Form OAC with the RBI, which is used for opening a foreign bank account.

5. **Submission and Verification:** Submit the documents to the foreign bank and follow their process for verification.

### **4. **Alternatives**

- **Foreign Currency Account with Indian Bank:** Consider opening a Foreign Currency Account with an Indian bank that deals in foreign currencies. This account allows you to hold foreign currency and is often used for international transactions.

- **Consulting a Professional:** Given the complexity of international banking regulations, it might be helpful to consult with a legal or financial advisor specializing in cross-border transactions to ensure compliance and to streamline the process.

### **Summary**

Opening a bank account in a foreign country without establishing a physical presence or representative office is challenging but possible through existing international banking relationships or correspondent banks. Ensure you comply with all relevant regulations and gather the necessary documentation. Consulting with professionals who specialize in international banking and compliance can provide further assistance and facilitate the process.