12 November 2013
I have a client with registered financial Pvt ltd firm, they are interested in opening a foreign currency bank account in India/abroad.
Can you please suggest me with rules and regulations associated with it.
12 November 2013
Read Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 issued by RBI under FEMA.
13 November 2013
Ajay, my client is planning to start Full Fledged Money Changer ( Remittance )Business,we had gone through the RBI documentation...Being an Indian registered company we have to Apply for FFMC license from RBI.. and I have few questions about the operations, Please will you be able to answer me.
1. From fema-circular-no-18-dated-november-27-2009--2584 - under 3.1.a - it Says " system envisages a tieup between a reputed money transfer company abroad called Overseas Principals and AP i.e. Indian Agent.... which means as we an Indian Entity - this regulation will not allow us to do a direct inward remittance business with NRI's in Abroad.? - is my understanding correct.
2. As an indian Entity, is there any other way that we can Buy Foriegn currency & Exchange them as part remittance business.
Do i am missing anything here.. please clarify me the above statements... I appreciate for your help in advance.
09 August 2024
Opening foreign currency bank accounts and starting a Full Fledged Money Changer (FFMC) business in India involves navigating a complex regulatory framework. Here’s a detailed guide to help you with the rules and regulations associated with it:
### **1. Opening a Foreign Currency Bank Account**
#### **In India:**
- **Regulation:** Foreign currency accounts in India are regulated by the Foreign Exchange Management Act (FEMA), 1999. The Reserve Bank of India (RBI) oversees these regulations.
- **Types of Accounts:** - **Foreign Currency Non-Resident (FCNR) Accounts:** These are term deposits held in foreign currencies by Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs). They can be opened by individuals who meet the eligibility criteria. - **Non-Resident External (NRE) Accounts:** These are savings or term deposit accounts held in Indian rupees but funded from abroad. NRIs and PIOs can open these accounts.
- **Regulatory Requirements:** - **Bank Selection:** Choose a bank authorized by RBI to handle foreign currency transactions. - **Documentation:** Provide documentation such as proof of identity, proof of residence, and details of the source of funds. - **Purpose of Account:** Specify the purpose of the foreign currency account, such as business operations or personal use.
#### **Abroad:**
- **Regulation:** Each country has its own regulations for opening foreign currency accounts. In most cases, businesses or individuals will need to comply with local banking regulations.
- **Steps:** - **Choose a Bank:** Select a bank in the country where you wish to open the account. - **Provide Documentation:** Provide necessary documentation such as proof of business registration, identification, and possibly a reference from your home bank. - **Regulatory Compliance:** Ensure compliance with the local laws and regulations governing foreign currency transactions.
### **2. Starting a Full Fledged Money Changer (FFMC) Business**
#### **Regulations and Licensing:**
- **FFMC License:** In India, to operate as a Full Fledged Money Changer, you need to obtain a license from RBI. The license is issued under the Foreign Exchange Management Act (FEMA), 1999.
- **Application Process:** - **Eligibility:** Ensure your company meets the eligibility criteria specified by RBI. - **Documentation:** Submit necessary documents including company registration, financial statements, and details of the proposed business operations. - **Compliance:** Comply with all RBI regulations, including anti-money laundering (AML) and know your customer (KYC) norms.
#### **Regulatory Queries:**
1. **Tie-up with Overseas Principals:** - **FEMA Circular No. 18/2009:** This circular specifies that an Indian agent (AP) must have a tie-up with a reputed money transfer company abroad (Overseas Principal) to handle inward remittances. This means that as an Indian entity, you cannot directly receive remittances from NRIs abroad without involving an overseas principal. - **Understanding:** Your understanding is correct. You need to partner with a reputed money transfer company abroad to facilitate such transactions.
2. **Buying and Exchanging Foreign Currency:** - **Regulations:** You can buy foreign currency and exchange it as part of your remittance business if you have the necessary FFMC license from RBI. - **Operational Framework:** Your business operations must adhere to FEMA guidelines, including compliance with anti-money laundering laws and maintaining proper records. - **Alternative Methods:** If you are looking to operate without direct inward remittance, consider partnering with an established foreign exchange operator or establishing a relationship with an overseas principal.
### **Summary:**
1. **Opening Foreign Currency Accounts:** - **In India:** FCNR and NRE accounts are regulated by FEMA and require specific documentation. - **Abroad:** Follow local regulations and documentation requirements for foreign currency accounts.
2. **Starting an FFMC Business:** - **Obtain an FFMC License:** Comply with RBI regulations, including forming a tie-up with an overseas principal for inward remittances. - **Operational Compliance:** Ensure compliance with all applicable regulations, including AML and KYC.
For further assistance, consulting with a legal or financial advisor experienced in foreign exchange and banking regulations is advisable. They can provide tailored guidance based on your specific needs and business plans.
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