Companies incorporated in China,Pakistan,Bangladesh,Sri Lanka,Iran and Afghanistan will have to seek the permission of the Reserve Bank of India to set up branch or liaison offices in India as general permission granted to entities of other nations will not apply to them,the RBI said on Thursday.
The central bank had in 2000 barred citizens from the six neighbouring countries from opening any place of business in India under the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations,2000.
Subsequently,in guidelines released in 2003 the bank had granted general permission to a foreign entity for setting up a project office in India subject to certain conditions. Foreign companies were allowed to open project office if they have secured from an Indian firm a contract to execute a project in India and if the project is funded by inward remittance from abroad. Besides,permission was granted if the project is funded by a bilateral or multilateral international finance agency or if the project has been cleared by an appropriate authority.
As per the RBI guidelines,no person,being a citizen of Pakistan,Bangladesh,Sri Lanka,Afghanistan,Iran or China,shall establish in India,a branch office or a liaison office or a project office or any other place of business by whatever name called,without the prior permission of the RBI.
Overseas firms were allowed to open project office if a company or entity in India awarding the contract has been granted term loan by a public financial institution or a bank in India for the project. It is clarified that the general permission accorded in terms of the November 15,2003 guidelines is subject to the adherence to the provisions of Regulation 4 dated May 3,2000,along with their specified conditions, the RBI said. The RBI circular said that in the case of firms from China,Pakistan and other four countries general permission is subject to the adherence to the regulations laid down in 2000 under the Foreign Exchange Management Regulations.
Apex bank issues norms on foreign contribution
The RBI on Thursday stipulated that entities have to get themselves registered with the Central government before accepting any foreign contribution and banks will have to forward the report of receipts of such transfers to the government.
In the guidelines issued under the Foreign Contribution (Regulation) Act,2010,the RBI also said that recipients can receive foreign contribution in a single account only. The Act provides that persons having definite cultural,economic,educational,religious and social programmes should get themselves registered with the government of India before accepting any foreign contribution.
In case a person falling in the above category is not registered with the central government,it can accept foreign contribution only after obtaining prior permission of the central government, said the guidelines. Under the Act,foreign contribution means donation,delivery or transfer made by a foreign source of any article (not being an article of gift for personal use,the market value of which is not more than the specified amount),currency (whether Indian or foreign) or any security. ENS