Section 7(4) in The Foreign Exchange Management (Foreign Currency Accounts By A Person Resident In India) Regulations, 2000
(4)Life Insurance Corporation of India or General Insurance Corporation of India and its subsidiaries may open, hold and maintain with a bank, outside India, a Foreign Currency Account for the purpose of meeting the expenditure incidental to the insurance business carried on by them and for that purpose credit to such account the insurance premia received by them outside India.[(4-A) A firm or a company or a body corporate registered or incorporated in India (hereinafter referred to as `the Indian entity') may open, hold and maintain in the name of its office (trading or non-trading) or its branch set up outside India or its representative posted outside India, a foreign currency account with a bank outside India by making remittances from India for the purpose of normal business operations of the office/branch or representative:Provided that--(a)the overseas branch/ office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity;(b)the total remittances made under this sub-regulation by the Indian entity, to all such accounts in an accounting year shall not exceed--(i)[ 15 per cent. of the average annual sales/income or turnover of the Indian entity during the last two financial years or up to 25 per cent. of the net worth, whichever is higher, where the remittances are made to meet initial expenses of the branch or office or representative, and(ii)10 per cent. of such average annual sales/income or turnover during the last financial years where the remittances are made to meet recurring expenses of the branch or office or representative;](c)[ the overseas branch/office/representative shall not enter in any contract or agreement in contravention of the Act, Rules or Regulations made thereunder;(d)the account so opened, held or maintained shall be closed,--(a)if the overseas branch/ office is not set up within six months of opening the account, or(b)within one month of closure of the overseas branch/office, or(c)where no representative is posted for six months, and the balance held in the account shall be repatriated to India:Provided further that the restriction contained in clause (b) of the first proviso shall not apply in a case where--(a)the remittances to the account maintained under this sub-regulation are made out of funds held in EEFC account of the Indian entity, or(b)the overseas branch/office is set up or representative posted by a 100% EOU or a unit in EPZ or in a Hardware Technology Park or in a Software Technology Park, within two years of establishment of the Unit.Explanation. - For the purpose of this sub-regulation,-(A)Purchase or acquisition of office equipments and other assets required for normal business operations of the overseas branch/office/representative will not be deemed as a capital account transaction;(B)Transfer or acquisition of immovable property outside India, other than by way of lease not exceeding five years, by the overseas branch/office/representative will be subject to the Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2000.]
