(i) Without prior permission of the Reserve Bank, no person being a citizen of/ registered in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau can establish in India, a Branch or a Liaison Office or a Project Office or any other place of business.
(ii) Proprietary concerns set up abroad are not allowed to establish Branch /Liaison/Project Offices in India.
(iii) Entities from Nepal are allowed to establish only Liaison Offices in India.
(iv) Branch/Project Offices of a foreign entity, excluding a Liaison Office are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal, Bhutan, China, Hong Kong and Macau are not allowed to acquire immovable property in India even for a Branch Office. These entities are allowed to lease such property for a period not exceeding five years.
(v) Branch / Liaison / Project Offices are allowed to open non-interest bearing INR current accounts in India.
(vi) Powers relating to transfer of assets of Liaison / Branch Office/Project Office have been delegated to AD Category-1 Banks subject to compliance with certain stipulations as mentioned in A.P.DIR (Series Circular) No. 142 dated June 12, 2014.
(vii) Authorised Dealers can allow term deposit account for a period not exceeding 6 months in favor of a branch/office of a person resident outside India provided the bank is satisfied that the term deposit is out of temporary surplus funds and the branch / office furnishes an undertaking that the maturity proceeds of the term deposit will be utilised for their business in India within 3 months of maturity. However, such facility may not be extended to shipping/airline companies.
(viii) Permission to establish offices, in India by foreign Non-Government Organisations/Non-Profit Organisations/Foreign Government Bodies/Departments, by whatever name called, are under the Government Route as specified in A. P. (DIR Series) Circular No. 23 dated December 30, 2009. Such entities are required to apply to the Reserve Bank for prior permission to establish an office in India, whether Project Office or otherwise.
F. All the new entities setting up LO/BO/PO shall also:
- submit a report containing information as per Annex (given in AP DIR.Circular.35 dated September 25, 2012) within five working days of the LO/BO/PO becoming functional to the DGP of the state concerned in which LO/BO/PO has established its office; if there are more than one office of such a foreign entity, in such cases to each of the DGP concerned of the state where it has established office in India;
- a copy of the report as per above mentioned Annex shall also be filed with the DGP concerned on annual basis along with a copy of the Annual Activity Certificate/Annual report required to be submitted by LO/BO/PO concerned, as the case may be.
- A copy of report thus filed as above shall also be filed with AD by LO/BO/PO concerned.
G. The existing LO/BO/PO shall henceforth report the information as per above mentioned Annex along with the copy of Annual Activity Certificate/Annual report to DGP of state concerned and also file a copy of the same with AD bank