Now Startup with overseas unit can open foreign currency a/c abroad says RBI

RBI today said a start-up with an overseas subsidiary is permitted to open foreign currency account abroad to pool the foreign exchange earnings.

“A start-up in India with an overseas subsidiary is permitted to open foreign currency account abroad to pool the foreign exchange earnings out of the exports/sales made by the concerned start-up,” RBI said.

In view of the Government’s Start-up India initiative, regulatory relaxations are being given to them.

RBI further said the overseas subsidiary is also permitted to pool its receivables arising from the transactions with the residents in India as well as the transactions with the non-residents abroad into the foreign currency account opened abroad in the name of the start-up.

Also a start-up is allowed to avail of the facility for realising the receivables of its overseas subsidiary or making the repatriation through Online Payment Gateway Service Providers (OPGSPs) up to USD 10,000.

Also, the balances in the foreign currency account as due to the Indian start-up should be repatriated to India within a period as applicable to realisation of export proceeds (currently nine months).

RBI had earlier announced that in case of start-ups, to facilitate ease of doing business, certain permissible transactions under the existing regime would be clarified. One of the issues related to the start-ups accepting payment on behalf of overseas subsidiaries.

On issue of shares without cash payment through sweat equity in case of a start-up, RBI said Indian companies are permitted to issue sweat equity.

On issue of shares against legitimate payment owed, RBI said Indian companies are allowed to issue equity shares against any other funds payable by the investee company and remittance of which does not require prior permission.

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