What changed
This Master Circular consolidates all existing instructions on establishment of Branch/Liaison/Project Offices by foreign entities into one document. It replaces multiple earlier circulars and notifications, with a sunset clause of one year, effective July 1, 2011, and will stand withdrawn on July 1, 2012, to be replaced by an updated version.
What it means for you
Banks must ensure foreign entity applications meet the consolidated eligibility criteria: profit track record and net worth thresholds. The circular streamlines compliance by providing a single reference for all related instructions, reducing ambiguity for AD Category-I banks processing these applications.
What you must do
- Verify foreign entity applications meet profit track record and net worth criteria as per the circular.
- Forward applications in Form FNC through designated AD Category-I bank to RBI's Foreign Investment Division.
- Ensure all prescribed documents, including attested Certificate of Incorporation and audited balance sheet, are submitted.
- Monitor sunset clause: this circular will be replaced on July 1, 2012, so stay updated for the next version.
Who it affects
AD Category-I banks, Foreign entities seeking to establish Liaison, Branch, or Project Offices in India, RBI's Foreign Exchange Department
What are the net worth requirements for a Branch Office?
The foreign entity must have a net worth of not less than USD 100,000 or its equivalent, as per the latest audited balance sheet.
How should applications be submitted?
Applications must be forwarded by the foreign entity through a designated AD Category-I bank to the Chief General Manager-in-Charge at RBI's Foreign Investment Division in Mumbai.
What happens if the foreign entity does not meet the eligibility criteria?
Applicants who do not satisfy the criteria but are subsidiaries of other companies may submit additional documentation; otherwise, the application may be rejected.