What changed
This Master Circular consolidates all existing instructions on establishment of Branch/Liaison/Project Offices by foreign entities into one document. It includes a sunset clause, meaning it will be replaced by an updated version after July 1, 2013.
What it means for you
Banks must ensure foreign entity applications meet the specified profit track record and net worth thresholds before forwarding to RBI. The circular streamlines compliance by centralizing rules, but the sunset clause requires banks to stay alert for future updates.
What you must do
- Verify foreign entity applications meet profit track record (3 years for LO, 5 for BO) and net worth (USD 50,000 for LO, USD 100,000 for BO) criteria.
- Forward applications through designated AD Category-I banks to RBI's Foreign Investment Division.
- Ensure all prescribed documents, including attested Certificate of Incorporation and audited balance sheet, are attached.
- Monitor the sunset clause and prepare for the updated Master Circular after July 1, 2013.
Who it affects
AD Category-I banks, Foreign entities seeking to establish LO/BO/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 to RBI?
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 after July 1, 2013?
This Master Circular will stand withdrawn and be replaced by an updated version on the same subject.