Mumbai, May 6 (UNI) The Reserve Bank of India today announced that it will delegate certain powers to authorised dealers (ADs) from July one, regarding extension of validity period of liaison offices of foreign entities and closure of their branch/liaison offices in India.
The Central Bank, in a release here, said it also proposed to place in public domain eligibility criteria and procedural guidelines for establishment of branch and liaison offices by foreign entities in India, to achieve greater transparency.
Under the present provisions of Foreign Exchange Management Act, a person residing outside India requires prior approval of the RBI for establishing branch/liaison offices in India. The applications are considered by the Reserve Bank on case by case basis subject to the company meeting the eligibility criteria, such as, track record and financial position.
For the purpose of seeking public comments, the Reserve Bank had placed on its website, both - the draft circulars regarding delegation of powers for extension of validity period or closure of liaison offices of foreign entities in India and eligibility criteria and procedural guidelines for branch/liaison offices of foreign entities in India.
RBI said to provide a uniform framework, a Unique Identification Number (UIN) would be allotted to both the existing as well as new Branch/Liaison Offices. This UIN is required to be quoted in all references made to the Reserve Bank by the Branch office, liaison office and designated AD Category I bank. Consequent to the delegation of powers from July 1, 2008, existing Branch and liaison offices would also have to necessarily approach the Reserve Bank through their designated AD Category - I bank for their requests/references.
The work that would be delegated to the designated AD Category-I bank included Submission of Annual Activity Certificate, Extension of validity period of Liaison Offices, Closure of Branch/Liaison Offices The RBI said all Branch/Liaison Offices may identify and designate an AD bank to whom they would submit the Activity Certificates as well as other formalities related to closure/winding up.
Cases which are not covered under the delegated powers would continue to be required to be forwarded to the Reserve Bank, through the designated AD Category I bank.
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