How can foreign firms/companies use their Temporary Surplus funds lying with the branches/project/liaison office?
Prior to introduction of FEMA a branch/office in India of foreign firm/company were allowed to keep funds, which were rendered surplus temporarily, in term deposits with maturity not exceeding three months with the same branch of authorized dealer with whom the erstwhile QA-22 account was maintained. Reserve Bank has now relaxed this condition and has permitted Authorised Dealers to open term deposit account for a period not exceeding 6 months in favour of a branch/office of a person resident outside India provided that the Authorised Dealer 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 utilized for their business in India within 3 months of maturity. However, such facility is not extended to shipping/airline companies.
