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November 2015

A. P. (DIR Series) Circular No. 15 dated September 24, 2015

By Gaurang Gandhi Chartered Accountant
Reading Time 2 mins
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Opening of foreign currency accounts in India by ship-manning/crew management agencies

Presently, ship-manning/crew managing agencies that are rendering services to shipping/airline companies incorporated outside India, are permitted to open, hold and maintain non-interest bearing foreign currency account with a bank in India for meeting the local expenses in India of such shipping or airline company.

This circular states that the under mentioned guidelines in respect of such accounts need to be strictly followed: –

a) Credits to such foreign currency accounts can only be by way of freight or passage fare collections in India or inward remittances through normal banking channels from the overseas principal.
b) Debits will be towards various local expenses in connection with the management of the ships / crew in the ordinary course of business.
c) No credit facility (fund based or non-fund based) must be granted against security of funds held in such accounts.
d) The bank must meet the prescribed ‘reserve requirements’ in respect of balances in such accounts.
e) No EEFC facility can be allowed in respect of the remittances received in these accounts.
f) These foreign currency accounts can be maintained only during the validity period of the agreement.

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