Saturday, May 14, 2011

ESCROW ACCOUNTS FOR SECURING FDI TRANSACTIONS

To provide structured flexibility and easiness to the resident/non-resident shareholders of Indian Company, Reserve Bank of India (RBI) vide its Circular RBI/2010-11/ 498 A. P. (DIR Series)
Circular No. 58 dated May 02, 2011 has decided to permit AD category -1 banks to open and maintain, without prior approval of the Reserve Bank, non-interest bearing Escrow accounts in Indian
Rupees in India on behalf of residents and/or non-residents, towards payment of share purchase consideration and / or provide Escrow facilities for keeping securities to facilitate FDI transactions subject to the terms and conditions. Further, It has also been decided to permit SEBI authorized Depository Participants, to open and maintain, without prior approval of the Reserve Bank, Escrow
accounts for securities subject to the terms and conditions. These facilities will be applicable for both issue of fresh shares to the non- residents as well as transfer of shares from / to the non- residents.

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