Reserve Bank of India vide its notification dated June 23, 2016 allowed Startups with an overseas subsidiary to open foreign currency accounts with a bank abroad to credit to the account foreign exchange earnings from exports and sales made by the startup or its subsidiary. The notification is part of series of incentives granted by the Central Government to the Indian Startups under the "Start up India, Stand up India" Scheme. RBI had earlier in February, 2016 clarified the issue regarding opening of foreign currency accounts for startups. As per the present notification, the balance in the accounts representing exports from India shall be repatriated to India within the period prescribed for realization of exports in Foreign Exchange management regulations, 2016. Payments received in foreign exchange by an Indian Startup out of sales or exports made by the startup or its subsidiaries will be a permissible credit to the Exchange Earners Foreign Currency (EEFC) account maintained in India by the Startup. An Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorized Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
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