The Hindu Business Line : `OBUs can't offer forex accounts to residents'

THE Reserve Bank of India has decided that offshore banking units (OBU) in special economic zones will not be allowed to open foreign currency accounts of residents.

Banks had been posting queries following the recent RBI relaxation permitting residents to invest up to $25,000 overseas. Banks without overseas branches had plans to set up OBUs in order to offer foreign currency deposits through its OBU.

The central bank said in a notification issued today, "The banks are advised to ensure that the OBUs do not accept/ solicit deposits or investments from residents or open their accounts.''

The RBI has drawn the attention of all commercial banks to the scheme for setting up of OBUs which stated that the sources for raising foreign currency funds by an OBU would be only external and that funds can also be raised from those resident sources to the extent such residents are permitted under the existing exchange control regulations to invest/maintain foreign currency accounts abroad.

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