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MumbaiApril 24Indian corporates have been given more leeway in dollar spending with RBI announcing a slew of measures towards capital account convertibility in the annual monetary policy on Tuesday.

Indian companies have been allowed to remit up to $10 million for infrastructure consultancy services against the current limit of $1 million

To enable small and medium enterprises (SMEs) to hedge the foreign exchange exposure, the RBI has allowed them to book forward contracts without underlying exposures or past records of exports and imports. " Such contracts may be booked through the authorised dealers with whom the SMEs have credit facilities. The SMEs are also permitted to freely cancel and rebook the contracts," it said.

Banks are now allowed to open escrow/ special accounts on behalf of non- residents subject to specific conditions where such accounts are required to be opened in terms of SEBI regulations for open offers, delisting and exit offers.

The central bank has permitted authorised dealers, on request of depositors, to permit remittance of the maturity proceeds of FCNR(B) [ foreign currency non- resident bank scheme] deposits to third parties outside India.

The facility of operation of accounts by power of attorney holder is extended to NRO (non- resident ordinary) accounts.Remittances for donations by corporates for specific purposes, subject to a limit of one per cent of their foreign exchange earnings during the previous three years or $5 million, whichever is lower are allowed.Corporates are also allowed to remit foreign exchange towards reimbursement of pre- incorporation expenses incurred in India where they do not exceed five per cent of the investment brought into India or $100,000, which ever is higher, on the basis of statutory auditors' certification.Ship manning agencies that render services to shipping companies incorporated outside India are allowed to open foreign currency accounts in India.Remittances on account of cash calls for the purpose of oil exploration will be allowed, provided the operator/ consortium member in India submits documents to the satisfaction of the dealer.Remittances of BPO companies requests for payment of equipment cost to be installed in overseas sites for setting up international call centres, subject to specified terms and conditions, will be allowed.Remittance of winding up proceeds of companies under liquidation, subject to orders issued by official liquidator or Indian court will also be allowed. .

(This article was published in the Business Line print edition dated April 25, 2007)
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