Regulation 5 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Regulation 5 lists the residents who may keep a foreign currency account with a bank outside India: banks and authorised dealers, Indian entities with overseas offices, exporters, Indian parties making overseas investment, startups, individuals under the Liberalised Remittance Scheme, students, travellers and others. The Master Direction on Deposits and Accounts (paragraph 4 of Part I) restates the permissions, and this article states each condition as the Master Direction prints it.
This article reads regulation 5 of the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 (Notification No. FEMA 10(R)/2015-RB, January 21, 2016, amended upto February 27, 2019), as per the copy from the Enforcement Directorate site, with the Fifth, Sixth and Seventh Amendments of 2025. Conditions are taken from the Master Direction - Deposits and Accounts, updated as on September 02, 2026. An exporter may keep a foreign currency account abroad for realisation of full export value and advance remittance, and must use the funds for imports or repatriate them within the end of the next month, or three months for a bank in an IFSC. A condition found only in the copy and not in the Master Direction is left out.
Authority and the texts
The preamble cites "Section 9 and clause (e) of sub-section (2) of section 47" of the Foreign Exchange Management Act, 1999. See the Act articles on section 9 and sections 47 and 48. The copy of the Regulations is amended upto February 27, 2019 only; the Third and Fourth Amendments are not in the sources consulted, and the Fifth to Seventh (2025) are. The footnotes of the amendment pages give Gazette references that do not agree: the Fifth Amendment page dates G.S.R. 570(E) as "01.06.2018" and the Sixth as "01.06.2016". The copy says June 1, 2016. The Master Direction is the Reserve Bank's direction to authorised dealers under section 11. For advice on overseas accounts and overseas investment, see our overseas investment reporting service.
The text of regulation 5 and the Master Direction, side by side
| Regulation 5 | Who | Master Direction paragraph 4 (updated as on September 02, 2026) |
|---|---|---|
| (A) | Authorised dealers and branches | An authorised dealer in India with its branch, head office or correspondent outside India; a branch outside India of a bank incorporated in India (4.1) |
| (B) | Indian firm, company or body corporate, in the name of its overseas office, branch or representative | "An India firm/ company/ body corporate in the name of its foreign office/ branch or its representative posted outside India" (4.1) |
| (C) | Exporters on deferred terms | An exporter exporting services and engineering goods on deferred payment terms, or executing a turnkey project or a construction contract abroad (4.1) |
| (CA) | Exporters | For realisation of full export value and advance remittance (4.10) |
| (D) | Indian party making overseas direct investment | May open an account abroad for overseas direct investment, provided the overseas regulator mandates opening such an account (4.6) |
| (E) | Startups | Indian startup with an overseas subsidiary (4.9) |
| (F) | Other cases | ECB and ADR or GDR funds pending utilisation (4.8); Indian shipping or airline company (4.1); insurance and reinsurance companies registered with IRDA (4.1); LRS accounts (4.7); students (4.2); visitors (4.3); exhibitions (4.4); salary accounts (4.5) |
Regulation 5(CA): exporters
The Fifth Amendment (January 14, 2025) inserted sub-regulation (CA), and the Seventh Amendment (October 06, 2025) substituted it. As substituted, a resident exporter may open, hold and maintain a foreign currency account with a bank outside India for realisation of full export value and advance remittance received towards export of goods or services. Funds may be used to pay for the exporter's imports into India or repatriated into India within a period not exceeding the end of three months in the case of accounts with banks in an International Financial Services Centre, or the end of the next month for all other jurisdictions, from the date of receipt of the funds after adjusting for forward commitments, provided the realisation and repatriation requirements of the export regulations named in the clause are also met. The Seventh Amendment also added an Explanation that the accounts permitted to be opened "outside India / abroad" under regulation 5 can also be opened in an IFSC, and a definition of IFSC in regulation 2. Paragraph 4.10 of the Master Direction says the same. The export regulations named are the 2015 Regulations; the Export and Import of Goods and Services Regulations, 2026 come into force from October 01, 2026 and are explained in our article on export declaration and realisation.
Master Direction paragraph 4 in detail
- 4.1 persons permitted. AD banks and their overseas branches or correspondents; branches of Indian banks abroad; Indian shipping or airline companies; insurance and reinsurance companies registered with IRDA; an Indian firm, company or body corporate in the name of its foreign office, branch or representative posted outside India; and an exporter on deferred payment terms or executing a turnkey project or construction contract abroad. The account is for carrying on normal business and incidental transactions. The copy of the Regulations ties the Indian entity's overseas-office account to remittance ceilings expressed as percentages of turnover and net worth and to closing periods; the Master Direction does not print those conditions, so they are not stated here.
- 4.2 students. A resident who has gone abroad for studies may open an account during his stay; credits from India must comply with FEMA and its rules and regulations; on return after studies the account is deemed to have been opened under the Liberalised Remittance Scheme.
- 4.3 visitors. A resident on a visit to a foreign country may open an account during the stay; the balance should be repatriated to India on return.
- 4.4 exhibitions. A person going abroad for an exhibition or trade fair may open an account to credit sale proceeds of goods; the balance should be repatriated within one month from the closure of the exhibition or trade fair.
- 4.5 salary. A foreign citizen resident in India who is an employee of a foreign company on deputation to its office, branch, subsidiary, joint venture or group company in India; an Indian citizen employee of a foreign company on such deputation; and a foreign citizen resident in India employed with an Indian company may open an account abroad for remitting or receiving their entire salary payable in India.
- 4.6 overseas direct investment. An Indian Party (as defined in the 2004 foreign security regulations named in the paragraph) may open an account abroad for overseas direct investment provided the overseas regulator mandates opening of such an account.
- 4.7 LRS. A resident individual can open a foreign currency account with a bank outside India for sending remittances under the Liberalised Remittance Scheme.
- 4.8 ECB and ADR/GDR funds. Subject to the conditions for raising ECB or resources through ADRs or GDRs, the funds may be held in deposits in foreign currency accounts with a bank outside India pending utilisation or repatriation to India.
- 4.9 startups. An Indian startup with an overseas subsidiary may open an account abroad to credit foreign exchange earnings from exports or sales by the startup or its subsidiary; balances to the extent they represent exports from India shall be repatriated within the period prescribed for realisation of exports in the 2015 export regulations named.
- Death of a holder. A resident nominee of an account held outside India has to close it and bring back the proceeds to India through banking channels (end of paragraph 5 of Part I).
Example
Corvus Software Pvt Ltd, an invented Indian company, exports software services. Under regulation 5(CA) it opens a foreign currency account with a bank abroad to receive export proceeds and advance remittances. Proceeds received on 10 June must be used for the company's imports or repatriated to India by 31 July, if the bank is outside an IFSC, after adjusting for forward commitments; if the bank is in an IFSC, by the end of three months from receipt. Separately, a director's daughter studying abroad opens a student account; credits from India must comply with FEMA and, after she returns, the account is deemed opened under the Liberalised Remittance Scheme.
The related ODI account is part of the overseas investment framework, covered in our articles on deferred payment and mode of payment in the Overseas Investment Regulations and on the designated AD bank and online reporting. Later amendments and circulars should be checked.
Need help with an overseas account?
Whether an account abroad is allowed, who must repatriate and by when depend on which paragraph applies. Our overseas investment reporting team can map the account to the right paragraph and the reporting around it.
Key takeaways
- Regulation 5 lists the residents who may keep a foreign currency account abroad, and the Master Direction restates the permissions in paragraph 4.
- Exporters: full export value and advances; use for imports or repatriate by the end of the next month, or three months for an IFSC bank.
- Students, visitors, exhibitors, employees on deputation, startups and individuals under the LRS have their own conditions.
- Accounts permitted abroad can also be opened in an IFSC (Seventh Amendment).
- The copy's conditions not printed in the Master Direction are left out.
Read next
- EEFC, RFC and other accounts in India: regulation 4
- Deferred payment and mode of payment: Overseas Investment Regulations 7 and 8
- Designated AD bank and online reporting: Master Direction on Overseas Investment
- LRS: Liberalised Remittance Scheme complete guide
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.