How to Open a Business Current Account in India When the Company is Incorporated Abroad

Introduction

India's rapidly growing economy continues to attract many international companies, from software startups to large corporations. To operate effectively & grow efficiently in the Indian market, businesses must open a business current account before working with local clients or vendors.

If your business is registered outside India, opening a bank account in the country can be challenging due to the regulations and extensive paperwork. You must comply with foreign exchange laws when opening an account abroad, which differs significantly from domestic banking processes. However, with the appropriate procedures in place, the process becomes structured and easy to manage.

This guide explains how foreign businesses can open a current account in India. It outlines the different types of accounts you can open and the paperwork required to ensure the approval process goes smoothly.

Table of Content

• Introduction

• Eligibility for Opening a Current Account in India

• Documents Required for Foreign Company Current Accounts

• Types of Current Accounts for Foreign Entities

• Step-by-Step Current Account Opening Process

• Conclusion

• FAQs

Eligibility for Opening a Current Account in India

The first thing to understand is that Indian banking regulators categorise "foreign companies" into two distinct buckets. Your eligibility and the type of account you can open depend entirely on how you choose to enter the Indian market.

1. Entities registered in India (Wholly Owned Subsidiaries/Joint Ventures)

If your foreign business sets up a Private Limited Company in India, the company is considered to be an Indian resident entity. You can open a regular domestic current account, just like any other Indian firm can.

2. Foreign Entities with Offices in India (Liaison/Branch/Project Offices)

You continue to be treated as a foreign entity if you do not incorporate a new company but instead establish a Liaison Office (LO), Branch Office (BO), or Project Office (PO). You can open certain accounts as long as you follow foreign exchange rules, which usually require clearance from the banking regulators or the Authorised Dealer (AD) bank.

3. Foreign Companies with No Physical Presence

A foreign company that does not have an office in India but conducts business there (such as importing or exporting) may be eligible to open a Special Non-Resident Rupee (SNRR) account. However, stricter rules may apply.

Documents Required for Foreign Company Current Accounts

Most delays happen during the documentation stage. Indian banks strictly follow Know Your Customer (KYC) rules to meet anti-money laundering laws. Since most of your core documents are from outside India, they must be properly validated instead of simple photocopies.

Here is the checklist of documents that are typically needed:

• Company Proof: Certificate of Incorporation (COI), Memorandum of Association (MOA), and Articles of Association (AOA) of the foreign entity.

• Proof of Indian Address: If you have an office, a lease agreement or a utility bill in the company’s name.

• Board Resolution: A resolution passed by the Board of Directors of the foreign parent company authorising the opening of the account and designating authorised signatories.

• Tax Registration (PAN): A Permanent Account Number (PAN) is mandatory for all financial transactions in India. Foreign companies must apply for this using Form 49AA.

• KYC of Signatories: Passport copies and address proofs of the authorised signatories and directors.

• Beneficial Ownership Declaration: A declaration identifying the ultimate individuals who own the company (usually those holding more than 10-25% shares).

Crucial Note on Attestation: Documents issued abroad (like your Certificate of Incorporation) must usually be attested by the Indian Embassy in your home country. Standard notarisation may not be accepted by Indian banks.

Types of Current Accounts for Foreign Entities

Choosing the right account type is important to avoid compliance problems later. Here are the three main options:

1. Standard Current Account

• Best for: Wholly Owned Subsidiaries (WOS) or Joint Ventures incorporated in India.

• Features: Operates like a normal business account. You can receive local payments, pay vendors, and repatriate profits after paying relevant taxes.

2. Special Non-Resident Rupee Account (SNRR)

• Best for: Foreign companies with a business interest in India but no permanent establishment (or those operating via Project Offices).

• Features: This is a repatriable account. You can use it for specific business transactions, such as trade, invoicing, and external commercial borrowings. However, the account is non-interest-bearing and is subject to a defined tenure (usually up to 7 years).

3. Non-Resident Ordinary (NRO) Account

• Best for: Getting money from India that isn't from your main business, such as rent, dividends, or interest.

• Features: It's easy to deposit money into an NRO account, but withdrawals are subject to higher limits and tax clearance requirements.

Step-by-Step Current Account Opening Process

Follow these procedures to open your account after you know what kind of entity you are and have your papers ready.

Step 1: Get a PAN Card

Get a Permanent Account Number (PAN) before you go to the bank. Companies from other countries must submit Form 49AA and apostilled company documents. Your PAN is your tax ID in India.

Step 2: Pass the Board Resolution

Hold a board meeting in your home country to pass a resolution. This resolution should name the Indian bank you plan to use and the people who will be authorised to operate the account.

Step 3: Document Attestation

The Indian consulate should apostille or authenticate all documents that are sent to India from another country. Then, give the original papers to your representative in India.

Step 4: Fill out the application and complete in-person verification (IPV)

Send the bank your application form and other papers. You can start the procedure online, but Indian banking restrictions often require you to verify in-person. The person who is allowed to sign may need to go to the branch, or bank employees may come to your workplace.

Step 5: Account Activation and Funding

Your account will be authorised after the bank's compliance team validates the beneficial ownership and the papers. You have to deposit the minimum amount the bank requires before you can use the account.

Conclusion

As a foreign corporation, you need to be very careful when opening a current account in India. It is essential to follow the regulatory requirements, ensure proper document authentication, and select a bank that knows how to do business worldwide. You can focus on building your business rather than worrying about compliance issues if you set things up correctly.

Choose a bank that offers both digital tools and a strong understanding of the rules to make things easier. Kotak Mahindra Bank offers current account options for international businesses that want to do business in India. Our dedicated team assist foreign businesses by walking them through the regulatory procedures and get their business ready to scale. To start doing business in India, contact Kotak Mahindra Bank.