Opening a corporate bank account is a critical step for any foreign subsidiary starting operations in India. It enables seamless financial transactions, capital infusion, payroll processing, vendor payments, and tax compliance. However, due to regulatory and compliance requirements, this process must be carefully navigated by foreign firms.
This guide outlines a step-by-step approach to opening a bank account for a foreign subsidiary in India, in line with local laws and Reserve Bank of India (RBI) directives.
1. Ensure Proper Company Incorporation
Before a bank account can be opened, the foreign subsidiary must be fully incorporated in India as a Private Limited Company under the Companies Act, 2013. This includes:
Certificate of Incorporation from the Registrar of Companies (RoC)
PAN and TAN from the Income Tax Department
GST registration (if applicable)
Board resolution authorizing account opening
2. Choose the Right Bank
Foreign subsidiaries can open accounts with both public sector and private sector banks such as:
State Bank of India (SBI)
HDFC Bank
ICICI Bank
Axis Bank
HSBC India
Citibank India
It is advisable to choose a bank that supports foreign currency transactions, international remittances, and multi-city operations, and offers robust digital banking services.
3. Gather Required Documents
Banks in India follow strict Know Your Customer (KYC) norms as per RBI guidelines. Required documents generally include:
Certificate of Incorporation
PAN and GST certificate
Memorandum and Articles of Association
Board resolution for opening the account
Authorized signatory’s ID and address proof
Registered office address proof (rent agreement or utility bill)
Foreign parent company’s registration certificate (for reference)
Some banks may require additional declarations about the source of funds and nature of business.
4. Comply with FEMA and RBI Reporting
If the foreign parent company has remitted capital for investment:
The inflow must be reported to the RBI within 30 days using the Advance Remittance Form
Shares must be allotted within 60 days of receipt
Report the share allotment using the FC-GPR form on the RBI’s FIRMS portal
This step is crucial for maintaining Foreign Exchange Management Act (FEMA) compliance.
5. Complete In-Person Verification (if required)
Some banks may conduct a physical verification of the registered office and verify original documents of directors and authorized signatories. This is generally a one-time process.
6. Activate and Operate the Account
Once verified and approved, the bank account will be activated. Most banks offer:
Multi-currency accounts
Internet and mobile banking
International payment gateways
Corporate credit cards
Escrow and salary accounts
Foreign subsidiaries should also maintain proper bookkeeping for all transactions and reconcile bank statements regularly for audit purposes.