What is a Capital Account Transaction?

According to Section 2(e) of FEMA, Capital Account transactions are those which alter the assets or liabilities, including contingent liabilities outside India, of persons resident in India or alter the assets or liabilities in India, of persons resident outside India.

Consider yourself residing in a foreign country and you wish to buy or sell assets or liabilities or be engaged in capital contribution, such as the purchase of shares, etc. in Indian companies. You will need to provide the necessary documentation for such transactions to proceed at ease.

Capital Account transactions typically involve a fair amount of documentation, regulatory filing and timely updating, to ensure that the money is not stuck.

In simpler terms, Capital Account transactions include transactions that:

1. Change or alter assets and liabilities, including contingent liabilities (liabilities that may occur in the future), held abroad by Indian Residents.
2. Change or alter assets and liabilities held in India by non-residents.

These transactions are regulated, overseen and approved by the Reserve Bank of India (RBI).

Capital Account transactions can be confusing or tricky and there may often be grey areas with regards to the definitions of assets and liabilities. Moreover, strict adherence to the regulations and compliance requirements needs to be maintained, so that your money is not locked in limbo.

For instance, in the case of investments in shares of companies in India by NRIs, regulatory filings need to be completed for these transactions after receiving the funds and after the allotment of shares. If you fail to comply, the company will be barred from using the funds it has received from you, neither will it be able to raise the next series of funds.

If you intend to conduct such a transaction and are wondering about the next steps, look no further.

At ICICI Bank, we specialise in such transactions and have experts to give you the correct advice and guidance. With us, you need not worry about your Capital Account transactions, documentation

and compliance requirements.

Here’s a snapshot of the services you will get with ICICI Bank:

• A specialised team to handle Capital Account transactions and dedicated Capital Account Managers (CAMs)
• Pre-vetting (i.e. pre-verification) of documents for timely submission of regulatory returns
• Dedicated experts, who will handle pre-and-post-transaction queries
• Online Settlement of FDI through CIB, which is the first and the only of its kind in India
• Simplified documentation and quick processing.

If you have further queries about the process, come to the experts, we have got you covered.

You can reach us at: