Can an India subsidiary maintain a foreign currency bank account?

Resident Indian entities, including India subsidiaries of foreign companies, are generally required to convert foreign exchange receipts into rupees rather than hold them indefinitely in foreign currency. The main exception is the Exchange Earners' Foreign Currency (EEFC) account, which lets exporters and other foreign-exchange earners retain a portion of their foreign currency earnings without immediate conversion, useful for meeting future foreign currency obligations like import payments.

Beyond EEFC accounts, foreign currency accounts are permitted in narrower, specific circumstances (such as project offices or certain SEZ units) rather than as a general treasury tool. Most India subsidiaries manage FX exposure through hedging and timing of conversions rather than by holding foreign currency balances directly.