Foreign cos can open escrow accounts

MUMBAI: Reserve Bank on Thursday allowed foreign companies to open escrow or special accounts in authorised banks for buying shares in Indian firms -- a move that gives them more flexibility in acquiring domestic companies.

In a notification, RBI said authorised banks may open escrow or special accounts on behalf of non-residents for the purpose of open offers, delisting offers and exit offers subject to Sebi regulations.

The notification follows the central bank's announcement in the annual credit policy for 2007-08.

As per the notification, these banks will not require prior approval of the Reserve Bank to open such accounts. Such accounts could be operated by persons appointed by the firms.

Reserve Bank is also expected to notify necessary amendments in the Foreign Exchange Management Regulations shortly in this regard.

The notification also said these non-interest bearing accounts could be opened in Indian currency jointly for the purpose. However, banks will not be allowed to provide any facilities against balance in these accounts.