RBI directs banks not to approve proposals of foreign law firms to open a branch office in India

RBI on Monday (23/11/2020) directed all AD Category –I banks, not to grant any approval to any branch office, project office, liaison office or other place of business in India under FEMA for the purpose of practicing legal profession in India. The establishment of branch office/ liaison office / project office or any other place of business in India by foreign entities is regulated in terms of Section 6(6) of Foreign Exchange Management Act, 1999. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications and issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents.

The latest instruction to AD Category was issued by the Banking Regulator, in view of Supreme Court order while disposing of a case with regard to foreign law firms or foreign lawyers practicing law profession in India. The Hon’ble Supreme Court has while disposing of the case, held that advocates enrolled under the Advocates Act, 1961 alone are entitled to practice law in India and that foreign law firms/companies or foreign lawyers cannot practice the profession of law in India. RBI in October 2015 had advised banks not to grant fresh permissions or renew permissions already granted to any foreign law firm for the opening of a liaison office in India till the policy in this regard is reviewed based on, among others, final disposal of the matter by the Supreme Court. Now, in view of the above-said judgment of the Apex Court, foreign law firms/companies or foreign lawyers or any other person resident outside India, are not permitted to establish any branch office, project office, liaison office, or other places of business in India for the purpose of practicing legal profession by foreign entities.   Banks are also asked to bring to the notice of the Reserve Bank in case any such violation of the provisions of the Advocates Act comes to their notice”.