RBI directs banks not to grant approval for liaison/branch offices of foreign law firms under FEMA

The Reserve Bank of India (RBI) has issued a notification directing Authorised Dealer (AD Category - I) banks not to grant approval to any branch office of foreign law firms under the Foreign Exchange Management Act (FEMA), 1999..AD Category–I banks are Authorised Money Changers (AMCs) approved by the RBI under Section 10 of the FEMA..Additionally, such banks have also been asked to bring any violations of the Advocates Act to the notice of the RBI. The notification issued today states,."Accordingly, AD Category – I banks are directed 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. Further, they shall bring to the notice of the Reserve Bank in case any such violation of the provisions of the Advocates Act comes to their notice."Reserve Bank of India notification.The RBI's directions come in the background of the Supreme Court's 2018 decision to not allow foreign law firms to establish offices and practice in India..In Bar Council of India v. AK Balaji & Ors, the Apex Court held that foreign law firms with foreign lawyers cannot set up offices in India. However, the Court allowed foreign lawyers to ‘fly in fly out’ to advise on foreign law..Back in October 2015, when the matter was still pending before the Supreme Court, the RBI had issued a notification stating that no foreign law firm shall be permitted to open any liaison office in India until the matter is decided. However, foreign law firms which had been granted permission for opening such offices in India prior to the interim order of the Supreme Court were allowed to continue..Clarifying its stance pursuant to the final order of the Apex Court in the matter, the RBI has now directed that banks are not allowed to grant permission for opening of branch/liaison offices of foreign law firms..The notification states,"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 profession of law in India. As such, 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 place of business in India for the purpose of practicing legal profession.".[Read the notification]