Tuesday, September 29, 2015

External Commercial Borrowings (ECB) Policy - Issuance of Rupee denominated bonds overseas

External Commercial Borrowings (ECB) Policy - Issuance of Rupee denominated bonds overseas
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to the provisions contained in A.P. (DIR Series) Circular No. 5 dated August 01, 2005 as amended from time to time on External Commercial Borrowings (ECB).
2. In order to facilitate Rupee denominated borrowing from overseas, it has been decided to put in place a framework for issuance of Rupee denominated bonds overseas within the overarching ECB policy. The broad contours of the framework are as follows:
  1. Eligible borrowers: Any corporate or body corporate as well as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
  2. Recognised investors: Any investor from a Financial Action Task Force (FATF) compliant jurisdiction.
  3. Maturity: Minimum maturity period of 5 years.
  4. All-in-cost: All in cost should be commensurate with prevailing market conditions.
  5. Amount: As per extant ECB policy.
  6. End-uses: No end-use restrictions except for a negative list.
3. The detailed guidelines for issuance of Rupee denominated bonds overseas are set out in the Annex.
4. All other provisions of extant ECB guidelines regarding reporting requirements (including obtaining Loan Registration Number (LRN) through submission of Form 83 where type of ECB is to be specifically mentioned as borrowing through issuance of Rupee denominated bonds overseas), parking of bond proceeds, security / guarantee for the borrowings, conversion into equity, corporates under investigation, etc., not appearing in the Annex will be applicable for borrowing by issuance of Rupee denominated bonds overseas.
6. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Issuance of Rupee denominated bonds overseas
Sr. No.ECB parameterFramework
1.Eligibility of borrowersAny corporate or body corporate is eligible to issue Rupee denominated bonds overseas. Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) coming under the regulatory jurisdiction of the Securities and Exchange Board of India are also eligible.
2.Type of instrumentOnly plain vanilla bonds issued in a Financial Action Task Force (FATF) compliant financial centres; either placed privately or listed on exchanges as per host country regulations.
3.Recognised investorsAny investor from a FATF compliant jurisdiction. Banks incorporated in India will not have access to these bonds in any manner whatsoever. Indian banks, however, can act as arranger and underwriter. In case of underwriting, holding of Indian banks cannot be more than 5 per cent of the issue size after 6 months of issue. Further, such holding shall be subject to applicable prudential norms.
4.MaturityMinimum maturity period of 5 years. The call and put option, if any, shall not be exercisable prior to completion of minimum maturity.
5.All-in-costThe all-in-cost of such borrowings should be commensurate with prevailing market conditions. This will be subject to review based on the experience gained.
6.End-usesThe proceeds can be used for all purposes except for the following:
  1. Real estate activities other than for development of integrated township / affordable housing projects;
  2. Investing in capital market and using the proceeds for equity investment domestically;
  3. Activities prohibited as per the foreign direct investment (FDI) guidelines;
  4. On-lending to other entities for any of the above objectives; and
  5. Purchase of land.
7.AmountUnder the automatic route the amount will be equivalent of USD 750 million per annum. Cases beyond this limit will require prior approval of the Reserve Bank.
8.Conversion rateThe foreign currency - Rupee conversion will be at the market rate on the date of settlement for the purpose of transactions undertaken for issue and servicing of the bonds.
9.HedgingThe overseas investors will be eligible to hedge their exposure in Rupee through permitted derivative products with AD Category - I banks in India. The investors can also access the domestic market through branches / subsidiaries of Indian banks abroad or branches of foreign bank with Indian presence on a back to back basis.
10.LeverageThe leverage ratio for the borrowing by financial institutions will be as per the prudential norms, if any, prescribed by the sectorial regulator concerned.

Ref- A.P. (DIR Series) Circular No.17 dated 29th September 2015

Thursday, September 24, 2015

'Indian Government to ease more FDI restrictions'


 'Indian Government to ease more FDI restrictions'
 
 
The Indian government is planning to remove some conditions and restrictions in its policy on foreign direct investment (FDI), to attract more of it, Economic Affairs Secretary Shaktikanta Das said on Wednesday.


"The next area we are looking at is with regard to FDI reforms. New sectors have been opened up and sectoral caps have been liberalized but there is a lot more to do," he said at an event organized by business chamber Assocham.


FDI policy has various conditionalities and restrictions, he said. "The effort is to make FDI policy simple and progressive. I won't be able to spell out details because it is work in progress."

This government has relaxed FDI policy norms in the defense, insurance, construction, medical devices and railway sectors. Its 'Make In India' drive is aimed at making the country a global investment hub.


Das said the government would continue with measures to make India an attractive investment destination, without necessarily waiting for new announcements in the annual budgets. He reiterated an earlier forecast that growth in this financial year would exceed 7.5 per cent. In the June quarter, the economy grew at seven per cent.

"Policy initiatives are round the clock, a 24x7 exercise, and it will continue," Das said.

"The direction of these reforms and administrative measures is to strengthen the initiative towards Make in India and, second, to ensure revival of demand by giving a boost to more and more investment," he added.



On start-ups that shift base out of the country due to procedural issues after a few years, Das said an enabling framework is in the works. "It will be spelt out as and when the government takes a decision."



Reserve Bank proposes easier ECB norms


Reserve Bank proposes easier ECB norms

Hours after Economic Affairs Secretary Shaktikanta Das said in New Delhi that the government was in discussions with the Reserve Bank of India (RBI) to ease some of the rules for external commercial borrowings (ECBs), the central bank came out with a draft paper that allowed Indian companies to raise funds from a wider class of lenders.

The RBI said companies would now be able to borrow up to $50 million in ECBs with three-year maturities and more than $50 million for five-year maturities, from the earlier $20 million.

According to the proposal, companies can now take the ECB route for raising 10-year funds which is capped at five years now. Overseas regulated financial entities, pension funds, insurance funds, sovereign wealth funds and similar other long-term investors are included in the list of recognized lenders for long-term funding into India.

The draft paper also said the central bank would now allow real estate investment trusts and infrastructure investment trusts to raise rupee-denominated funds offshore, a step likely to provide some relief to the cash-strapped real estate sector in India.

"An attempt has now been made to replace the ECB policy with a more rational and liberal framework, keeping in view the evolving domestic as well as global macro-economic and financial conditions," the RBI said in a statement.

As part of the proposals, the RBI also said it would allow funds raised from ECBs to be directed to additional purposes, including certain infrastructure lending and some overseas direct investments.

However, the RBI also proposed tightening how much companies can pay to borrow via ECBs, saying it would lower by 50 basis points (bps) the current all-in-cost ceiling of 350 bps over six-month Libor for three-five-year loans and 500 bps over Libor for above five-year maturities.

The central bank has also proposed wider range for end-use of proceeds raised via ECB. Apart from
capital expenditure, modernization of projects and working capital loans, companies can now raise funds to repay trade credit taken up to three years for capital expenditure, for payments towards capital goods already shipped, purchase of second-hand domestic capital goods, plants and machinery, among others. ECB can also be raised for overseas direct investment in joint venture and wholly-owned subsidiaries by core investment companies.

"A framework for issuance of rupee denominated bonds overseas will be announced separately," RBI said. The RBI asked market participants to provide feedback by October 11, 2015.

Friday, September 18, 2015

"Clarification on FDI Policy on Facility sharing Arrangements between Group Companies"

"Clarification on FDI Policy on Facility sharing Arrangements between Group Companies".

DIPB:


The Department of Industrial Promotion & Policy has issued a "Clarification on FDI Policy on Facility sharing Arrangements between Group Companies". The Department has received certain references on the issue as to whether entering into facility sharing arrangements through leasing/ sub-leasing arrangements within group Companies for the larger purpose of Business Activities would be constructed to mean "Real Estate" business within the provisions of Consolidated FDI Policy Circular of 2015.
 

Clarification:

Facility sharing arrangements between group Companies through leasing/ sub-leasing arrangements for the larger interest of business will not be treated as "Real Estate Business" within the provisions of the Consolidated FDI policy Circular of 2015, provided such arrangements are at Arm's Length price in accordance with relevant provisions of Income Tax Act 1961, and annual lease rent earned by the lessor Company does not exceed 5% of its total revenue."

Saturday, September 12, 2015

Issue or Transfer of Security by a Person Resident outside India) Regulations, 2000 - New Amendments


Issue or Transfer of Security by a Person Resident outside India) Regulations, 2000

New Amendments


Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2015)

In Regulation 2:

a. after clause (iie), the following new clause shall be added, namely:-

‘(iif) “employees’ stock option” means the option given to the directors, officers or employees of a company or of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price;’
 

b. after clause (x), the following new clause shall be added, namely :-

“(xa) “sweat equity shares” means such equity shares as issued by a company to its directors or employees at a discount or for consideration other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;”

For the existing Regulation 8, the following shall be substituted, namely:

“(1) An Indian company may issue “employees’ stock option” and/or “sweat equity shares” to its employees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, provided that :

a.   The scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013, as the case may be.

b.  The “employee’s stock option”/sweat equity shares issued to non-resident employees/directors under the applicable rules/regulations are in compliance with the sectoral cap applicable to the said company.

c.   Issue of “employee’s stock option”/sweat equity shares in a company where foreign investment is under the approval route shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.

d.  Issue of “employee’s stock option”/sweat equity shares under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.

(2) The Reserve Bank may require the company issuing “employees’ stock option” and/or “sweat equity shares” to submit such reports and at such frequency as it may consider necessary.

 

Ref Notification No. FEMA.344/2015 RBI- Dated June 11, 2015

 

What Changes have been effected after Amendment?
 

v  Through 11 June 2015 Amendment, the definition of “sweat equity and ESOP “have been inserted.

 

v Apart from ESOPs, an Indian Company now can issue Sweat Equity Shares to its directors / employees are not resident in India or who are resident outside India.

 

v Now , non-resident employees and directors of holding company abroad can receive options / shares issued by the Indian subsidiary.

 

v  The non-resident directors of Wholly owned subsidy or joint venture can receive now ESOP / Sweat equity shares from Indian Company.

 

v Even unlisted companies can issue now ESOP shares within the definition of Companies Act 2013 to its non-resident directors / employees.

 

v The new amendment is silent about the mode of offer of ESOP or Sweat Equity either through direct allotment or through a trust.

 

v The new amendment has removed the threshold limit of 5% of the paid-up capital of issuing company.

 

v However , Indian company has to receive approval of FIPB if the issue of shares/options under a scheme where company has to issue shares with the FIPB approval.

 

v If sectoral cap is applicable to the Issuing Company, then , the Company has to issue ESOP / Sweat equity within its sectoral gap limit.

 

v Prior Approval from FIPB is required if ESOP or Sweat Equity is issued to citizen of Pakistan / Bangladesh.

 

v The issuing company has to obtain a certificate from SEBI registered Merchant Banker or Chartered Accountant as the case may be as to the manner of arriving at the issue prices of the shares to the resident outside India.

 

v The Issuing Company has to report to RBI within 30 days of issue the details of the issue in a newly prescribed form.

 

Thursday, September 10, 2015

Exposure to foreign exchange derivatives, currency hedges and swaps may make the Company to sink

 

Exposure to foreign exchange derivatives, currency hedges and swaps may make the Company to sink

 
 Delhi-based Amtek group is an integrated auto and non-auto component manufacturer with presence in 11 countries. It has combined revenues of over Rs 20,000 crore and presence in segments like forging and castings.

The group had made a string of acquisitions in the country and abroad, in the automotive segment. But these failed to match the projected revenues due to an economic slowdown and slump in demand. This put pressure on Amtek Auto's finances, prompting it to seek funding support from banks.

It is, however, still a standard account, as the company has paid the interest component on schedule. But with a pressure on revenues, bankers have put a question mark over its ability to pay instalments in future.

Earlier this week, rating agency CRISIL downgraded the long-term bank rating for group company JMT Auto to 'BBB-' from 'BBB+', on deterioration in credit profile marked by a shrinking revenue and profitability.

JMT Auto's financial flexibility is likely to be affected substantially after a significant deterioration in its majority shareholder Amtek Auto's credit risk profile. Amtek Auto holds a 70.74 per cent stake in JMT Auto.

This is the second time that Amtek Auto has found itself in a tight spot. It was affected by the global financial crisis of 2007-08 along with many other Indian companies, due to its exposure to foreign exchange derivatives. The company had informed stock exchanges in March 2008 that it could potentially make a loss of up to $18 million (Rs 72.18 crore) in the next two years, given its exposure to currency hedges and swaps. Its promoters had then promised to bring in a matching amount to meet the obligation, should that arise, in the form of 10-year, interest-free non-convertible debentures or preference shares.
 


Lenders to Amtek Auto group have decided to go for a special audit

of the books of various group companies before providing fresh loans to help it repay Rs 800 crore of bonds coming up for redemption on September 20.

While details of the action plan would differ from case to case, lenders would also ask the promoters to pledge more of their holdings and sell some group companies to generate resources. In addition, promoters would be required to bring their own resources to indicate their skin in the game, a bank executive said.

A Joint Lenders Forum is working on the contours of the corrective action plan, a senior public-sector bank official said. Banks have a Rs 26,000-crore exposure to the group; of this Amtek Auto accounts for over Rs 7,800 crore.
 
Banker said lenders might also look at inserting a clause for strategic debt restructuring (SDR), which would empower them to acquire a 51 per cent stake or more in the flagship company or other group companies to recover bad loans.

In June, the Reserve Bank of India (RBI) had allowed banks to hold 51 per cent or more of the equity after a debt-for-share conversion. Under this, banks will have to closely monitor the performance of a company and appoint professional management to run it. At the same time, the banks themselves should try and sell their stake "as soon as possible".
 

 

The plan is being drafted under the 'early recognition and early resolution of stressed assets' framework. RBI had in 2014-15 prescribed this framework to nudge lenders to be proactive in spotting stressed accounts and take prompt steps.

Courtesy :Abhijit Lele of Business Standards

 

Discontinuation of Statement pertaining to trade related loans and advances under Exchange Earners’ Foreign Currency (EEFC) Account

Exchange Earners’ Foreign Currency (EEFC) Account-
Discontinuation of Statement pertaining to trade related loans and advances
 
Attention of Authorized Dealers Category –I (AD Category –I) banks is invited to A.P. (DIR Series) Circular No.78 dated February 14, 2003 in terms of which transactions relating to loans/ advances from EEFC account may be reported by the AD banks on a quarterly basis to the Regional Office of Reserve Bank.

2. With a view to liberalizing the procedure, it has now been decided to dispense with the above-mentioned statement with immediate effect.

3. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.


Ref:
RBI/2015-16/173
A.P. (DIR Series) Circular No.11dated September 10, 2015
 

 

Friday, September 4, 2015

RBI done away 5% limit on the Issue of shares under the Employees Stock Options Scheme or sweat equity shares to its employees who are resident outside India

 
RBI done away 5% limit on the Issue of shares under the Employees Stock Options Scheme or sweat equity shares to its employees who are resident outside India
 
 
RBI has issued a notification dated 16th July 2015 wherein it has done away with the 5% limit on the issue of shares under the Employees Stock Options Scheme or sweat equity shares to its employees who are resident outside India. Instead the company has to comply with all the applicable regulations of SEBI/ MCA / RBI in this regard.
 
The relevant portion of the said notification is reproduced below:
 
On a review, it has been decided that an Indian company may issue “employees’ stock option” and/or “sweat equity shares” to its employees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, provided that :
 
  • The scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013, as the case may be.
 
 
  • The “employee’s stock option”/ “sweat equity shares” issued to non-resident employees/directors under the applicable rules/regulations are in compliance with the sectoral cap applicable to the said company.
  •  
  • Issue of “employee’s stock option”/ “sweat equity shares” in a company where foreign investment is under the approval route shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.
  1. Issue of “employee’s stock option”/ “sweat equity shares” under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.
The issuing company is also required to furnish a return in form ESOP within 30 days of the issue to the RBI.

Requirement for obtaining prior approval of RBI in cases of acquisition/ transfer of control of Non-Banking Financial Companies (NBFCs)

Requirement of prior approval of Reserve Bank (i) Henceforth, prior written permission of the Reserve Bank shall be required for taking-over or acquiring NBFC.

  • Any takeover or acquisition of control of an NBFC, which may or may not result in change of management;


  • Any change in the shareholding of an NBFC, including progressive increases over time, which would result in acquisition/ transfer of shareholding of 26 per cent or more of the paid up equity capital of the NBFC. Prior approval would, however, not be required in case of any shareholding going beyond 26% due to buyback of shares/ reduction in capital where it has approval of a competent Court. The same is however required to be reported to the Reserve Bank not later than one month from its occurrence;
  • Any change in the management of the NBFC which would result in change in more than 30 per cent of the directors, excluding independent directors. Prior approval would not be required for those directors who get re-elected on retirement by rotation.
 
(ii) Notwithstanding clause (i), NBFCs shall continue to inform the Reserve Bank regarding any change in their directors/ management as required in Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998, Non-Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 and Systemically Important Non-Banking Financial (Non-Deposit Accepting Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015.
 
3. Application for prior approval.
 
(i) NBFCs shall submit an application, in the company letter head, for obtaining prior approval of the Bank under paragraph 2, along with the following documents:
  1. Information about the proposed directors/ shareholders as per the Annex;
  2. Sources of funds of the proposed shareholders acquiring the shares in the NBFC;
  3. Declaration by the proposed directors/ shareholders that they are not associated with any unincorporated body that is accepting deposits;
  4. Declaration by the proposed directors/ shareholders that they are not associated with any company, the application for Certificate of Registration (CoR) of which has been rejected by the Reserve Bank;
  5. Declaration by the proposed directors/ shareholders that there is no criminal case, including for offence under section 138 of the Negotiable Instruments Act, against them; and
  6. Bankers’ Report on the proposed directors/ shareholders.
(ii) Applications in this regard may be submitted to the Regional Office of the Department of Non-Banking Supervision in whose jurisdiction the Registered Office of the NBFC is located.
4. Requirement of Prior Public Notice about change in control/ management
i. A public notice of at least 30 days shall be given before effecting the sale of, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares. Such public notice shall be given by the NBFCs and also by the other party or jointly by the parties concerned, after obtaining the prior permission of the Reserve Bank.
ii. The public notice shall indicate the intention to sell or transfer ownership/ control, the particulars of transferee and the reasons for such sale or transfer of ownership/ control. The notice shall be published in at least one leading national and in one leading local (covering the place of registered office) vernacular newspaper.
5. The directions contained above are applicable with immediate effect, i.e., the same will apply on any takeover or acquisition of control, any change in the shareholding or any change in the management occurring after the date of this circular.
6. Any violation of the aforementioned directions would result in adverse regulatory action including cancellation of CoR

NOW , FC-TRS has to be filed through online only through e-Biz platform only


NOW , FC-TRS has to be filed through online only through e-Biz platform  only

RBI has modified online filing of form FC-TRS on the e-Biz platform vide RBI notification dated 21st August, 2015.



Significant elements  are:

2. With a view to promoting the ease of reporting of transactions under foreign direct investment, the Reserve Bank of India (RBI), under the aegis of the e-Biz project of the Government of India has enabled online filing of the Foreign Currency Transfer of Shares (FCTRS) returns for reporting transfer of shares, convertible debentures, partly paid shares and warrants from a person resident in India to a person resident outside India or vice versa.

3. The design of the reporting platform enables the customer to login into the eBiz portal, download the reporting form (FCTRS), complete and then upload the same onto the portal using their digitally signed certificates. The Authorised Dealer Banks (ADs) will be required to download the completed forms, verify the contents from the available documents and if necessary, call for additional information from the customer and then upload the same for RBI to process and allot the Unique Identification Number (UIN).

The FCTRS services of RBI will be made operational on the e-Biz platform from August 24, 2015. The user manual for this service is Annexed to this Circular.

4. It may be noted that for the present, the online reporting on the e-Biz platform is an additional facility to the Indian residents to undertake their FCTRS reporting and the manual system of reporting as prescribed in terms of A.P. (DIR Series) Circular No.6 dated July 18, 2014 would continue till further notice.

NOW , INVESTMENTS MADE BY NRIs , PIOs and OCBs WILL BE REGARDED AS INVESTMENT UNDER NON-REPATRIATION BASIS AND NO REPORTING TO RBI IS NEEDED

 
 

NOW , INVESTMENTS MADE BY NRIs , PIOs and OCBs WILL BE REGARDED AS INVESTMENT UNDER NON-REPATRIATION BASIS AND NO REPORTING TO RBI IS NEEDED

 
Review of Foreign Direct Investment (FDI) Policy on investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs)

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to review of Foreign Direct Investment (FDI) Policy on investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs).  Following are the amendments approved by the Cabinet to incorporated in FDI policy:
 
(i)           By amending relevant para, definition of NRI will be as under:
 
‘Non-Resident Indian' (NRI) means an individual resident outside India who is citizen of India or is an ‘Overseas Citizen of India’ cardholder within the meaning of section 7 (A) of the Citizenship Act, 1955. ‘Persons of Indian Origin’ cardholders registered as such under Notification No. 26011/4/98 F.I. dated 19.8.2002 issued by the Central Government are deemed to be “Overseas Citizen of India’ cardholders”.
 
(ii)   To provide that investment by NRIs on non-repatriable basis is domestic. Following new para is approved to be added:
 
Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents.’
                   
          The decision that NRI includes OCI cardholders as well as PIO cardholders is meant to align the FDI policy with the stated policy of the Government to provide PIOs and OCIs parity with Non Resident Indians (NRIs) in respect of economic, financial and educational fields. Further the decision that NRIs investment under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment made by residents, is meant to provide clarity in the FDI policy as such investment is not included in the category of foreign investment. The measure is expected to result in increased investments across sectors and greater inflow of foreign exchange remittance leading to economic growth of the country.
 
Source - Press Information Bureau -Government of India-Cabinet dated 21  May 2015
 

Wednesday, June 3, 2015

Non-Repatriation investments by NRI , OCBS, PIOs will not be subject to FDI caps -

 


As per the Press Release issued by Commerce & Industry Ministry , non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps.


The above notification further states that investment made by NRIs under Schedule 4 of FEMA regulations will be deemed to be  domestic investment at par with the investment made by residents


As per the above notification , NRIs would also include Overseas Citizens of India (OCIs) and Persons of Indian origin (PIOs). 


Government of India's decision is expected to result in increased investments across sectors and
greater inflow of foreign exchange remittances leading to higher economic
growth.














Friday, May 29, 2015

Reserve Bank of India now relaxes its rules to remit USD 2,50,000 by individual for aggregate of certain current account transactions for travel , business trip , gifts , donations , employment , education , medical treatment ,etc.




Reserve Bank of India  now relaxes its rules to remit  USD 2,50,000 f by individual for aggregate of certain current account transactions for travel , business trip , gifts , donations , employment , education , medical treatment ,etc. 


The Reserve Bank of India ('RBI') has notified amendment to the Foreign Exchange Management (Current Account Transactions) Rules to specify an aggregate limit of USD 2, 50,000 for remittance in foreign currency for certain current account transactions, inter-alia, for private visits to any country (except Nepal and Bhutan), gifts or donations, going abroad for employment, emigration, business travels, or medical treatment abroad, etc.
Remittances in foreign currency by an individual for the following current account transactions shall be made within limit of USD 2,50,000:
a) Holiday/Private Visits abroad
b) Business trip
c) Gifts/Donation
d) Employment or education
e) Remittance for Maintenance of a close relative abroad
f) Medical treatment abroad
g) Emigration facilities
Further, it is provided that an individual can avail of foreign exchange facility of an amount exceeding the limits as prescribed above under the Liberalized Remittance Scheme ('LRS') for the purpose of emigration, education, business travel, medical treatment, etc.
However, the amount so remitted by individual under the LRS shall be reduced from the USD 250,000 by the amount so remitted under the above-mentioned rules.

References – Ministry of Finance – Notification G.S.R 426 (E) dated 26 May 2015