RESERVE BANK OF INDIA (RBI)
July 8, 2014
Financial Commitment (FC) by Indian Party under Overseas DirectInvestments (ODI) – Restoration of Limit The Reserve Bank of India (“RBI”) has issued a circular A.P. (DIR Series) Circular No.1 dated July 3, 2014 restoring the limit of Overseas Direct Investments (ODI)/ Financial Commitment (FC) to be undertaken by an Indian Party under the automatic route to the limit prevailing, as per the extant FEMA provisions, prior to August 14, 2013. It has, however, been decided that any financial commitment exceeding USD 1 (one) billion (or its equivalent) in a financial year would require prior approval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet). Master Circular on Foreign Investment in India – The Reserve Bank of India (“RBI”) has issued a Master circular on Foreign Investment in India vide Circular No. 15/2014-15 dated 1st July, 2014 . This Master Circular also covers the area of ‘Investment in capital of Limited Liability Partnership, partners ship firms or proprietary concern” Master Circular on Establishment of Liaison / Branch /Project Offices in India by Foreign Entities - The Reserve Bank of India (“RBI”) has issued a Master circular No.7/2014-15 dated July 01, 2014. This Master Circular consolidates the existing instructions on the subject of “Establishment of Branch/Liaison/Project Offices in India by Foreign Entities" at one place. Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies – Revised format: The Reserve Bank of India (“RBI”) has in order to collect the information on Indian companies’ Outward Foreign Affiliated Trade Statistics (FATS) as per the multi-agency global ‘Manual on Statistics of International Trade in Services issued a circular - A.P. (DIR Series) Circular No.145 dated June 18, 2014 revising the format of Annual Return on Foreign Liabilities and Assets (FLA) Transfer of assets of Liaison Office (LO) / Branch Office (BO) / Project Office (PO) of a foreign entity either to its Wholly Owned Subsidiary (WOS) / Joint Venture (JV) / Others in India– Delegation of powers to AD Banks: The Reserve Bank of India (“RBI”) has issued A.P. (DIR Series) Circular No.142 dated June 12, 2014 delegating the powers relating to transfer of assets of Liaison Office / Branch Office / Project Office to the Authorised Dealer Category-I banks subject to compliance of conditions stipulated in the above said circular. Pledge of shares for business purposes in favour of NBFCs- The Reserve Bank of India has issued a circular A.P. (DIR Series) Circular No.141 dated June 6, 2014 with a view to further rationalise the process and reduce the transaction time. It has been decided to delegate to the AD Category – I banks the powers to allow pledge of equity shares of an Indian company held by non-resident investor/s in accordance with the FDI policy, in favour of the Non - Banking Financial Companies (NBFCs) – whether listed or not, to secure the credit facilities extended to the resident investee company for bona-fide business purposes / operations, subject to compliance with the conditions specified in the circular. Foreign investment in India – participation by registered FPIs, SEBI registered long term investors and NRIs in non-convertible/redeemable preference shares or debentures of Indian companies: The Reserve Bank of India (“RBI”) has issued A.P. (DIR Series) Circular No.140 dated June 6, 2014 by virtue of which it has decided to allow registered Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) deemed as registered Foreign Portfolio investors, registered Foreign Portfolio Investors (FPIs), long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, foreign Central Banks to invest on repatriation basis, in non-convertible/redeemable preference shares or debentures issued by an Indian company in terms of A.P. (DIR Series) Circular No. 84 dated January 6, 2014 and listed on recognized stock exchanges in India, within the overall limit of USD 51 billion earmarked for corporate debt. Further, NRIs may also invest, both on repatriation and non-repatriation basis, in non-convertible/redeemable preference shares or debentures as above Foreign investment in the Insurance Sector – Amendment to the Foreign Direct Investment Scheme: The Reserve Bank of India (“RBI”) has issued a circular A.P. (DIR Series) Circular No.139 dated June 5, 2014 permitting FIIs/FPIs and NRIs to make the investment in Insurance Sector up to 26% under automatic route by way of Foreign Direct Investment subject to the conditions specified in the Press Note 2 (2014 Series) dated February 4, 2014. The above said limit will be applicable with effect from the date of release of press note. Liberalized Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000: The Reserve Bank of India (“RBI”) has issued a circular A.P. (DIR Series) Circular No.138 dated June 3, 2014 liberalizing the remittance scheme for resident individuals from the existing limit of USD 75,000 per financial year (April-March) to USD 125,000 with effect from 3rd June, 2014.