rbi master circular on forex trading

Q.50: Can overseas bank give guarantee for ECB? The Indian Party should approach an Authorized Dealer Category I bank with an application in Form ODI and the prescribed enclosures / documents for effecting the remittances towards such investments. However, companies wishing to set up step-down operating subsidiaries to undertake financial sector activities will have to comply with the additional requirements for direct investment in the financial services sector as indicated in. (DIR Series) Circular.62 dated April 13, 2016. Answer: No, as on date, a guarantee, which has been issued on behalf of the overseas JV / WOS / step down subsidiary, may be allowed to be rolled over under the automatic route without subjecting the rollover to fema. Q.34: Can an Indian Party capitalise the proceeds of the exports to its overseas JV / WOS? They can act as ECB lenders (through their overseas branches / subsidiaries) only under Track I of the ECB framework duly ensuring that the applicable prudential norms are complied with. Q.54: What are the other requirements in respect of hedging of ECB? Fema questionnarie, foreign direct investments, source ( Reserve Bank of India Public Information available on Website ). B) The Indian party holds at least 51 direct stake in its subsidiary company c) The holding or subsidiary company furnishes a letter of disclaimer for the same in favour of the Indian Party.

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The financial hedge for all exposures on account of ECB should start from the time of each such exposure (i.e. Q.51: Is investment in agriculture permitted? Share warrants: Share warrants issued on or after July 8, 2014 will be considered as capital instruments. As an organization, it is necessary to make sure that all your transactions related to foreign exchanges are in compliance with law and if not, necessary precautionary measures shall be undertaken to rectify the same. Answer: For the purpose of raising ECB, Infrastructure Sector has the same meaning as given in the Harmonised Master List of Infrastructure sub-sectors approved by Government of India vide Notification.

However, this does not mean that the applicant cannot apply for compounding. Q.14: What does the term infrastructure sector mean for the purpose of ECB? All the above investments need reporting or approval from RBI. Fema.120/RB-2004 dated July 07, 2004, as amended from time to time, the disinvestment proceeds are to be repatriated to India within the prescribed time limit. Q.27: What are the instructions for transfer of shares rbi master circular on forex trading against deferred payment? Flash reports are to be sent in fraud cases of INR 50 million and above to the CGM-In -Charge, DBS, CO with a copy to cfmc at Bengaluru as against the present limit of INR 10 million and above. Answer: No, only those companies in software sector space who are into development of software are eligible to raise ECB. Under the head Loan in terms of instructions issued for filling Form ODI vide.P. In case of a foreign currency exchangeable bond (fceb investors have the option of converting the bonds into equity of the offered company. Swap of shares (refers to the acquisition of the shares of an overseas JV / WOS by way of exchange of the shares of the Indian party). The shares acquired by all the employees/directors do not exceed 5 of the paid-up capital of the Joint Venture or Wholly Owned Subsidiary outside India; and after allotment of such shares, the percentage of shares held by the Indian promoter.

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Q.5: Is the extant ECB framework different from the framework for issuance of Rupee denominated bonds overseas? Q.31: What are the valuation norms referred to. The ECB 2 Return should reach dsim within seven working days from the close of month to which it relates. Q.1: How can an Indian company receive foreign investment? Capitalisation of export proceeds remaining unrealised beyond the prescribed period of realisation will require the prior approval of the Reserve Bank. After the overwhelming response received by offshore rupee bonds, colloquially referred to as Masala Bonds, RBI has decided to expand the scope of such bond issues to permit Indian corporates to raise external commercial borrowing (ECB) through the issuance of rupee bonds outside India. Investors have the option of redeeming their investment on maturity or converting the bonds into equity any time during the currency of the bond. E) Incorporation certificate and the valuation certificate for the overseas entity (if applicable). The current restriction on selling of imported gold coin by the banks will continue. General permission is also available to sell the shares so purchased or acquired.

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Answer: Where the JV/WOS has been established through a SPV, all funding to the operating step down subsidiary should be routed through the SPV only. Q.42: What are the provisions with regard to Downstream investment for an investment vehicle? The RBI, in its recent circular titled Strategic Debt Restructuring Scheme, provided a framework whereby lender banks have been granted certain enhanced capabilities to initiate a change in ownership of a defaulting borrower by converting the loan dues into equity shares. Answer: No, foreign currency loans given domestically by Authorised Dealer Category I banks out of the proceeds of fcnr (B) deposits do not come under the ECB framework. Regulated entities engaged in financial services sector activities in India making investment in non-financial services activities overseas are also required to comply with the additional conditions mentioned above. However, Indian banks operating in India can set up JVs/WOSs abroad provided they obtain clearance under the Banking Regulation Act, 1949, from the Department of Banking Regulation (DBR CO, RBI. In relation to rupee denominated ECBs, The Government released a press note on November 10, 2015 outlining significant reforms in the Consolidated FDI Policy Circular of 2015 and the dipp issued another press note on November 24, 2015. Answer: Indian Mutual Funds registered with sebi are permitted to invest within the overall cap of USD 7 billion in: ADRs / GDRs of the Indian and foreign companies; equity of overseas companies listed on recognized overseas stock exchanges;.

Letters of Credit/ Bank Guarantee arrangements continue as a form of trade finance, as hitherto. Any further clarifications in respect of cases not covered by the instructions may be obtained, giving full details of the case, from the Central Office of the Reserve Bank at the following address: The Chief General Manager Reserve Bank of India Foreign. Who is an Indian Party? An Indian Party is a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act 1932 or a Limited Liability Partnership (LLP) incorporated under. The company issuing fceb shall be part of the promoter group of the offered company and shall hold the equity shares being offered at the time of issuance of fceb. Further, the time specified for the completion of the contract will be the validity period of the related performance guarantee. It may be noted that, for undertaking activities in the financial services sector, certain additional conditions as specified in Regulation 7 of the Notification ibid should be adhered. However, Navaratna Public Sector Undertakings, ongc Videsh Ltd and Oil India Ltd are allowed to invest in overseas unincorporated / incorporated entities in oil sector (i.e. While submitting revised Form 83, the changes should be specifically mentioned in the communication.

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Any change in the end use of guarantee or rbi master circular on forex trading overseas lender or rate of interest or amount or any other terms and conditions of the guarantee shall subject the rollover of guarantee to the extant fema compliance afresh. Answer: The primary responsibility for ensuring that the borrowing is in compliance with the applicable ECB guidelines is that of the borrower concerned. Answer: Form ODI is available as an Annex to the Master Direction titled Master Direction on Reporting under Foreign Exchange Management Act. Overseas branches/subsidiaries of Indian banks are permitted only to refinance ECBs of highly rated (AAA) corporates (or equivalent AAA(SO) rating) as well as Navratna and Maharatna PSUs, provided the outstanding maturity of the original borrowing is not reduced. Overseas direct investments Source (Reserve Bank of India Public Information available on Website ).1: Where are the guidelines pertaining to overseas direct investments available and how to get clarifications pertaining to the guidelines on overseas investment? When more than one such company, body or entity makes investment in the foreign JV / WOS, such combination will also form an Indian Party. Q.56: How are actual transactions of an ECB reported to RBI?

Q.7: How to forward the proposal for making Overseas Direct Investment (ODI) under approval route? Answer: An overseas bank (not overseas branches / subsidiaries of Indian bank) is permitted to give guarantee from overseas for ECB, provided it is recognised as ECB lender as per extant ECB guidelines. Q.13: What is the procedure to be followed by an Indian party to make overseas direct investment in a JV/WOS under the Automatic Route? Answer: In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis, within. Answer: Foreign Portfolio Investors (FPIs Non-Resident Indians (NRIs Overseas Citizens of India (OCIs Foreign Central Banks, Multilateral Development Bank, Long term investors like Sovereign Wealth Funds (SWFs Multilateral Agencies, Endowment Funds, Insurance Funds and Pension Funds which are registered. Q.37: Who is an fvci? Frauds of INR.1 million and above but below INR 50 million will be monitored by the respective Regional Office of RBI under whose jurisdiction the Head Office of the bank falls / Senior Supervisory Manager (SSM) of the bank. Id10223, notification to nbfc, provision of Safe Deposit Locker facility by Non-Banking Finance Companies (nbfcs). Further, it has also been decided that henceforth banks/FIs need not send the hard copies of the FMR-1 returns. Further, eligible entities can drawdown the ECB proceeds beyond the availability period of March 31, 2016 provided such ECBs are contracted on or before December 1, 2015 and such agreements provide availability period of ECB to be beyond March 31, 2016. AD Category I banks would continue to receive the ODI forms as also documents related to the post investment changes in the physical form from the Indian Party.

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The designated AD before forwarding the proposal should submit the Form ODI in the on-line OID application under approval route and the transaction number generated by the application should be mentioned in the letter. Fema 3/2000-RB dated May 03, 2000 are applicable only to the credit facilities extended to a Wholly Owned Subsidiary abroad or a Joint Venture abroad of an Indian entity, by an Authorised Dealer bank in India. For transfer of shares from a person resident outside India holding capital instruments in an Indian company on a repatriable basis to a person resident outside India holding capital instruments on a repatriable basis for transfer of shares by way of gift. All other investments, after the said date, would come under the ambit of fema 20(R). The write-off / restructuring is subject to the condition that the Indian Party should submit the following documents for scrutiny along with the applications to the designated AD Category I bank under the Automatic as well as the Approval.

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Answer: The borrowers are required to report actual ECB transactions, correctly and fully, through duly certified ECB 2 Return through the Authorised Dealer Category-I bank to dsim as per the periodicity specified by the RBI. Further, certification of APRs by the Statutory Auditor or Chartered Accountant may not be insisted upon in the case of Resident Individuals. Answer: The designated Authorized Dealer Category-I bank, which is the bank branch designated by the ECB borrower, would be primarily responsible for meeting the reporting requirements including obtaining of LRN, exercising the delegated powers under these guidelines and monitoring of ECB transactions. For approval by Reserve Bank, following documents need to be submitted along with Section D and Section E of Form ODI Part I by the designated Authorized Dealer: a) A letter from rbi master circular on forex trading the designated AD of the IP in a sealed. Q.5: What is JV and WOS? Fees payable, if any, for this guarantee will form part of All-in-cost of the ECB. Answer: The amount of consideration for all investment by an fvci has to be received/made through inward remittance from abroad through banking channels or out of funds held in a foreign currency account and/ or a Special Non-Resident Rupee. Answer: The Indian Party intending to make overseas direct investment under the automatic route is required to fill up form ODI duly supported by the documents listed therein,.e., certified copy of the Board Resolution, Statutory Auditors certificate and.

The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant fema regulations. Q.53: Whether restructuring of the balance sheet of the JV / WOS abroad involving write-off of capital and receivables is allowed? Fema 120/RB-2004 dated July 7, 2004 and banking business are the prohibited sectors for overseas direct investment. Q.27: Is it mandatory to furnish Annual Performance Reports (APR) of the overseas JV/WOS based on its audited financial statements? In exchange of ADRs / GDRs issued in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and the guidelines issued by Government of India in the matter.

Notification to Scheduled Commercial Banks, non-Fund Based Facility to Non-constituent Borrowers of Bank. In case the Indian Party/ Resident Individual wants to switch over to another AD, an application by way of a letter may be made to the Reserve Bank after obtaining an NOC from the existing Authorized Dealer. Id10225, credit information reporting in respect of Self Help Group (SHG) members. Answer: The shares of a JV/WOS can be pledged by an Indian Party as a security for availing fund based or non-fund based facility for itself or for the JV/WOS, from an authorised dealer/ public financial institution in India. In case, the overseas entity is a second or subsequent level step down operating subsidiary of the Indian party, guarantee may be issued by the Indian party on behalf of such step down operating subsidiary with prior approval. However, if current year profits are not sufficient, coupons may be paid subject to availability of sufficient revenue reserves (those which are not created for specific purposes by a bank) and/or credit balance in profit and loss account, if any. Answer: Investment Vehicle is an entity registered and regulated under relevant regulations framed by sebi or any other authority designated for the purpose. which are duly approved by the Government of India, without any limits, under the automatic route; iii) Overseas Investments by proprietorship concerns and unregistered partnership firms satisfying certain eligibility criteria; iv) Investments by Registered Trusts / Societies (satisfying certain eligibility. Resident employees of Indian companies in the knowledge based sectors including working directors may purchase foreign securities under the ADR/GDR linked stock option scheme provided that the consideration for purchase does not exceed the ceiling as stipulated by RBI from time to time. Frauds of INR 50 million and above will be monitored by Central Fraud Monitoring Cell (cfmc Bengaluru, and. Downstream investments made between February 13, 2009 and June 21, 2013 which were not in conformity with these regulations should have been intimated to the Reserve Bank by October 3, 2013, for treating such cases as compliant with these regulations. BC.85/21.04.048/2014-15 dated April 06, 2015 issued by the Department of Banking Regulation (DBR) of RBI will be applicable which interalia state that such refinance shall be treated as restructuring (and classified/provided for as per extant prudential norms on income recognition. Id10213, financial Literacy Centres (FLCs) Revised Guidelines.