Section 3, read with section 42, of the Foreign Exchange Management Act

FEMA : Order imposing penalty upon appellant-director for contravention of section 8 of FERA was set aside when appellant was not a director incharge of company at relevant time when offence was committed
■■■
[2015] 53 taxmann.com 132 (Delhi)
HIGH COURT OF DELHI
Umesh K. Modi
v.
Deputy Director of Enforcement
S. MURALIDHAR, J.
CRL. A. NO. 568 OF 2008†
JULY  31, 2014
Section 3, read with section 42, of the Foreign Exchange Management Act, 1999/Section 8, read with section 68, of the Foreign Exchange Regulation Act, 1973 - Restrictions on dealing in foreign exchange - Whether where appellant was not a director incharge of company when contravention of section 8 took place and also had discharged his burden in terms of section 68(2), order imposing penalty upon appellant for contravention of sections 8 and 68 was to be set aside - Held, yes [Paras 18, 19 & 20]

Section 19, read with section 49, of the Foreign Exchange Management Act

FEMA : If within sunset period under section 49(3) of FEMA, a revision petition was filed under section 52(4) of FERA, such revision petition would continue before Appellate Tribunal even after repeal of FERA
■■■
[2015] 53 taxmann.com 133 (Delhi)
HIGH COURT OF DELHI
Rakesh Jain
v.
Union of India
S. MURALIDHAR, J.
CRL. A. NOS. 630,756 & 818 OF 2008†
SEPTEMBER  24, 2014
Section 19, read with section 49, of the Foreign Exchange Management Act, 1999/Section 52 of the Foreign Exchange Regulation Act, 1973 - Appellate Board - Appeal to - Whether if within sunset period under section 49(3) of FEMA, a revision petition was filed under section 52(4) of FERA, such revision petition would continue before Appellate Tribunal even after repeal of FERA - Held, yes [Para 18]
Section 42 of the Foreign Exchange Management Act, 1999/Section 68 of the Foreign Exchange Regulation Act, 1973 - Offences by companies - Whether for purposes of section 68 where contravention is by a company, liability cannot be fastened on its directors if company itself is not proceeded against - Held, yes [Para 25]

Foreign Direct Investment – Reporting under FDI Scheme

RBI/2014-15/133

A.P. (DIR Series) Circular No. 6

July 18, 2014

To

All Category - I Authorised Dealer banks

Madam / Sir,

Foreign Direct Investment –

Reporting under FDI Scheme

Attention of Authorised Dealers Category-I (AD Category - I) banks is invited to the provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000, notified by the Reserve Bank vide Notification No.FEMA20/2000-RB, dated 3rd May 2000, as amended from time to time.

2. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India has, vide Press Note 4 (2014 Series) dated June 26, 2014 decided to switch over to the National Industrial Classification 2008 (NIC 2008) from the NIC 1987 version, for the purpose of classification of activities under the industrial classification system. In terms of Para 9 (1) B of Schedule I to the FEMA Notification No. 20 dated May 03, 2000 as amended from time to time, Indian companies are required to report the details of the issue of shares, convertible debentures, partly paid shares and warrants in form FC-GPR, to the Regional Office concerned, within 30 days of issue of shares / convertible debentures. In terms of Para 10 of the Schedule ibid, transfer of shares, convertible debentures, partly paid shares and warrants by way of sale from a person resident in India to a person resident outside India or vice versa, are required to be reported by the transferor/transferee resident in India to the AD Bank in form FCTRS, within 60 days from the date of receipt or payment of the amount of consideration. Indian companies are required to report the NIC Codes in the FCGPR and FCTRS forms as per the NIC 2008 version, henceforth.

3. It has also been decided to introduce a uniform State and District code list for reporting of details of foreign direct investment by Indian companies in Form FCGPR. The list can be accessed on the RBI website (www.rbi.org.in → FEMA – State and District Code List).

4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(B.P.Kanungo)

Principal Chief General Manager

Rupee Drawing Arrangement – Delegation of work to Regional Offices

RBI/2014-15/134
A. P. (DIR Series) Circular No. 7

July 18, 2014

To,
All Authorised Dealer Category - I Banks
Dear Sir/ Madam,

Rupee Drawing Arrangement – Delegation of work to Regional Offices

Attention of Authorised Dealer Category – I (AD Cat – I) banks is invited to the A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008 on Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses, as amended from time to time.

2. As per para (a) of Annex-II of the above mentioned circular, the application for obtaining first time approval to enter into Rupee / Foreign Currency Drawing Arrangements with Exchange Houses needs to be submitted by the AD Cat-I Bank, in the prescribed format, to the Chief General Manager-In-Charge, Foreign Exchange Department, Forex Markets Division, Reserve Bank of India, Central Office, Mumbai - 400001. It has now been decided to delegate the work of granting first time permission to AD Cat-I Banks for entering into Rupee Drawing Arrangement (RDA) with non-resident exchange house to the Regional Offices of the Reserve Bank. Therefore, AD Cat-I Banks willing to enter into Rupee/ Foreign Currency Drawing Arrangement with non-resident exchange house for the first time should submit the application, in the prescribed format, to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls. Subsequently, AD Cat-I Banks may enter into RDAs, subject to the prescribed guidelines and inform the concerned Regional Office of the Reserve Bank, immediately.

3. As per clause (vii) of para (G) – ‘Reports/ Statements’ of Annex-I of the above mentioned circular, AD Cat-I Banks are required to submit to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Forex Markets Division, Mumbai- 400001 by 30th June every year an annual review note covering the period January 1 to December 31 of the previous year, on the vostro accounts of the Exchange Houses maintained by them under the Rupee/ Foreign Currency Drawing Arrangements (RDAs), duly approved by their Board. Henceforth, AD Cat-I Banks should submit the duly approved Annual Review note by 30th June every year, to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls.

4. All other instructions issued vide A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008, as amended from time to time, will remain unchanged.
5. AD Cat-I Banks may bring the contents of this circular to the notice of their constituents concerned.
6. The directions contained in this circular have been issued under Section 10(4) and Section 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.

Yours faithfully,

(B. P. Kanungo)

Principal Chief General Manager

Money Transfer Service Scheme – Delegation of work to Regional Offices

RBI/2014-15/135

A. P. (DIR Series) Circular No. 8

July 18, 2014

To,

All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme

Dear Sir/ Madam,

Money Transfer Service Scheme – Delegation of work to Regional Offices

Attention of Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) is invited to the A.P. (DIR Series) Circular No. 89 dated March 12, 2013 on Money Transfer Service Scheme – Revised Guidelines, as amended from time to time.

2. As per Annex-I Part-A Section-I Para 3 – ‘Procedure for making Applications to the Reserve Bank’ of the above mentioned circular, the application for necessary permission to act as an Indian Agent under MTSS is required to be made to the Chief General Manager-in-Charge, Forex Markets Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Fort, Mumbai-400 001. It has now been decided to delegate the work related to authorization of Indian Agents to the Regional Offices of the Reserve Bank. Therefore, the application for necessary permission to act as an Indian Agent under MTSS should henceforth be made to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls.

3. All other instructions issued vide A. P. (DIR Series) Circular No. 89 dated March 12, 2013, as amended from time to time, will remain unchanged.

4. Authorised Persons (Indian Agents) may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Section 10(4) and Section 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.

Yours faithfully,

(B. P. Kanungo)

Principal Chief General Manager

Foreign Direct Investment (FDI) in India - Issue/Transfer of Shares or Convertible Debentures - Revised pricing guidelines

RBI/2014-15/129

A. P. (DIR Series) Circular No. 4

July 15, 2014

To,

All Category –I Authorised Dealer Banks

Madam/Sir,

Foreign Direct Investment (FDI) in India - 

Issue/Transfer of Shares or Convertible Debentures 

- Revised pricing guidelines

Attention of Authorized Dealers Category – I (AD Category - I) banks is invited to Regulation 10(A)(b)(i), para 5 of Schedule 1, para 1(5) of Schedule 2 and para 2(iv) of Schedule 2A to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (the Principal Regulations) notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000 as amended from time to time, in terms of which, transfer/issue of shares of an Indian company is subject to pricing guidelines stipulated by the Reserve Bank and to A.P. (DIR Series) Circular No. 49 dated May 04, 2010, depicting the comprehensive position in this regard.

2. Attention of AD Category-I banks is also invited to Regulation 9 of the Principal Regulations read with A.P. (DIR Series) Circular No. 86 dated January 9, 2014 in terms of which optionality clauses have been allowed in equity shares and compulsorily and mandatorily convertible preference shares/debentures to be issued to a person resident outside India under the Foreign Direct Investment (FDI) scheme subject to conditions mentioned therein.

3. The extant pricing guidelines in respect of transfer/issue of shares and for exit from investment in equity shares with or without optionality clauses of listed/unlisted Indian companies have since been reviewed so as to provide greater freedom and flexibility to the parties concerned under the FDI framework. The new pricing guidelines shall be as under:

(i) In case of listed companies

(a) The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures shall be as per the SEBI guidelines;

(b) The pricing guidelines for FDI instruments with optionality clauses shall continue to be in accordance with A.P. (DIR Series) Circular No. 86 dated January 9, 2014, i.e., the non-resident investor shall be eligible to exit at the market price prevailing on the recognised stock exchanges subject to lock-in period as stipulated, without any assured return.

(ii) In case of unlisted companies

The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures with or without optionality clauses shall be at a price worked out as per any internationally accepted pricing methodology on arm’s length basis. Thus, the guiding principle will be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreement and shall exit at a fair price computed as above at the time of exit subject to lock-in period requirement as applicable in terms of A.P. (DIR Series) Circular No. 86 dated January 9, 2014.

4. The changes in the existing pricing guidelines for FDI applicable to transfer/issue of shares and for exit from foreign direct investment with optionality clauses for the unlisted Indian companies are given in the Annex 1 and Annex 2 respectively.

5. An Indian company taking on record in its books any transfer of its shares or convertible debenture by way of sale from a resident to a non-resident and a non-resident to a resident shall disclose in its balance sheet for the financial year, in which the transaction took place, the details of valuation of share or convertible debentures, the pricing methodology adopted for the same as well as the agency that has given/certified the valuation.

6. These directions shall come into effect from the date of the publication of the relative Notification in the Official Gazette.

7. All the other instructions of A. P. (DIR Series) Circular No.16 dated October 4, 2004 read with A.P. (DIR Series) Circular No.49 dated May 4, 2010 and A.P. (DIR Series) Circular No. 86 dated January 9, 2014 shall remain unchanged.

8. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers.

9 Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2014 notified vide Notification No. FEMA.306/2014-RB dated May 23, 2014 c.f. G.S.R. No. 435(E) dated July 8, 2014.

10. The directions contained in this circular have been issued under sections 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.

Yours faithfully,

(B.P. Kanungo)

Principal Chief General Manager

---

Annex 1

(A.P. (DIR Series) Circular No. 4 dated 15.07.2014)

Sr. No.	Issue/Transfer of Shares	Existing Provisions	Revised Provisions
1.	Issue of Shares	Issue of Shares to non-residents Price of shares issued to persons resident outside India under this Schedule, shall not be less than (a) the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India; (b) the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India ; and (c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.	Issue of Shares to non-residents Price of shares issued to persons resident outside India under this Schedule, shall not be less than No Change in existing clause (a) (b) the fair valuation of shares done as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker where the shares of the company are not listed on any recognised stock exchange in India This provision is omitted
2.	Transfer of Shares	Transfer by Resident to Non-resident(i.e. to foreign national, NRI, FII and incorporated non-resident entity other than erstwhile OCB) (a) where shares of an Indian company are listed on a recognized stock exchange in India, the price of shares transferred by way of sale shall not be less than the price at which a preferential allotment of shares can be made under the SEBI Guidelines, as applicable, provided that the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of shares. (b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value to be determined by a SEBI registered Category – I - Merchant Banker or a Chartered Accountant as per the discounted free cash flow method. The price per share arrived at should be certified by a SEBI registered Category-I-Merchant Banker / Chartered Accountant.	Transfer by Resident to Non-resident(i.e. to foreign national, NRI, FII, QFI, RFPI and incorporated non-resident entity other than erstwhile OCB) No Change in the existing clause (a) (b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value worked out as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis which should be duly certified by a Chartered Accountant or a SEBI registered Merchant Banker.
3.	Transfer of Shares	Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI and FII) to Resident Price of shares transferred by way of sale, by non-resident to resident shall not be more than the minimum price at which the transfer of shares can be made from a resident to a non-resident as given in para 2 above.	Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI, FII, QFI and RFPI) to Resident No Change in the existing clause

---

Annex 2

(A.P. (DIR Series) Circular No.4 dated 15.07.2014 )

c.f. Annex to A.P.(DIR Series) Circular No. 86 dated January 9, 2014	Earlier condition	Revised condition
Para 2(b)	(ii) In case of unlisted company, the non-resident investor shall be eligible to exit from the investment in equity shares of the investee company at a price not exceeding that arrived at on the basis of Return on Equity (RoE) as per the latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy/FEMA Regulations. Note: For the above purpose, RoE shall mean Profit After Tax / Net Worth; Net Worth would include all free reserves and paid up capital. (iii) Investments in Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) of an investee company may be transferred at a price worked out as per any internationally accepted pricing methodology at the time of exit duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreement and shall exit at the price prevailing at the time of exit, subject to lock-in period requirement, as applicable.	(ii) In case of an unlisted company, the non-resident investor shall be eligible to exit from the investment in equity shares, Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) of the investee company at a price not exceeding that arrived at as per any internationally accepted pricing methodology on arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreements and shall exit at the fair price computed as above at the time of exit, subject to lock-in period requirement, as applicable.

Issue of Partly Paid Shares and Warrants by Indian Company to Foreign Investors

RBI/2014-15/123 A.P.(DIR Series) Circular No.3 July 14, 2014 To, All Category – I Authorised Dealer Banks Madam/Sir, Issue of Partly Paid Shares and Warrants by Indian Company to Foreign Investors Attention of Authorized Dealers Category –I (AD Category-I) banks is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (principal Regulations) notified by the Reserve Bank of India vide Notification No.FEMA.20/2000-RB dated 3rd May 2000, in terms of which only equity shares and compulsorily and mandatorily convertible preference shares/debentures are recognised as Foreign Direct Investment (FDI) compliant instruments. Further, equity shares or compulsorily and mandatorily convertible preference shares/debentures containing an optionality clause but without any option/ right to exit at an assured price have also been recognised as FDI compliant instruments. 2. A review of the policy as regards partly paid shares and warrants has been undertaken and it has been decided as under: (i) Eligible instruments and investors Partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013and the SEBI guidelines, as applicable, shall be eligible instruments for the purpose of FDI and foreign portfolio investment (FPI) by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolio Investors(RFPIs) subject to compliance with FDI and FPI schemes. (ii) Pricing and receipt of balance consideration (a) Partly paid equity shares The pricing of the partly paid equity shares shall be determined upfront and 25% of the total consideration amount ( including share premium, if any), shall also be received upfront; The balance consideration towards fully paid equity shares shall be received within a period of 12 months. The time period for receipt of the balance consideration within 12 months shall not be insisted upon where the issue size exceeds rupees five hundred crore and the issuer complies with Regulation 17 of the SEBI (Issue of Capital and Disclosure Requirements(ICDR)) Regulations regarding monitoring agency. Similarly, in case of an unlisted Indian company, the balance consideration amount can be received after 12 months where the issue size exceeds rupees five hundred crores. However, the investee company shall appoint a monitoring agency on the same lines as required in case of a listed Indian company under the SEBI (ICDR) Regulations. Such monitoring agency (AD Category -1 bank) shall report to the investee company as prescribed by the SEBI regulations, ibid, for the listed companies. (b) Warrants The pricing of the warrants and price/ conversion formula shall be determined upfront and 25% of the consideration amount shall also be received upfront. The balance consideration towards fully paid up equity shares shall be received within a period of 18 months; 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 warrants, in accordance with the extant FEMA Regulations and pricing guidelines stipulated by RBI from time to time. Thus, Investee company shall be free to receive consideration more than the pre-agreed price. (iii) Reporting (a) Partly paid equity shares The reporting of receipt of foreign inward remittance towards each upfront /call payment for FDI transaction shall be made in Advance Reporting Form (format enclosed) along with copy/ies of Foreign Inward Remittance Certificate/s (FIRC), Know Your Customer (KYC) report on non-resident investor and details of the Government approval, if any. The reporting of issue or transfer of partly paid shares shall be made in form FC-GPR and form FC-TRS respectively, to the extent the equity shares are called up. The reporting of purchase/sale of partly paid shares by FIIs/RFPIs in form LEC by the designated branch of authorised dealer bank should be in accordance with FEMA regulations. (b) Warrants The identity of non-resident investor shall be disclosed for the purpose of compliance with KYC norms at the time of issuance of warrants. The reporting of receipt of foreign inward remittance towards each upfront /call payment for FDI transaction shall be made in Advance Reporting form (format enclosed) along with a copy/ies of Foreign Inward Remittance Certificate/s (FIRC), Know Your Customer (KYC) report on non-resident investor and details of the Government approval, if any. The reporting of issue or transfer of warrants in form FC-GPR and form FC-TRS respectively, under the head ‘others’, shall reflect the extent up to which the amount in respect of equity shares has been called up by the company. The reporting of purchase/sale of warrants by FIIs/RFPIs in form LEC under the head ‘others’ with suitable details by the designated branch of authorised dealer bank of FIIs/RFPIs, should be in accordance with FEMA regulations. (iv) Compliance The onus of compliance of all the conditions under FEMA as regards entry route, sectoral caps and all other conditions under FDI guidelines shall be on the Investee company in case of issue of partly paid shares /warrants as well as upon resident transferor or transferee in accordance with extant guidelines in case of transfer of partly-paid shares/warrants . The onus of giving notice required under the provisions of the Companies Act, 2013 for transfer of partly-paid shares shall also be on the Investee company. The onus of compliance with individual limit below 10% (ten per cent) of the total paid-up equity capital shall be on each FII/RFPI. Further, the aggregate investments of all FIIs/RFPIs put together shall not exceed the applicable aggregate limit for each issue of partly paid shares. Other conditions 3. The following other conditions shall also be adhered to: (a) The Indian company whose activity/ sector falls under government route would require prior approval of the Foreign Investment Promotion Board (FIPB), Government of India for issue of partly-paid shares/ warrants. (b)The forfeiture of the amount paid upfront on non-payment of call money shall be in accordance with the provisions of the Companies Act, 2013 and Income tax provisions, as applicable; (c) The company while issuing partly paid shares or warrants shall ensure that the sectoral caps are not breached even after the shares get fully paid-up or warrants get converted into fully paid equity shares. Similarly, the Non-resident investors acquiring partly paid shares or convertible debentures or warrants shall ensure that the sectoral caps are not breached even after the shares get fully paid-up or warrants get converted into fully paid equity shares. (d) The deferment of payment of consideration amount or shortfall in receipt of consideration amount as per applicable pricing guidelines by the foreign investors will not be covered under these guidelines so as to be treated as subscription to partly paid shares and warrants. Thus, the Investee company under these guidelines for issue/transfer of partly-paid shares/warrants, shall require to comply with the requirements under the Companies Act, 2013 for issuance of partly paid shares and warrants; 4. Non-Resident Indians (NRIs) shall also be eligible to invest on non-repatriation basis in partly-paid shares and warrants issued by Indian companies in accordance with the provisions of the Companies Act/ SEBI guidelines / Income tax provisions, as applicable. Investments by NRIs in partly-paid shares and warrants on non-repatriation basis shall also be subject to terms and conditions stipulated in Schedule 4 to Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time. 5. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2014 notified vide Notification No. FEMA. 308 /2014-RB dated June 30, 2014 c.f. G.S.R. No. 436(E) dated July 8, 2014. 6. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents and customers concerned. 7. The directions contained in this circular have been issued under sections 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. Yours faithfully, (B.P. Kanungo) Principal Chief General Manager

Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000

RBI/2014-15/132
A.P. (DIR Series) Circular No.5

July 17, 2014

To
All Category – I Authorised Dealer Banks
Madam/ Sir,

Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the guidelines regarding the Liberalised Remittance Scheme (LRS) for Resident Individuals (the Scheme).

2. It was decided vide A.P.(DIR Series) Circular No. 138 dated June 3, 2014, to increase the limit to USD 125,000 per financial year (April-March) from USD 75,000. Accordingly, AD Category –I banks have been allowed to remit up to USD 125,000 per financial year, under the Scheme, for any permitted current or capital account transaction or a combination of both. Further, it is clarified that the Scheme can now be used for acquisition of immovable property outside India.

3. All other terms and conditions mentioned in A.P.(DIR Series) Circular No. 64, dated February 4, 2004, A.P.(DIR Series) Circular No. 24 dated December 20, 2006, A.P.(DIR Series) Circular No.51 dated May 8, 2007, A.P.(DIR Series) Circular No.36 dated April 4, 2008, A.P.(DIR Series) Circular No.17 and 18 both dated September 16, 2011, A.P.(DIR Series) Circular No.106 dated May 23, 2013, A.P.(DIR Series) Circular No.24 dated August 14, 2013 and A.P.(DIR Series) Circular No. 138 dated June 3, 2014, shall remain unchanged.

4. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Permissible Capital Account Transaction) (Amendment) Regulations, 2014 notified vide Notification No. FEMA 311/2014-RB dated June 24, 2014 c.f. G.S.R. No. 488 (E) dated July 11, 2014.
5. AD-Category I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6. The directions contained in this Circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act, 1992 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Yours faithfully,

(C. D. Srinivasan)
Chief General Manager

Cases Registered Under FEMA

The number of investigation cases registered under the Foreign Exchange Management Act (FEMA), 1999 during the last three Financial Years are as follows: Financial Year 2011-12 2012-13 2013-14 Cases Registered 1170 1622 1041             On completion of investigations under FEMA, in case of any violations are noticed, Show Cause Notices are issued to the entities concerned which are adjudicated by the appropriate Adjudicating Authority as per the assigned monetary limits. There is no provision under FEMA to launch prosecution proceedings for any violations and hence there is no question of conviction.

Government tables amendments to Fema, no vote needed

The government has tabled amendments to the Foreign Exchange Management Act in the Lok Sabha, required to allow foreign direct investment in multi-brand retail trade. Five amendments to regulations issued by the Reserve Bank of India between May and October were tabled by minister of state for finance Namo Narain Meena during zero hour. The amendments seek to provide for 51% foreign investment in multi-brand retail, 100% FDI in single-brand retail and investment by foreign airlines in domestic carriers. RBI had notified the amendments after a directive from Supreme Court in October. The apexBSE 0.00 % court had admitted a PIL that accused the government of not following proper procedure in introducing the new FDI policy. 

Source : Economic Times