RESERVE BANK OF INDIA

Reserve Bank of India has reviewed the extant FDI Policy so as to incorporate the definition for ‘group company’. The same has been announced by RBI vide its notification RBI/2013-14/356 A.P. (DIR Series) Circular No.68 dated November 01, 2013. As per the definition, ‘Group company’ means two or more enterprises which, directly or indirectly, are in position to:

1. exercise twenty-six per cent, or more of voting rights in other enterprise; or

2. appoint more than fifty per cent, of members of board of directors in the other enterprise.

Reserve Bank of India has vide its notification FEMA.292/2013-RB dated : October 04, 2013 made the following amendments in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB dated 3rd May 2000). These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by A Person Resident Outside India) (Sixteenth Amendment) Regulations, 2013 and shall deemed to have come into force from June 3, 2013.

Amendment of Regulation 2

In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000), in Regulation 2, after the clause (iv), the following shall be inserted, namely:-

“(iva) ‘Group company’ means two or more enterprises which, directly or indirectly, are in a position to :

1. exercise twenty-six per cent, or more of voting rights in other enterprise; or

2. appoint more than fifty per cent, of members of board of directors in the other enterprise.”

Reserve Bank of India has vide its notification RBI/2013-14/304 A.P. (DIR Series) Circular No. 59 dated September 30, 2013 decided to discontinue with the facility allowing eligible borrowers to raise ECB at a higher all-in-cost to refinance / reschedule an existing ECB with effect from October 01, 2013. It has also been stated that the scheme of refinance of existing ECB by raising fresh ECB at lower all-in-cost, subject to the condition that the outstanding maturity of the original ECB is either maintained or extended, will continue as hitherto under the automatic route and approval route as the case may be.