- A.P. (DIR Series) Circular No. 67/2015-16 [(1)/5(R)] dated May 05, 2016-05-31
Foreign Exchange Management (Deposit) Regulations, 2016 repealing and superseding the
FEMA (Deposit) Regulations, 2000 hereinafter referred to as Deposit Regulations.
- These regulations seek to regulate deposits between a person resident in India and a person resident outside India
- Some of the key definitions headings under the regulations are given below:
- A ‘Non-resident Indian
- A ‘Person of Indian Origin (PIO)’
- Permissible currency
- No restriction under these regulations shall be applicable for opening of rupee/foreign currency deposit accounts by certain persons viz.,
- foreign diplomatic missions and diplomatic personnel or their family members in India
- deposits in rupees maintained by persons’ resident in Nepal and Bhutan
- deposits with Authorised Dealer in India maintained by any multilateral organization, of which India is a member nation, and the subsidiary/ affiliate bodies and officials of such organizations in India
- In terms of Regulations 5 and 6 of the Deposit Regulations, a person resident outside India may open deposit accounts with Authorized Dealer/authorized bank/Indian Company under various schemes. Heading of the Schemes are mentioned below:
- Non-Resident (External) Account (NRE) Scheme
- Foreign Currency (Non-Resident) Account (Banks) (FCNR(B)) Scheme
- Non-Resident (Ordinary) Rupee (NRO) Account
- Special Non-Resident Rupee (SNRR) Account
- Escrow Account
- Acceptance of deposit by a company in India from NRIs and PIOs on repatriation basis
- Acceptance of deposits by Indian Proprietorship concern/firm or a company from NRIs and PIOs on non-repatriation basis
- Other Deposits (subject to Regulations 6 and 7 of the Deposit Regulations)
- Maturity proceeds of term deposits, if any, under the erstwhile Non-Resident (Special) rupee Account Scheme (NRSR Account) which was discontinued with effect from April 1, 2002, may be credited to the NRO account of the account holder
- Regional Rural Banks (RRBs) are permitted to open and maintain NRO/ NRE accounts in Rupees and accept FCNR(B) deposits as per the eligibility criteria prescribed by the Reserve Bank vide Circular No. RPCD.CO.RRB.No.BC.106 /03.05.33(C)/2006-07 dated June 28, 2007. RRBs may approach the respective Regional Office of the Foreign Exchange Department, for authorization for opening of accounts/ acceptance of deposits.
- Any deposit between a person resident in India and a person resident outside India which is not covered by the provisions of the Act or these Regulations would require approval of Reserve Bank.
- A.P. (DIR Series) Circular No. 73/2015-16/412 dated May 26, 2016-05-31
Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) – Compounding of Contraventions under FEMA, 1999
To ensure more transparency and greater disclosure, it has been decided to bring in the following disclosure which are mentioned hereunder:
- Public disclosure of Compounding Orders
- For disseminating the information pertaining to compounding orders, it has been decided to host the compounding orders passed on or after June 1, 2016 on the Bank’s website (rbi.org.in). The data on the website will be updated at monthly intervals in the following format:
Sr. No. Name of Applicant Amount imposed under the compounding order Whether the amount imposed has been paid Download order
Accordingly, a new sub-para no.8.6 is being added in the Master Direction on Compounding.
- Public disclosure of guidelines on the amount imposed during compounding
- As per provisions of section 13 of FEMA the amount imposed can be up to three times the amount involved in the contravention. However, the amount imposed is calculated based on guidance note given in the Annex. Now it has been decided to put the guidance note on the Bank’s website for information of general public. It may, however, be noted that the guidance note is meant only for the purpose of broadly indicating the basis on which the amount to be imposed is derived by the compounding authorities in Reserve Bank of India. The actual amount imposed may sometimes vary, depending on the circumstances of the case taking into account the factors indicated in paragraph 7.3 of the abovementioned Master Direction. This new provision is being inserted as sub-para 7.4 in the Master Direction on Compounding and the subsequent sub-paragraph renumbered accordingly.
- Guidance Note on computation of the amount imposed under the Foreign Exchange (Compounding Proceedings) Rules 2000 is linked as an Annexed to these Regulations.
- Public disclosure of Compounding Orders
- Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) (Seventh Amendment) Regulations, 2016
In exercise of the powers conferred by clause (b) of sub-section (3) of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes 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) namely:
- In the Principal Regulations, after Regulation 10, the following shall be inserted, namely:-
“10A. 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 a period not exceeding eighteen months from the date of the transfer agreement. For this purpose, if so agreed between the buyer and the seller, an escrow arrangement may be made between the buyer and the seller for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the transfer agreement or if the total consideration is paid by the buyer to the seller, the seller may furnish an indemnity for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the payment of the full consideration.
Provided the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines.”