Capital A/c TransactionsExternal commercial borrowings Foreign investments in India Overseas Direct Investment
External Commercial BorrowingsCommercial loans availed from nonnonresident lenders Can be accessed under automatic/approval route
External Commercial BorrowingsAutomatic Route Eligible Borrowers corporates (except financial Borrowers intermediaries like banks/NBFCs) Individuals/trusts not eligible Recognized lenders international banks/financial institutions/suppliers of equipments/foreign equity holders with minimum 25 % holding.
External Commercial BorrowingsAmount Amount maximum USD500 million per financial year. Minimum maturity ECB upto USD20 million-- 3 years million-ECB above USD 20 million -- 5 years All in cost ceiling ( rate of interest, other fees/expenses in foreign currency excluding fees/taxes payable in INR ) ECB upto 5 years 6 months LIBOR + 300 bps years ECB above 5 years 6 months LIBOR + 500 bps years
External Commercial BorrowingsEnd use import of capital goods foreign currency expenditure Expansion/modernization/new project Rupee expenditure ODI in JV/WOS abroad ECBs not permitted for on lending/investment in real estate/working capital purposes/repayment of existing Rupee loans
External Commercial BorrowingsSecurity Security left to the borrower. creation of charge over immovable property/shares etc subject to compliance with notification FEMA 21,FEMA 20. Issue of guarantees/SBLCs etc by banks not permitted. Issue of personal/corporate guarantees permitted.
External Commercial BorrowingsProcedure Loan agreement in compliance with ECB guidelines Form 83 in duplicate to be submitted to AD One copy to be sent to DSIM (RBI) by AD LRN to be allotted by DSIM Draw down only after obtaining LRN ECBECB-2 return to be submitted to DSIM through AD on monthly basis
External Commercial BorrowingsApproval Route ECBs by Banks/Financial institutions/NBFCs and cases falling outside automatic route limits/maturity etc Additional amount of USD 250 mio can be availed with average maturity > 10 years Form ECB to be submitted to RBI CO through AD
Foreign Investments in IndiaNotification FEMA-20 dated 03-05-2000 as amended FEMA03-05Eligibility for investment- Any person resident outside investmentIndia (other than citizen of Pakistan) or any entity incorporated outside India (except Pakistan) Type of Instruments- Equity/Preference Instrumentsshares/Convertible debentures Entry Routes- Approval/Automatic Routes-
Foreign Investments in IndiaApproval Route (Investment in sectors like petroleum refining, defence, postal, courier, broadcasting etc) Investments exceeding sectoral caps under automatic route Automatic route- Investments not falling under routeapproval route subject to sectoral caps
Foreign Investments in IndiaReporting of FDI InflowInflow- Funds to be received by way of foreign inward remittance/debit to FCNR/NRE a/c Conversion of ECB/technical know how/lump sum fees/royalty Reporting to RBI within 30 days through AD with copies of FIRC and KYC report
Foreign Investments in IndiaIssue of Shares Form FCGPR Part A to be submitted to RBI within 30 days through AD with certificates by chartered accountant and company secretary FCGPR Part B to be submitted to DSIM on annual basis (31st July)
Foreign Investments in IndiaTime limit for issue of shares (APDIR 20 dtd 14-12-07) 14-12Shares to be issued/money refunded within 180 days from the date of receipt After 180 days share application money can be refunded with RBI permission
Foreign Investments in IndiaTransfer of shares Non Resident to Non Resident- general Residentpermission (NRI to other than NRI requires RBI approval) Non Resident to Resident- gift- general Resident- giftpermission Resident to Non Resident- gift- with RBI Resident- giftapproval
Foreign Investments in IndiaTransfer of Shares from Non Resident to Resident and vice versa by sale General permission subject to compliance with AP Dir 16 (04-10-04) (04-10Pricing guidelines Reporting in FCTRS to AD General permission covers buy back of shares by companies
Foreign Investments in IndiaTransfer of shares of companies in financial service sector and transfer of shares attracting SAST regulations require RBI approval Transfer of shares of companies coming under approval route and transfer of shares resulting in breach of sectoral caps require govt and RBI approval
Foreign Exchange Management ActAct-1999Contravention and penalties SecSec-13 Penalty upto 3 times the amount involved. SecSec-15 Compounding of contravention by DoE/RBI SecSec-16 Adjudication and appeal SecSec-17 Appeal to special director SecSec-18 Appellate tribunal SecSec-35 Appeal to High Court
Investment by Residents in JV/WOS abroadAvenues for promoting global business by Indian entrepreneurs Access to wider global market Notification FEMA 120 (07-07-04) (07-07Investments permitted up to 400% of the net worth of Indian party Ceiling not applicable for investments out of EEFC balances/ADR/GDR proceeds
Investment by Residents in JV/WOS abroadInvestments can be made by way of: Contribution to capital of JV/WOS Loans granted to JV/WOS Guarantees on behalf of JV/WOS Loans/Guarantees can be extended only after equity participation All transactions with JV/WOS to be routed through a designated AD
Investment by Residents in JV/WOS abroadPartial/Full acquisition of an existing foreign company Valuation of shares by Cat-1 merchant Catbanker registered with SEBI or a CA Acquisition by way of swap of shares requires FIPB approval in addition to valuation by Cat-1 merchant banker Catregistered with SEBI
Investment by Residents in JV/WOS abroadReporting Requirements ODI Part-1 (by the company) Part-2 by AD PartPartUIN number to be allotted by RBI All investments to be made through the same AD ODI Part-3 (Apr) to be submitted annually PartODI Part-4 Reporting disinvestments Part-
THANK YOUS.M.HiremathManagerManager-FED, RBI, Bangalore.
Tel : 080-22217775 080Email: firstname.lastname@example.org