Issue of Security in India by a Branch, Office or Agency of Person Resident Outside India

(GSR.385 (E) dated 3rd May, 2000)
Any transfer or issue of any security or a foreign security in India by a branch, office or agency in India of any person resident outside India which is not covered by the provisions of the Act or Rules or Regulations made under the Act would require prior approval of the Reserve Bank.

Borrowing or Lending in Foreign Exchange

(GSR. 386 (E) dated 3rd May, 2000)

These regulations relate to the borrowing or lending in foreign exchange by a person resident in India. In terms of these Regulations approval of Reserve Bank would be necessary for any borrowing or lending in foreign exchange by any person resident in India except those covered in Regulation nos. 4 pertaining to authroised dealers and 5 relating to persons other than authorised dealers.

Apart from borrowing as aforesaid covered by regulation 4 and 5 relating respectively to authorised dealers and persons other than authorised dealers in terms of regulation 6 substituted by notification FEMA NO. 126/2004 – RB dated 13.12.2004 other borrowings in Foreign Exchange can be made under Automatic Route or with prior approval of RBI under the Approval Route or as Trade Credit by persons resident in India other than a branch or office in India owned or controlled by a person resident outside India.  Any corporate registered under Companies Act, 1956 subject to exceptions and terms and conditions mentioned in Schedule 1 can borrow upto US$ 500 million in or its equivalent in one Financial Year under Automatic Route.

A person/entity resident in India desirous to raise Foreign Currency Loan of the nature/purpose and under terms and conditions covered in Schedule II may apply to RBI for prior approval to raise such loans as per terms of regulation 6(2) for borrowings other than those covered by schedule 1 above.  Form for such borrowings under Approval Route shall be specified by RBI from time to time.

Refinancing of outstanding amounts of loans raised in Foreign Currency in accordance with the Act or the Rules and Regulations made their under may be made by making fresh borrowings in Foreign Exchange in accordance with respective schedule 1 item 2 or schedule 2 item 4 as the case may be.

Trade Credit not exceeding US$ 20 million per import transaction shall be raised by borrowing subject to the terms specified in schedule III under regulation 6(3).

Any foreign currency borrowing, which is not covered by these schemes or by the provisions of Regulation nos. 4 and 5 would require approval of both Government of India and Reserve Bank of India.

Export and Import of Currency

(GSR. 389(E) dated 3.5.2000)
There is no change in the regulations as existed earlier under FERA for export/import of Indian currency/foreign currency from/into India contained in Part G of Chapter 6 and Part D of Chapter 7 of Exchange Control Manual except that:-

·         A person is permitted to take out of India while on a visit to a foreign country other than Nepal or Bhutan, Indian currency notes up to Rs.5000 in aggregate. Such a person is also permitted to bring back in Indian currency notes not exceeding Rs.5000 while returning to India. Earlier, these limits were Rs.1000.  RBI may however on application made to it allow a person to take or send out of India or bring into India currency notes subject to such terms and conditions as  a bank may stipulate. 

As for Foreign Exchange / currency any amount can be brought in India provided that when the amount of Foreign Currency brought in exceeds US$ 5,000 or its equivalent or when the currency and / or travelers cheques together exceeds US$ 10,000 or its equivalent in aggregate a declaration in Form CDF (Currency Declaration Form) shall have to be made on arrival at the Indian port by the person importing currency.  Foreign Exchange legally obtained from authorised persons can be taken / sent out of India.  Unspent balance out of amount brought in India can be taken back / sent out of India under FEMA.

·         Regulations for export and import of Indian currency to/from Nepal are applicable to Bhutan also.  Currencies of Nepal / Bhutan / India can be brought in / taken out provided the Indian currency notes of denominations above Rs. 100  cannot be used for the purpose.

Deposit

(GSR. 388(E) dated 3rd May, 2000)

These regulations relate to the deposits between a person resident in India and a person resident outside India.

“Authorised Dealers/Banks” have been authorised to accept deposits from person resident outside India and keep such deposits under:  Non Residential (External) Account Scheme – (NRE Account), Foreign Currency (Non Resident) Account Bank Scheme (FCNR Account) Non Resident (Ordinary) Account Scheme (NRO Account) as specified in schedule 1, 2 and 3 respectively attached to the regulation.

Non resident (Non Repatriable) Rupee Accounts opened in terms of schedule 4 were suspended from 1.4.02 with an amendment of the schedule with the permission to those existing as on 31.03.2002 to be continued under NRNR Scheme only up to the date of maturity of such existing deposits. Other deposits like NRSR too shall be maintained as per provisions of item 3 of the regulation as specified in schedule 5.  Schedule 6 and 7 strictly specify regulations for deposits with persons other than authorised dealers / banks.

General permission has been granted for retention of funds raised through external commercial borrowings or raising of resources through ADRs/GDRs in deposit with a bank outside India pending their utilisation or repatriation in India.

General permission has been granted to Indian companies to accept deposits from NRIs/OCBs by issue of a Commercial paper subject to terms and conditions specified in Regulation No.8(2).

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.

Guarantees

(GSR. 391(E) dated 3rd May, 2000)
Giving a guarantee or a surety or undertaking any transaction which has the effect of guaranteeing a debt or obligation or other liability owned by a person resident in India to or incurred by a person resident outside India, requires approval of Reserve Bank except where issue of such a guarantee or surety is permissible under the Regulations.

General permission has been granted by Reserve Bank to authorised dealers to issue guarantees in respect of transactions specified in Regulation No.4.

General permission has also been granted to agents in India of foreign shipping or airline companies on behalf of their principals in favour of any statutory or Government authority in connection with the obligations owned by the principals to such authorities.

Remittance of Assets

GSR 396 (E) dated 3rd may, 2000)

Remittance of capital assets in India held by a person whether resident in or outside India would require approval of the Reserve bank except to the extent provided in the Act or Rules or Regulations made under the Act.

Authorised dealers have been permitted to allow remittance of assets of a person referred to in Regulation 4(2) who has retired from India or who has inherited assets from a person who was a resident of India, or remittance of assets in India of a foreign born widow of an Indian national resident outside India in amount exceeding US$ 1 million per calendar year subject to the terms & conditions mentioned therein.

Authorised dealers have been permitted to allow remittance of balance amount held in bank account by a foreign student after completion of his studies. 

A Non Resident / Person of Indian origin (PIO) may remit an amount not exceeding US$ 1 million per calendar year strictly in terms and subject to conditions laid down in regulation 3 substituted vide notifications no. FEMA NO. 119/2004-RB of 29.06.2004. Under Regulation 6 prior permission may be applied for from RBI for remittances in excess of the above laid limit of US$ 1 million per calendar year strictly under terms and rules laid in Regulation 6.

General permission has also been granted to Indian entities to make remittance towards their share of contribution to provident fund or superannuation / pension fund in respect of their expatriate staff who are resident in India but not permanently resident therein.