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PART
II - RULES AND REGULATIONS, OF INTEREST TO OTHERS
Encashment
of Draft, Cheque, Instrument and Payment of Interest
(GSR 379 (E) dated 3rd May, 2000)
These
Rules relate to delivery and encashment of draft, cheque
and other instrument, in case where investigation under
section 37 of FEMA, 1999 is being taken up into any
alleged contravention of any provision of the Act or
of any Rule, Regulation, direction or order, or violation
of any condition subject to which the Reserve Bank of
India gives authorization.
These
Rules contain provisions in respect of opening of an
account for depositing the seized Indian currency, indemnifying
Reserve Bank of India, giving direction for payment
of proceeds and payment of interest on the seized Indian
currency.
Authentication
of Documents
(GSR 380 (E) dated 3rd May, 2000)
According
to these Rules, any document received from any place
outside India purporting to have affixed, impressed
or submitted thereon or thereto the seal and signature
of any person who is authorised by section 3 of the
Diplomatic and Consular Officer (Oaths and Fees) Act,
1948 to do any notarial acts shall be deemed duly authenticated
for the purpose of section 39 of the Act.
Adjudication
Proceedings and Appeal
(GSR 382 (E) dated 3rd May, 2000)
These
Rules relate to appointment of the Adjudicating Authority;
holding of inquiry; appeal to Special Director (Appeals);
procedure before Special Director (Appeals); contents
of the Order in appeal; representation of party; service
of notices; requisitions or orders; appeal to the Appellate
Tribunal; procedure before Appellate Tribunal, etc.
Compounding
Proceedings
(GSR 383 (E) dated 3rd May, 2000)
Under
these Rules, powers have been given to Reserve Bank
of India to compound contraventions, where such contraventions
are of the provisions of the Foreign Exchange Management
Act, 1999 (42
of 1999). Compounding
powers have been given to RBI for contravention of the
provisions of the Act in general except for those pertaining
to section 3(a).
For contravention of sectjon 3 clause (a) of
that Act powers have been given to Enforcement Directorate
to compound contraventions.
Contents
of Rule 4 and 5 as to powers of RBI and Enforcement
Directorate to compound contraventions should be followed.
Sub Rule 1(a) to 1(d) / 1(e) of both Rule 4 &
5 empower different officers with different ranks in
RBI to deal with compounding of contraventions ranging
from sums involved below Rs. 5 lacs to over Rs. 50 lacs. Every officer specified under Sub Rule (1) of Rule 4 of the
RBI shall exercise the powers to compound any contravention
subject to the directions, control and supervision of
the Governor of the RBI.
Every application for compounding shall be in
the prescribed form accompanied by a Demand Draft of
Rs. 5,000/- in favour of the compounding authority and
sent to RBI exchange control department central office
Mumbai or Directorate of Enforcement, New Delhi under
Rule 4 or 5 as the case may be.
Rule 5 to 13 respectively pertain to power of
enforcement Directorate to compound contravention, effect
of compounding before adjudication, effect of compounding
after complaint under section 16(3) procedure of compounding,
payment of amount compounded, consequence of failure
to pay the compounded sum, bar on compounding, contents
of the order of compounding authority and copy of order.
Borrowing
and Lending in Rupees
(GSR 387 (E) dated 3rd May, 2000)-
In
terms of these Regulations, a person resident in India,
not being a company incorporated in India, may borrow
in rupees on non repatriation basis from a non resident
Indian or a person of Indian origin resident outside
India subject to the following conditions:
-
the amount of loan shall be received by way of inward
remittance from outside India or out of NRE/NRO/ FCNR/
NRNR / NRSR account of the lender maintained with an
authorized dealer or an unauthorized bank in India;
-
period of loan shall not exceed three years;
-
rate of interest shall not exceed 2 percentage points
over the Bank rate prevailing on the date of availment
of loan;
-
where
the loan is made out of funds in NRSR account of
the lender, payment of interest and repayment of
loan shall be made to the credit to that account;
and in other cases, payment of interest and repayment
of loan shall be made by credit to the lender’s
NRO / NRSR account as desired by the lender; and
-
the
amount borrowed shall not be allowed to be repatriated
outside India.
A
company incorporated in India may subject to Sub Regulation
2 and 3 of Regulation 5 borrow in rupees on repatriation
or non repatriation basis, from a non resident Indian
or a person of Indian origin resident outside India
by way of investment in non convertible debentures (NCD)
subject to the following conditions:
issue
of NCDs is made by public offer, period of redemption
of NCDs is not less that three years;
the
rate of interest on such non convertible debentures
(NCDs) doesnot exceed the prime landing rate of the
State Bank of India as on the date on which the resolution
approving the issue is passed in the borrowing companies
General Body Meeting plus 300 basis points.
the
borrowing company does not carry on any agricultural
plantations / real estate business/ trading in Transferable
Development Rights/or does not and shall not act as
Nidhi or Chit Fund company
the
borrowing company shall file with the nearest office
of Reserve Bank of India not later than 30 days each
from the date of receipt of remittance for investment
in non convertible debentures (NCD’s) and issue of NCDS
giving full details as required by clause 5(1)
A&B and fully follow conditions laid their in.
No
person resident in India who has borrowed in rupees
from a person resident outside India shall use such
borrowed funds for any purpose except in his own business
other than:
- the business of chit fund or
- as Nidhi Company ,or
- agricultural or plantation activities or real estate
business or construction of farm houses or
- trading in Transferable Development Rights (TDRs)
and
Shall
use such borrowed funds for any investment, whether
by way of capital or otherwise in any company or partnership
firm or proprietorship concern or any entity, whether
incorporated or not or for re-lending.
Further
as per directions issued by Reserve Bank of India from
time to time in this regard, an authorised dealer in
India may grant loan to a non resident Indian:
a) against the security
of shares or other securities held in the name of the
borrower; or
b)
against the security of immovable property (other
than agricultural or plantation property or farm house)
held by him in accordance with the Foreign Exchange
(Acquisition and Transfer of Immovable Property in India)
Regulations; 2000
The
conditions laid in sub clause 7a to f of regulation
7B & regulation 7C have to be strictly followed.
Rupee
loan can be provided to a Non Resident or POI resident
outside India for acquisition of residential accommodation
in India by an authorized dealer or a housing finance
institution approved by National Housing Bank subject
to the conditions
(a)
the quantum of loan, margin money and the period
of repayment shall be at par with those applicable to
Finance provided to residents in India
(b)
the loan amount shall not be credited to NRE,
FCNR, NRNR account of the borrower
(c)
the loan should be fully secured by acquaitbale
mortgage of the property proposed to be acquired and
if necessary
also by a lien on his assets.
(d)
the installment of loan interest and other charges
shall be paid by borrower through normal banking channels
from abroad or out of funds in NRE, FCNR, NRNR, NRO,
NRSR account in India or out of rental income of the
property acquired through the loan or by any relative
of the borrower in India by crediting the borrowers
loan account through the bank account of such relative
(e)
the rate of interest shall conform to the directives
of RBI or National Housing Bank as the case may be.
The
regulation 8A further stipulates conditions and rules
for rupee
loans being extended to NRI/PIO employees of Indian
body Corporates. Continuance of rupee loan/overdraft
to residents who later become persons residents outside
India and continuance of rupee loan by a person resident
of India who later becomes non resident to a resident
of India is subject to regulations 9 and 10 respectively.
An
authorized dealer may permit a temporary overdraft for
value not exceeding Rs. 500 lacs in Rupee accounts maintained
with him by his overseas branch or correspondent or
headoffice outside India subject to RBI terms and conditions.
Acquisition
and Transfer of Immovable Property outside India
(GSR 390 (E) dated 3rd May, 2000)
In
terms of these Regulations, acquisition or transfer
of any immovable property outside India by a person
resident in India would require prior approval of Reserve
Bank except in the following cases
(i)
Property
held outside India by a foreign citizen resident in
India;
(ii)
Property
acquired by a person on or before 8.7.1947 and continued
to be held with the permission of the Reserve Bank;
(iii)
Property
acquired by way of gift or inheritance from persons
referred to in (ii) above;
(iv)
Property
purchased out of funds held in RFC account.
General
permission has also been granted to a person resident
in India for transfer of a property acquired by him
in terms of sub- paragraph (iii) and (iv) above to his
relative as specified in the Explanation to Regulation
no. 5, who is also a person resident in India.
RBI
may also be permit a company incorporated in India having
offices overseas
to acquire immovable property outside India for its
business or for residential purposes of its staff subject
to necessity terms/conditions.
Realisation,
Repatriation and Surrender of Foreign Exchange
(GSR 392 (E) dated 3rd May, 2000)
A
person resident in India to whom any foreign exchange
is due or has accrued is under duty to take reasonable
steps to realize and repatriate to India such foreign
exchange unless an exemption has been provided in the
Act and rules or regulations made thereunder or with
the general or special permission of Reserve Bank.
The
manner of repatriation of foreign exchange has been
specified in Regulation 4. Regulation no. 5 provides
that any foreign exchange due or accrued as remuneration
for services rendered or in settlement of any lawful
obligation or on income on assets held outside India
or as inheritance, settlement or gift should be sold
to an authorised person within a period of 7 days of
its receipt and in all other cases within 90 days of
its receipt.
Under
Regulation No.6, any person who has drawn exchange for
any purpose but has not utilized it for the same or
any other purpose permissible under the provisions of
the Act or rules or regulations made thereunder shall
surrender such foreign exchange or unutilized foreign
exchange to an authorised person within a period of
60 days from the date of acquisition. Where, however,
exchange was drawn for travel abroad, the unutilized
exchange in excess of the limit upto which foreign exchange
is permitted to be retained, should be surrendered to
an authorised person within 90 days from the date of
return of the traveler to India if unspent exchange
is in the form of foreign currency notes and within
180 days if it is in the form of travelers' cheque.
These
regulations are not applicable to foreign exchange in
the form of currency of Nepal and Bhutan
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