Western India Regional Council of
The Institute of Chartered Accountants of India

Law Update Details

April 2019 CA. Manoj Shah, CA. Sudha G. Bhushan & CA. Mitesh Majithia

Branch Office (BO) / Liaison Office (LO) / Project Office (PO)

A.P. (DIR Series) Circular No. 20 dated February 27, 2019 and Notification No. FEMA 22(R) (1)/2018-RB dated August 31, 2018

In terms of extant regulations, applications received from a Non-Government Organisation, Non-Profit Organisation, Body/Agency/Department of a foreign Government for opening of a BO or a LO or a PO or any other place of business in India are forwarded to the RBI for prior approval to be considered in consultation with the Government of India.

This has been reviewed and as notified through Notification No FEMA Notification No. 22(R)(1) dated August 31, 2018, it is advised that if such an entity is engaged, partly or wholly, in any of the activities covered under Foreign Contribution (Regulation) Act, 2010 (FCRA), it shall obtain a certificate of registration under the said Act and shall not seek permission under FEMA Notification No. 22(R). Accordingly, the Form FNC has also been suitably modified.

Voluntary Retention Route (VRR) for Foreign Portfolio Investors (FPIs) investment in debt

A.P. (DIR Series) Circular No. 21 dated March 1, 2019 and A.P. (DIR Series) Circular No. 22 dated March 1, 2019

RBI had released the discussion paper on VRR for investments by FPIs on October 5, 2018 and finalised the same after taking into consideration the comments and views received. Suitable amendments have been made to various regulations under the Foreign Exchange Management Act, 1999 to enable FPIs participating in the VRR scheme to hedge their interest rate and exchange rate risks related to their investments under the scheme and to undertake repo/reverse repo transactions to meet their liquidity requirements.

The operational guidelines, terms and conditions for hedging the exposure to exchange rate risk on account of investments made under this route are provided in the annexure to A.P. (DIR Series) Circular No. 22.

For details please refer aforesaid circulars available on RBI website at:



Trade Credit Policy framework revised

A.P. (DIR Series) Circular No. 23 dated March 13, 2019

The RBI rationalised principal regulation governing the External Commercial Borrowings (ECB) and Trade Credits on December 17, 2018 through the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 vide Notification No. FEMA.3R/2018-RB dated December 17, 2018. The new ECB framework based on the above regulation was issued vide A.P. (DIR Series) Circular No. 17 dated January 16, 2019. The Trade Credit framework based on the aforementioned notified regulation is being issued now through this circular.

For details please refer aforesaid circular available on RBI website at:


Export and Import of Indian Currency

A.P. (DIR Series) Circular No. 24 dated March 20, 2019

An individual travelling from India to Nepal or Bhutan may carry Reserve Bank of India currency notes in Mahatma Gandhi (New) Series of denominations ` 200/- and/or ` 500/- subject to a total limit of ` 25,000/-. Instructions regarding currency notes of Government of India and Reserve Bank of India for any amount in denominations up to ` 100/- shall continue as hitherto.

Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 (Notification No. FEMA 6(R) /RB-2015 dated December 29, 2015) has been amended through issue of Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2019 [Notification 6(R)/(1)/2019-RB dated February 26, 2019].


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