FEMA

CA. Manoj Shah, CA Atal Bhanja

Summary Information on few Compounding Orders:

Sr. No.

Party Name

Nature of Contravention

Date of Order

Compounding Fees (Rs.)

1.

FDS Infotech Private Limited

Contraventions under Section 10(6) of FEMA 1999 regarding use of foreign exchange other than the purpose for which it was acquired, Regulation 6(6)(a)(ii) of FEMA 120 regarding non obtaining of valuation report for overseas investment, Regulation 16(i) and 16(iv) of FEMA 120 regarding not obtaining prior approval for disinvestment resulting in write off and making disinvestment despite there being outstanding dues from overseas entity.

06-10-2023

1,54,590

2.

Radon Agro Private Limited

Contraventions under Regulation 13.1(4)(c) of FEMA Notification No. 20(R) relating to delay in reporting / non reporting in Form FCTRS for transfer of capital instruments prescribed in Regulation 10(9) on deferred consideration basis for receipt of every tranche.

19-10-2023

3,50,000

3.

Auxel FTG India Private Limited

Regulation 4.B(i) read with para 12 of Schedule I of FEMA Notification 3(R) relating to drawdown without obtaining LRN or without completing reporting.

27-10-2023

50,000

  1. RBI NOTIFICATION NO. RBI/2023-2024/87 IDMD.CDD.No.2128/14.04.050/2023-24 Dated December 11, 2023

    2. Sovereign Gold Bond (SGB) Scheme 2023-24

    • Government of India, vide its Notification No F.No.4(6)-B (W&M)/2023 dated December 08, 2023, has announced Series III and IV of Sovereign Gold Bond Scheme 2023-24. Under the Scheme, there will be a distinct series (Series III and IV) which will be indicated on the Bond issued to the investor. The terms and conditions of the issuance of the Bonds shall be as per the above notification.

    • Date of Issue

      • The bonds shall be issued as per the details given below:

      S. No.

      Tranche

      Date of Subscription

      Date of Issuance

      1.

      2023-24 Series III

      December 18 - December 22, 2023

      December 28, 2023, Thursday

      2.

      2023-24 Series IV

      February 12 - February 16, 2024

      February 21, 2024, Wednesday

    • Period of subscription

      • The Subscription of the Gold Bonds under the Scheme shall be open (Monday to Friday) on the dates specified above, provided that the Central Government may, with prior notice, close the Scheme at any time before the period specified above.

    • Application

      • Subscription for the Bonds may be made in the prescribed application form Form A or in any other form as near as thereto, stating clearly the units (in grams) of gold and the full name and address of the applicant. Every application must be accompanied by valid ‘PAN details’ issued by the Income Tax Department to the investor(s). Designated Scheduled Commercial Banks, Designated Post Offices, Stock Holding Corporation of India Ltd., Clearing Corporation of India Ltd. and the recognized stock exchanges, viz. National Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. are the Receiving Offices which are authorized to receive applications for the Bonds either directly or through agents and render all services to the customers. The Receiving Office shall issue an acknowledgment receipt in Form B to the applicant.

    • All online applications should be accompanied by email Id of the investor/s which should be uploaded on the Ekuber portal of Reserve Bank of India along with the subscription details.

    • In addition to receipt of application, the Receiving Offices are also entrusted with the responsibility of providing service to the investors of the SGB and are required to be guided by the instructions issued by the Reserve Bank of India in this regard from time to time. With a view to facilitate availability of all current operative instructions regarding servicing of these bonds at one place, Reserve Bank of India has issued Consolidated Procedural Guidelines vide circular IDMD.CDD.1100/14.04.050/2021-22 dated October 22, 2021 (updated as on October 04, 2022) and the same is available on its website. The Receiving Offices shall be guided by these instructions while dealing with all the procedural aspects and providing service to the investors.

    • All other terms and conditions specified in the notification of the Government of India, Ministry of Finance (Department of Economic Affairs) F.No.4(2)-W&M/2018 dated March 27, 2018 shall apply to the Bonds.

  2. RBI NOTIFICATION NO. RBI/2023-2024/88 CO.DPSS.POLC.No.S-882/02.14.003/2023-24 Dated December 12, 2023

    3. Processing of e-mandates for recurring transactions

    • A reference is invited to our circular CO.DPSS.POLC.No.S-518/02.14.003/2022-23 dated June 16, 2022 in terms of which relaxation in Additional Factor of Authentication (AFA) was permitted while processing e-mandates / standing instructions on cards, Prepaid Payment Instruments and Unified Payments Interface, for subsequent recurring transactions with values up to ₹15,000/-, subject to conditions listed therein.

    • In this regard, as announced in the Statement on Developmental and Regulatory Policies dated December 08, 2023, it has been decided to increase the limit from ₹15,000/- to ₹1,00,000/- per transaction for the following categories: (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.

    • This circular is issued under Section 10 (2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and shall come into effect immediately.

  3. RBI NOTIFICATION NO. RBI/2023-24/90 DOR.STR.REC.58/21.04.048/2023-24 Dated December 19, 2023

    4. Investments in Alternative Investment Funds (AIFs)

    • Regulated entities (REs) make investments in units of AIFs as part of their regular investment operations. However, certain transactions of REs involving AIFs that raise regulatory concerns have come to our notice. These transactions entail substitution of direct loan exposure of REs to borrowers, with indirect exposure through investments in units of AIFs.

    • In order to address concerns relating to possible evergreening through this route, it is advised as under:

      1. REs shall not make investments in any scheme of AIFs which has downstream investments either directly or indirectly in a debtor company of the RE.

        Explanation: The debtor company of the RE, for this purpose, shall mean any company to which the RE currently has or previously had a loan or investment exposure anytime during the preceding 12 months.

      2. If an AIF scheme, in which RE is already an investor, makes a downstream investment in any such debtor company, then the RE shall liquidate its investment in the scheme within 30 days from the date of such downstream investment by the AIF. If REs have already invested into such schemes having downstream investment in their debtor companies as on date, the 30-day period for liquidation shall be counted from date of issuance of this circular. REs shall forthwith arrange to advise the AIFs suitably in the matter.

      3. In case REs are not able to liquidate their investments within the above-prescribed time limit, they shall make 100 percent provision on such investments.

    • In addition, investment by REs in the subordinated units of any AIF scheme with a ‘priority distribution model’ shall be subject to full deduction from RE’s capital funds.

      • Explanation: ‘Priority distribution model’ shall have the same meaning as specified in the SEBI circular SEBI/HO/AFD-1/PoD/P/CIR/2022/157 dated November 23, 2022.

    • These instructions have been issued in exercise of the powers conferred by the Sections 21 and 35A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949; Chapter IIIB of the Reserve Bank of India Act, 1934 and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987.

    • The above instructions shall become effective immediately.