FEMA

CA. Manoj Shah, CA Viral Satra

Foreign Exchange Management (Overseas Investment) Directions, 2022 – Investment in Overseas Funds

A.P. (Dir Series) Circular No. 09 dated June 07, 2024

In view of the diverse regulatory framework governing investment funds across various jurisdictions and to provide clarity, the following amendments are carried out in the Foreign Exchange Management (Overseas Investment) Directions, 2022:

(a) Existing Paragraph 1(ix)(e) of FEM (OI) Directions, 2022 is replaced with the following:

“The investment (including sponsor contribution) in units or any other instrument (by whatever name called) issued by an investment fund overseas, duly regulated by the regulator for the financial sector in the host jurisdiction, shall be treated as OPI. Accordingly, in jurisdictions other than IFSCs, listed Indian companies and resident individuals may make such investment. Whereas in IFSCs, an unlisted Indian entity also may make such OPI in units or any other instrument (by whatever name called) issued by an investment fund or vehicle, in terms of schedule V of the OI Rules subject to limits, as applicable.

Explanation: ‘investment fund overseas, duly regulated’ for the purpose of this para shall also include funds whose activities are regulated by financial sector regulator of host country or jurisdiction through a fund manager.”

(b) Existing Paragraph 24(1) of FEM (OI) Directions, 2022 is replaced with the following:

“A person resident in India, being an Indian entity or a resident individual, may make investment (including sponsor contribution) in units or any other instrument (by whatever name called) issued by an investment fund or vehicle set up in an IFSC, as OPI. Accordingly, in addition to listed Indian companies and resident individuals, unlisted Indian entities also may make such investment in IFSC.”

International Trade Settlement in Indian Rupees (INR) – Opening of Current Account

RBI/2024-2025/43 FED Circular No. 11 dated June 11, 2024

The facility of opening an additional special current account by the AD Category I banks (maintaining Special Rupee Vostro Accounts in terms of the RBI circular dated July 11, 2022) for its constituents which was previously allowed for export transactions is now extended for import transactions as well.

Launch of PRAVAAH Portal

Press Release of RBI dated May 28, 2024

RBI launched PRAVAAH portal as part of its one of three initiatives which were announced in RBI’s bi-monthly Statement on Development and Regulatory Policies in April 2023, April 2024 and December 2023.

The PRAVAAH portal will make it convenient for any individual or entity to apply online for various regulatory approvals in a seamless manner. This portal will also enhance the efficiency of various processes related to granting of regulatory approvals and clearances by the Reserve Bank. PRAVAAH is Platform for Regulatory Application, Validation and Authorization Portal. It is a secure and centralized web-based portal for any individual or entity to seek authorization, license or regulatory approval on any reference made by it to Reserve Bank. At present 60 applications forms covering different regulatory and supervisory department of RBI have been made available on portal. This also includes a general purpose form for applicants to submit their requests which are not included in any other application form. More application forms would be made available as may be required. The portal can be accessed at: https://pravaah.rbi.org.in. With reference to Foreign Exchange Department following applications are available on PRAVAAH portal:

  1. Approval for Opening of Special Rupee Vostro Account.

  2. Regulatory Approvals pertaining to LO or BO or PO in India.

  3. Approval for Acquisition or Sale of Immovable Property,

  4. Regulatory Approvals under FEMA – 5(R) and FEMA – 10 (R).

  5. Approval for Bank Guarantees beyond limit available to AD Banks.

  6. ECB proposals under Approval route.

  7. Confirmation for appearing for personal hearing w.r.t. compounding proceedings along with preferred date, time or attending personnel information.

  8. Compounding application.

  9. Additional information or addendum to already filed compounding application.