Hedging facilities for INR denominated ECBs permitted with authorised dealer banks to manage currency risk.
Non-resident holders of INR denominated ECBs may obtain hedging facilities with Authorised Dealer Category I banks using forwards, options and swaps. Customers must furnish pre deal documentation evidencing the underlying ECB, undertake that the exposure is not hedged elsewhere and that cancelled underlying exposures will trigger hedge cancellation. Hedge amount and tenor must not exceed the underlying transaction; settlement occurs via Nostro/Vostro accounts and funds are released only after sighting credits. Contracts cannot be rebooked after cancellation but may be rolled over before maturity; gains on cancellation may be passed to customers subject to a non rebooking declaration.

Line of Credit enables export financing with Indian content, specified disbursement timelines and FEMA compliance.
Exim Bank's Line of Credit to the Democratic Republic of Congo finances the Ketende Hydro electric Project with eligible exports from India; at least 75% of contract value must be supplied from India while up to 25% of non consultancy goods may be sourced abroad. The Credit Agreement is effective from October 20, 2011, with LC/disbursement cut offs of 48 months from project completion for project exports and 72 months from execution for supply contracts. Shipments must be declared on GR/SDF forms; no agency commission under the LOC, though exporters may pay from own resources or EEFC balances in compliance with remittance rules. Directions issued under FEMA.

Line of credit enabling export finance with specified Indian sourcing and documentation requirements under foreign exchange directions.
Exim Bank's Line of Credit finances eligible Indian exports for a Maldives housing project, requiring at least 75 per cent of contract value to be supplied from India and permitting up to 25 per cent non consultancy procurement abroad; shipments must be declared on GR/SDF forms, no agency commission is payable under the LOC (exporters may use own funds or EEFC balances for commission subject to AD Category I compliance), and timelines for L/C opening and disbursement vary by contract type under RBI directions issued under the Foreign Exchange Management Act.

KYC and AML compliance updated: passport copies accepted as ID and address proof for foreign tourists under PMLA obligations.
KYC, AML and CFT obligations for Authorised Persons in money changing are amended to allow acceptance of a foreign tourist's passport copy as both identity and address proof, and retention of a visa copy stamped by Indian immigration; other existing KYC instructions continue to apply and non compliance attracts prescribed penalties under the foreign exchange regulatory framework.

External Commercial Borrowings: revised borrowing cap for MFIs and NGOs under automatic route with eligibility and safeguards.
ECB policy now permits MFIs and NGOs engaged in micro finance to raise ECB under the Automatic Route subject to eligibility (societies, trusts, cooperatives, NBFC-MFIs, Section 25 companies), lender safeguards and due diligence certification by the designated AD, permitted end-uses limited to lending for micro-credit and capacity building, compliance with existing ECB parameters, and AD responsibility to certify borrower status and ensure full forex hedging at drawdown.

Forward contract rebooking restriction now bars rebooking of cancelled forwards; deliverable hedges and reduced position limits follow.
The circular withdraws the facility permitting cancellation and rebooking of forwards by residents; forwards once cancelled cannot be rebooked. Past performance hedging limits are reduced and such contracts must be fully deliverable, with no passing of exchange gains on cancellations to customers. Cash/tom/spot client transactions must be for actual remittance/delivery and non cancellable. FIIs may roll over forwards but cancelled contracts cannot be rebooked. Net Overnight Open Position Limits for Authorised Dealers are reduced and intra day limits must not exceed the approved NOOPL.

Compounding authority for FEMA contraventions delegated to regional RBI offices to streamline reporting and documentation.
Delegation of compounding authority under the Foreign Exchange Management Act, 1999 permits specified Regional Offices of the Reserve Bank to compound contraventions relating to delayed reporting of inward remittances, delayed filing of Form FC GPR after share allotment, and delayed issue of shares beyond the prescribed period; some Regional Offices may compound subject to a specified monetary limit while others have no limit. Applications within the delegated jurisdictions are to be submitted to the relevant Regional Office with the prescribed fee and detailed annexed schedules and supporting documents; other applications remain with the central Compounding Authority in Mumbai.

Foreign investment in pharmaceuticals: greenfield allowed under automatic route; brownfield requires government approval under revised FDI policy.
FDI policy for the pharmaceuticals sector is amended so that FDI up to 100 per cent is allowed under the automatic route for greenfield investments, while brownfield investments are permitted under the Government approval route; AD Category I banks are to notify customers, and amendments to FEMA regulations will be separately notified, the directions being issued under the Foreign Exchange Management Act, 1999.

Conversion of import payables into FDI under Government route requires complete application within prescribed 180-day period.
Conversions of import payables for capital goods into FDI under the Government route require applications complete in all respects to be filed within 180 days from shipment; applications for capitalization must be complete and filed within 180 days from the company's incorporation. Other instructions of the earlier circular remain unchanged and amendments to FEMA regulations will be notified separately.

Revision of special currency basket value alters exchange valuation applicable to authorised dealer banks under FEMA directions.
The Reserve Bank notified Authorised Dealer Category I banks that, after a recalculation on November 23, 2011, the Rupee value of the special currency basket under the Deferred Payment Protocols has been revised and fixed with effect from November 28, 2011, and directed banks to inform their constituents; the circular is issued under FEMA and without prejudice to other statutory permissions.

Rupee value adjustment of special currency basket announced, requiring authorised dealer banks to apply the revised valuation in settlements.
The circular revises the Rupee valuation of the special currency basket used for settlement under the Deferred Payment Protocols with the erstwhile USSR, notifies Authorised Dealer Category I banks that a prior value has been superseded by a further revision effective from the stated date, and directs AD Category I banks to inform their constituents. The Directions are issued under the Reserve Bank's statutory powers and are without prejudice to other permissions or approvals required under law.

Repatriation requirement for ECB proceeds: rupee intended funds must be credited to domestic rupee accounts and not parked abroad.
ECB proceeds intended for rupee expenditure must be repatriated immediately and credited to borrowers' Rupee accounts with Authorised Dealer Category I banks; only proceeds for foreign currency expenditure may be retained abroad. Retained funds may be parked in highly liquid, rated instruments; repatriated rupee funds are prohibited from investment in capital markets, real estate or inter corporate lending.

All-in-cost ceiling for external commercial borrowings revised; medium term pricing cap raised and effective immediately until review.
Revision of the all-in-cost ceiling for External Commercial Borrowings adjusts the ceiling measured over the six month benchmark for borrowings with average maturities of three to five years while leaving longer term ceilings unchanged; the revision takes effect immediately as a temporary measure until March 31, 2012, subject to review, and all other ECB policy provisions remain unchanged.

Foreign Currency-INR swap cap removed, allowing AD Category I banks to intermediate OTC swaps for customer hedging without the prior net supply limit.
AD Category I banks may undertake OTC Foreign Currency-INR swap transactions as intermediaries by matching corporate counterparties' requirements to facilitate hedging, and the earlier regulatory cap on net supply of foreign exchange in the market for such swaps has been removed; banks should notify their constituents and remain subject to any other statutory permissions.

Foreign investment in infrastructure debt funds permitted on repatriation basis with eligibility, maturity, lock in and caps.
Permits repatriation basis foreign investment into IDFs set up as NBFCs or SEBI registered mutual funds, by specified SEBI registered sovereign, multilateral, pension, insurance, endowment funds, FIIs, NRIs and SEBI registered HNIs; eligible instruments include rupee units and rupee or, for qualifying investors, foreign currency denominated bonds. All investments require an original five year maturity and a three year lock in (with intra non resident trading allowed). Foreign currency bonds must meet ECB conditions, hedging is permitted under FEMA, and quantitative limits apply to non NRI investments while NRIs face no cap for rupee securities.

GR declaration procedure for mid sea trans shipment: exporters may use vessel master's GR form in lieu of Customs certification.
The Reserve Bank prescribes a tailored GR declaration procedure for mid sea trans shipment by Indian deep sea fishing vessels: exporters may submit a GR form signed by the Master in lieu of Customs certification recording composition, quantity, export value and date of transfer; Bill of Lading details may substitute for Shipping Bill particulars; GR forms must be supported by an international cargo surveyor certificate, indicate the Ministry of Agriculture Letter of Permit number, be serialised by Customs at a registered or approved port, and the period for realisation and repatriation runs from the master certified transfer date or invoice date, whichever is earlier.

Set-off of export receivables against import payables: AD Category I banks may allow set offs under prescribed documentary and reporting safeguards.
AD Category - I banks are delegated authority to allow set-off of export receivables against import payables only where imports comply with the Foreign Trade Policy, invoices/bills of lading/airway bills and exchange control copies of Bills of Entry for home consumption are submitted, import payments remain outstanding, consent for set-off exists from the same overseas buyer/supplier, transactions are reported in 'R' Returns, GR forms are released only after full adjustment/receipt of export proceeds, and ACU country transactions are excluded.

Prohibition on overseas forex remittances: unauthorized internet forex trading payments are not permitted and banks must block facilitation.
Remittance or deposit of funds by residents for overseas foreign exchange trading through internet portals is not permitted under the Foreign Exchange Management Act. Authorised Dealer Category-I banks must exercise heightened vigilance over margin payments and accounts used to collect such monies, publicise the restriction, and ensure compliance with KYC and AML obligations; residents remitting funds for such trading may be proceeded against for contravention of foreign exchange law.

Foreign Direct Investment: issue or transfer of participating interest in oil fields to non-residents treated as FDI and must be reported.
Issue or transfer of participating interest/rights in oil fields to non-residents is to be treated as Foreign Direct Investment under the FEMA Regulations; transfers must be reported as 'other' under Para 7 of Form FC-TRS and issuances as 'other' under Para 4 of Form FC-GPR, with implementing amendments to the Regulations to be notified separately.

All-in-cost ceiling for trade credit increased, effective immediately, as a temporary measure subject to subsequent review.
Revision of the all-in-cost ceiling for trade credits into India increases permissible margins over the relevant benchmark for defined maturities; the ceilings include arranger, upfront and management fees, handling/processing charges, out-of-pocket expenses and legal costs. The change is effective immediately, communicated to Category I Authorised Dealer banks for onward notice to constituents, is temporary and subject to review, and issued under powers conferred by the foreign exchange statute while other trade credit policy aspects remain unchanged.