Special currency basket value revised - rupee valuation updated, affecting deferred payment protocols and AD bank obligations.
The rupee value of the special currency basket for Deferred Payment Protocols has been revised from Rs.58.6989 (effective June 24, 2004) to Rs.60.5127 effective November 27, 2004; Authorised Dealer banks are directed to inform their constituents. The circular is issued under the Foreign Exchange Management Act, 1999 and is without prejudice to other statutory permissions or approvals.

Line of Credit to Vietnam: export financing available with specified shipment declarations, limited commission for after sales service, and set timelines.
The circular announces Exim Bank's Line of Credit of USD 27 million to the Government of Vietnam to finance specified categories of exports from India, sets the final dates for opening letters of credit and for disbursement, requires shipments to be declared on GR/SDF forms, and prescribes agency commission rules-generally no commission but permitting up to 5% for goods requiring after sales service with prior approval and specific reimbursement mechanics. Authorised dealer banks must notify exporter constituents and advise them to seek full LOC details from Exim Bank; the direction is issued under foreign exchange statutory provisions.

Settlement in freely convertible currency permitted for Indo Myanmar trade, alongside ACU routing, altering trade payment options.
Trade transactions with Myanmar may be settled in any freely convertible currency in addition to the ACU mechanism. Authorised Dealer banks are to notify constituents; amendments to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 will follow. The direction is issued under the Foreign Exchange Management Act and is without prejudice to other statutory permissions or approvals.

Lines of Credit for export financing permit specified exports with declaration, limited commission approval, and statutory foreign exchange direction.
Exim Bank extended two Lines of Credit to foreign banks to finance specified exports from India, each with stated effectiveness and deadlines for opening letters of credit and final disbursement. Shipments under the LOCs must be declared on GR/SDF Forms. Agency commission is generally not payable, though prior approval may be granted for limited commission in cases of after sales service under the Brazil LOC, payable by deduction abroad; exporters must use their own funds where commission is not authorised. Authorised Dealers must notify exporters and direct them to Exim Bank for details; the circular is issued under foreign exchange statutory directions.

Booking of forward contracts on past performance allowed with enhanced limits subject to CA certification and monthly reporting.
Authorised Dealer banks may permit importers/exporters to book forward contracts on past performance up to the eligible turnover limit and may enhance outstanding limits to full eligibility where satisfied of genuine need. Enhanced permissions require a Chartered Accountant certificate of compliance and a certified three year turnover statement. Exporters must keep overdue bills within the prescribed small proportion of turnover and contracts beyond a specified portion of the limit must be delivered. AD banks must submit monthly reports on limits granted and utilised to the central office by the tenth of the following month.

Extension of realisation period for export oriented units permits longer time for repatriation of export proceeds.
100 per cent Export Oriented Units (EOUs) and units under the Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) schemes are permitted to realise and repatriate the full value of export proceeds within an extended period of twelve months from the date of export; the relaxation applies to exports made on or after September 1, 2004, and existing guidelines on crediting foreign exchange earnings to EEFC accounts remain unchanged.

Guarantee issuance for import trade credits permitted to authorised banks under prudential guidelines with mandatory quarterly reporting.
Authorised Dealer banks are permitted to issue Guarantees, Letters of Undertaking and Letters of Comfort in favour of overseas suppliers, banks or financial institutions for trade credits for imports; tenors must be co-terminus with the credit term and issuance is subject to Reserve Bank prudential guidelines, with consolidated quarterly reporting of such instruments to the Foreign Exchange Department, ECB Division of the Reserve Bank.

Line of Credit for export finance to PTA member markets with specified documentation and limited agency commission rules.
A Line of Credit from Exim Bank to PTA Bank finances eligible Indian exports to sixteen PTA member countries, covering capital goods, machinery, industrial manufactures and consumer durables. The circular sets deadlines for opening letters of credit and final disbursement, requires shipment declarations on GR/SDF forms, and prescribes commission rules: ordinarily no agency commission; exceptional approval may allow commission up to five percent for after sales service, payable in the borrower country by deduction from invoice, with reimbursement to negotiating banks equal to ninety percent of invoice value minus commission; prior approval is required.

Line of credit to finance eligible exports to Ghana; banks must ensure shipment declarations and note commission restriction.
A Line of Credit from Exim Bank to the Government of Ghana finances export of capital goods, machinery, industrial manufactures, consumer durables and other items eligible under India's Foreign Trade Policy. The agreement is effective as specified in the circular, with prescribed last dates for opening letters of credit and disbursement. Shipments must be declared on GR/SDF forms. No agency commission is payable under the LOC; exporters must use their own funds if commission is required. Authorised Dealer banks must notify exporters and advise them to obtain full details from Exim Bank. The direction is issued under FEMA.

Line of credit to foreign government permits specified project and eligible exports under export policy, subject to FEMA directions.
Exim Bank made a Line of Credit available to the Government of Suriname with a designated portion for an electrical transmission line by specified Indian firms and the balance for other exports under the Foreign Trade Policy; letters of credit and disbursement deadlines apply, shipments must be declared on GR/SDF forms, no agency commission is payable from the credit, authorised dealers must notify exporters and obtain full LOC details from Exim Bank, and the direction is issued under FEMA without prejudice to other statutory permissions.

Ministry approval required for transponder hiring remittances; banks may process payments after receiving ministry clearance.
Remittance of hiring charges for transponders by television channels and internet service providers requires prior approval of the respective government ministries; Authorised Dealer banks may effect such remittances on receipt of the required ministry approval without reference to the central bank, and Schedule II is amended to record these approvals as the precondition.

Foreign investment regulations amended under FEMA restricting transfer or issuance of securities to non-residents; banks must inform clients.
The Reserve Bank notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Fourth Amendment) Regulations, 2004 (FEMA No.122/2004-RB dated 30.8.2004), amending rules governing transfer or issuance of securities to non-residents. The circular also references FEMA.105/2000-RB (notified 21.10.2003) as included in the Master Circular on Risk Management and directs Authorised Dealer Banks to inform their constituents; issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, without prejudice to other statutory permissions.

Foreign exchange management: department nomenclature change prompts amendments to current account rules and regulatory directions.
The Reserve Bank renamed its Exchange Control Department to the Foreign Exchange Department and the Government notified this change in the Official Gazette; amendments to the Foreign Exchange Management (Current Account Transactions) Rules, 2000 were issued and notified. Authorised Dealers must inform their constituents and customers. The circular is issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act and is without prejudice to permissions required under other laws.

Bank guarantees for foreign airlines may be issued by authorised dealer banks without prior RBI approval, subject to reporting.
Authorised dealer banks are permitted to issue bank guarantees in favour of foreign airlines or IATA on behalf of IATA approved travel agents without prior Reserve Bank approval; if a guarantee is invoked the AD bank must send a detailed report to the Chief General Manager, Foreign Exchange Department, Reserve Bank of India, explaining the circumstances leading to invocation, and amendments to the Foreign Exchange Management (Guarantees) Regulations, 2000 will be issued to reflect this delegation.

Foreign direct investment transfers now under general permission, subject to sectoral caps, pricing rules and documentation compliance.
Transfers of shares/convertible debentures between residents and non-residents are placed under general permission subject to conditions: transfers from residents to non-residents in automatic-route sectors (excluding financial services) require no prior Government approval if takeover rules are not attracted, post-transfer holdings comply with sectoral caps, and pricing follows SEBI/RBI guidelines. RBI grants general permission for private-sale transfers in both directions (except resident-to-non-resident in financial services) subject to Annex terms on pricing, documentation (FC-TRS, CA valuation, consent letters), payment/remittance procedures and reporting by ADs.

Conversion of ECB into equity allowed under general permission, subject to automatic route, sectoral cap, pricing and reporting compliance.
Conversion of ECBs and lump sum fees/royalties into equity is allowed under general permission provided the activity qualifies under the automatic route or has prior government approval, post conversion foreign equity remains within sectoral caps, share pricing complies with prescribed guidelines, and other statutory requirements are met. The facility applies to ECBs regardless of repayment status (excluding import payables). Reporting requires FC GPR to the Reserve Bank regional office and ECB 2 to the Bank's statistical department with specified markings and timelines for full and partial conversions.

Acquisition of foreign securities by resident employees allowed without prior central approval if issuer complies with ESOP guidelines.
Authorised Dealer banks may remit funds for resident employees to acquire foreign securities under ADR/GDR-linked ESOP schemes up to the existing per-employee limit in a block of five calendar years without prior Reserve Bank approval, after satisfying themselves that the issuing company has followed the relevant SEBI or Government guidelines; listed knowledge-based sector companies' ESOPs will be governed by SEBI guidelines, while unlisted companies remain under Government ADR/GDR guidelines.

Employee stock options: listed Indian companies may allot shares to citizens of Bangladesh and Sri Lanka under FEMA.
Listed Indian companies may allot shares under Employees Stock Option Scheme to employees who are citizens of Bangladesh and Sri Lanka, overriding the prior exclusion under the Foreign Direct Investment framework. The instruction is issued under FEMA and remains subject to any other statutory permissions or approvals; Authorised Dealer Banks are to inform constituents and customers accordingly.

CIF imports by government and public undertakings via ocean transport require Chartering Wing approval; banks to notify customers.
Prior approval for c.i.f. payments by Government Departments and Public Sector Undertakings is required from the Chartering Wing of the Ministry of Shipping only for imports effected through ocean transport; no such approval is needed where the mode of transport is other than ocean. This amendment stems from a change to Schedule II of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999. Authorised Dealer Banks are to notify their customers accordingly.

Foreign direct investment eligibility expanded to include Sri Lankan nationals, allowing share and convertible debenture purchases under specified conditions.
Persons resident outside India, including Sri Lankan citizens but excluding citizens/entities of Bangladesh and Pakistan, are now eligible to purchase shares or convertible debentures of Indian companies under the Foreign Direct Investment scheme subject to the terms and conditions in Schedule I of the Transfer or Issue of Security by a Person Resident Outside India Regulations; a formal amendment to the Regulations will follow and Authorised Dealer banks must notify their constituents.