Rupee Vostro Account rules require funded drawing arrangements, audit oversight, collateral and strict KYC/AML controls.
This Master Circular consolidates rules for opening and maintaining Rupee Vostro Accounts and foreign currency vostro accounts of non-resident Exchange Houses under Rupee Drawing Arrangements. It prescribes three procedures-DDA, Non DDA and Speed Remittance-setting out funding, verification, audit or deputation requirements, collateral cover based on operating vintage, prohibition of overdrafts and cash disbursements, operational limits on drawee branches, and mandatory KYC/AML/CFT compliance, concurrent audit inclusion and periodic reporting to the Reserve Bank.

Non Resident Rupee account rules permit limited repatriation and specify eligible credits, debits, and documentary requirements.
Regulatory framework for Non-Resident Ordinary Rupee (NRO) Accounts prescribes eligible account types, permissible credits (inward remittances, foreign currency brought into India, transfers from non-resident rupee accounts, India-source income, sale proceeds, gifts/loans from residents within LRS limits) and debits (local rupee payments, remittance of India-source income, remittances for bona fide purposes subject to an overall annual ceiling, transfers to NRE accounts subject to tax). Repatriation of balances and sale proceeds is allowed within overall limits on production of documentary evidence and a Chartered Accountant's certificate; certain nationalities face restrictions and prior RBI permission may be required.

KYC/AML/CFT compliance required for money transfer service scheme participants, imposing eligibility, reporting, due diligence and collateral obligations.
Master Circular consolidates MTSS rules: eligibility and authorisation requirements for Indian Agents, due-diligence and supervisory standards for Overseas Principals, collateral arrangements and remittance/payment limits, mandatory procedures for appointment, monitoring and audit of Sub-Agents, and comprehensive KYC/AML/CFT obligations including customer identification, risk-based due diligence, enhanced measures for PEPs, record-keeping, and timelines/formats for Cash Transaction Reports and Suspicious Transaction Reports to FIU-IND, together with prescribed reporting to the Reserve Bank.

Contract R&D service characterization: factors determining whether development centres bear insignificant risk and TNMM applicability.
Guidance identifies contract R&D service providers with insignificant risk by reference to whether the foreign principal performs economically significant functions (including conceptualization, design and strategic direction), provides funds and economically significant assets and remunerates the Indian centre, actually controls and supervises core activities, and whether the Indian centre lacks ownership rights and does not assume economically significant realized risks; it also presumes a rebuttable absence of risk control where the principal is in a widely perceived low or no tax jurisdiction and directs revenue officers to decide based on conduct and totality of facts while selecting the most appropriate transfer pricing method.

Profit Split Method guidance withdrawn after guidance implied method hierarchy, circular revoked with immediate effect
The issuing authority withdraws a prior circular on the application of the Profit Split Method because it appeared to create a hierarchy among transfer pricing methods and to suggest preference for the Profit Split Method in cases involving unique intangibles or multiple interrelated international transactions; the circular is withdrawn with immediate effect and stakeholders are to be informed.

Deputation appointment for Console Operator posts: applications required with service eligibility, qualifications, and mandatory clearances.
Seven Console Operator posts are to be filled on deputation/absorption with pay regulated under DoPT rules; eligibility requires holding analogous posts or prescribed service in specified pay scales plus essential qualifications in statistics, mathematics, engineering or computer science and experience in electronic data processing and programming. Deputation normally not to exceed three years and a maximum age for appointment by deputation/absorption is prescribed. Applications in triplicate must include the prescribed proforma, five years' ACRs, vigilance clearance and integrity certificate forwarded through proper channel within the stipulated period.

Electoral Trust name availability permitted for section 25 companies, subject to formation compliance and affidavit requirements.
Use of the phrase Electoral Trust is permitted in proposed company names for companies to be formed under section 25 of the Companies Act, 1956 under the Electoral Trusts Scheme, 2013. Such companies must be newly formed and comply with section 293-A, and the name application may be accompanied by an affidavit that the name is sought solely for registration under the CBDT-notified scheme.

Constituent-material classification directs filter elements to be classified by material, not under the filter machinery heading.
The circular directs that elements of filters must be classified according to their constituent material rather than automatically as parts of filtering machinery; paper-based elements are classifiable in paper headings, textile technical elements in textile headings, glass or ceramic elements in their respective material headings, while the filters themselves remain within the filter machinery heading.

Import restrictions on gold: cash margin and documents against payment required, with limited loan based imports for eligible jewellery exporters.
Nominated banks, agencies and permitted trading houses may import gold only to meet genuine needs of gold jewellery exporters; Letters of Credit for such imports must have a 100 per cent cash margin and imports must be on Documents against Payment (DP) basis. Imports on DA or enabled by suppliers'/buyers' credit or on unfixed price terms must comply with the cash margin and DP discipline. Loan basis imports remain permitted solely for on lending to exporters of jewellery. AD Category I banks must ensure compliance and these directions are effective immediately.

FII Hedging Mandate: Banks must obtain sub account holder mandate and verify forward cover against market value.
Authorised Dealer Category I banks must verify periodically that forward cover outstanding for FIIs is backed by corresponding underlying exposures. If an FII hedges a sub account holder's exposure, the bank must obtain and verify a clear written mandate from the sub account holder and confirm the contract's eligibility by reference to the market value of securities in that sub account.

External commercial borrowings: eligible non-residents may provide credit enhancement for INR bonds; maturity reduced to three years.
Eligible non-resident entities may provide credit enhancement for INR-denominated bonds and debentures issued under the automatic ECB route by all borrowers eligible to raise ECBs automatically. Minimum average maturity for such instruments is reduced to three years, with prepayment and call/put options prohibited up to that period. If a guarantor meets the liability and foreign-currency repayment to the non-resident is permissible, prevailing all-in-cost ceilings for the relevant Trade Credit/ECB maturity will apply to the novated loan.

External Commercial Borrowings end-use expansion permits import of services and license fees subject to documentation and bank due diligence
Policy now treats import of services, technical know how and license fees as part of import of capital goods for manufacturing and infrastructure companies, permitted under the automatic or approval route provided there is a signed agreement, original invoice certified by the borrower, declarations that the expenditure will be capitalised and forms part of project cost, and that the AD Category I bank ensures the bonafides; other ECB conditions remain unchanged.

Project export filing deadline extended for post award approval, easing time to submit DPX1, PEX 1 and TCS 1.
Exporters undertaking Project Exports and service contracts must submit forms DPX1, PEX 1 and TCS 1 to the Approving Authority (Authorised Dealer/Exim Bank/Working Group) within thirty days of entering into the contract for post award approval; all other provisions of the PEM remain unchanged and the Directions are issued under the Foreign Exchange Management Act, 1999.

ECB in Renminbi scheme discontinued; authorized banks must notify constituents with immediate effect under foreign exchange authority.
The scheme permitting External Commercial Borrowings in Renminbi for infrastructure-sector Indian companies under an approval route and subject to an annual cap is discontinued from the date of the circular; AD Category I banks must notify their constituents and customers. The directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and are without prejudice to other legal permissions.

External commercial borrowings for civil aviation: working capital facility period extended and policy conditions unchanged; banks must notify customers.
The scheme permitting External Commercial Borrowings for working capital in the civil aviation sector is extended so eligible borrowers may continue to avail ECBs for working capital until December 31, 2013; all other ECB policy aspects remain unchanged. Authorised Dealer Category I banks must notify their constituents and customers of the circular, and the directions are issued under statutory powers without prejudice to permissions or approvals under other laws.

Buyback of FCCBs under approval route extended temporarily; banks must notify constituents and ensure compliance with FEMA directions.
Continuation of the buyback and prepayment scheme for Foreign Currency Convertible Bonds (FCCBs) under the approval route is authorized temporarily, with the existing approval-route mechanism extended and a firm discontinuation stipulated after the extension period; Authorized Dealer Category I banks must notify their constituents and customers. The directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and do not affect other statutory permissions or approvals.

ECB window extension permits refinancing of outstanding 3G spectrum rupee loans under the approval route, subject to existing conditions.
The circular affirms that initial payments for 3G spectrum may be met from Rupee resources and refinanced with long term External Commercial Borrowings under the approval route within the stipulated period; it further decides that the ECB window for refinancing outstanding 3G spectrum Rupee loans on telecom operators' books will remain open until a specified cutoff, with all other ECB policy aspects unchanged and AD Category I banks required to inform constituents.

Notification requirement for exemption under Section 10(46): standardized application and filing process with prescribed format and enclosures.
Section 10(46) exemption covers income of specified public-regulatory or administrative entities not engaged in commercial activity and requires Central Government notification in the Official Gazette. Applicants must file a standardized application with the jurisdictional Commissioner/Director of Income-tax and send a copy with acknowledgement to the Under Secretary (ITA 1), CBDT, attaching prescribed evidence of establishment, objects, activities, revenue streams, accounts and any prior registrations or adverse orders.

Risk Management System in exports enables clearance of low-risk consignments by self-assessment, guiding verification and audits.
The Risk Management System (RMS) for exports will process Shipping Bills filed through ICES to enable clearance of low risk consignments on self assessment, while selecting higher risk consignments for verification, physical examination, drawback scrutiny or Post Clearance Audit. RMS outputs shall direct Appraising, Examining and Audit officers; deviations from RMS instructions require prior Commissioner level authorization and recording of reasons. Implementation is phased, will modify existing assessment norms where RMS output is received, and necessitates staff reorganisation and creation of a PCA function.

External Commercial Borrowings for affordable housing: revised eligibility and operational conditions permit ECB under approval route with capped allocation.
Revision permits ECB for low cost affordable housing under the approval route with modified eligibility and operational conditions: developers must have three years' experience and a good track record; the paid-up capital requirement for HFCs is withdrawn while a Net Owned Funds threshold for HFCs of Rs. 300 crore for the past three years remains. Aggregate annual ECB allocation under the scheme is capped and ECB must be swapped into rupees on a fully hedged basis. NHB shall fix reasonable on lending spreads and certify that ECB proceeds finance prospective owners under prescribed unit cost, loan amount, and carpet area limits.