Delegation of powers to authorised banks allows local processing of foreign branch and liaison office compliance and closures.
Designated Authorised Dealer Category-I banks are empowered to receive and scrutinise Form FNC applications and Annual Activity Certificates for foreign Branch and Liaison Offices (excluding banking and insurance entities), perform due diligence and KYC, extend LO validity where conditions are met (excluding specified sectors), and manage closure formalities and remittance of winding-up proceeds upon obtaining prescribed documents, while quoting the Unique Identification Number and reporting actions to the Reserve Bank; matters outside delegated scope remain to be referred to the Reserve Bank.

Branch and Liaison Office eligibility: prior Reserve Bank approval required with prescribed documentation and due diligence.
Prior Reserve Bank approval is required for establishment of a Branch Office or Liaison Office in India, considered under the Reserve Bank Route (sectors permitting 100% FDI under automatic route) or the Government Route (sectors not permitting 100% FDI automatically). Applications must be submitted in Form FNC through a designated AD Category I bank which must perform due diligence and forward recommendations. Additional criteria include prescribed track record and minimum net worth, with Letter of Comfort permitted from parent companies. A Unique Identification Number will be allotted and BOs/LOs must obtain PAN and comply with prescribed procedural, activity, extension and winding-up requirements.

EEFC Account eligibility clarified: SEZ developers can credit full foreign exchange earnings to EEFC accounts under FEMA directions.
Persons resident in India may open, hold and maintain an Exchange Earner's Foreign Currency (EEFC) Account with an Authorised Dealer, and all categories of foreign exchange earners, including Special Economic Zone developers, may credit the full extent of their foreign exchange earnings specified in the Schedule to their EEFC Account; Authorised Dealer Category I banks should allow such accounts and notify constituents, pursuant to FEMA directions and subject to other legal permissions.

Advance remittance allowed for rough diamond imports from specified mining companies without bank guarantees or limits.
Authorised Dealer Category I banks may accept advance remittance without limit and without bank guarantee or standby letter of credit for import of rough diamonds from the named mining companies, now including Namibia Diamond Trading Company (PTY) Ltd, subject to the existing terms, conditions and reporting requirements set out in A.P. (DIR Series) Circular No.34 dated March 2, 2007.

Line of credit conditions govern export financing, sourcing requirements, L/C timelines, reporting and commission remittance rules.
Establishes terms for an Exim Bank Line of Credit to Djibouti financing eligible exports from India, requiring at least 85 percent Indian supply and permitting up to 15 percent foreign procurement (excluding consultancy). The Credit Agreement fixes timelines for opening Letters of Credit and disbursements for project and supply contracts, mandates GR/SDF declaration of shipments, and prescribes that no agency commission is payable under the LOC while allowing exporter-funded commission payments from own resources or EEFC balances subject to AD Category I bank compliance and FEMA directions.

Royalty and technology transfer liberalization now permitted on automatic route, subject to current account foreign exchange rules.
Payments for transfer of technology, including royalties, lumpsum fees and payments for use of trademarks or brand names, are permitted on the automatic route without prior Government approval, subject to the Foreign Exchange Management (Current Account Transactions) Rules and a separate post-reporting mechanism to be notified; the guidelines modify and supersede specified earlier Press Notes.

External Commercial Borrowings policy tightens all-in-cost ceilings and revises ECB eligibility for NBFCs and telecom spectrum.
The circular modifies the External Commercial Borrowings (ECB) policy: it restores all-in-cost ceilings under the approval route from January 1, 2010 with maturity based caps; extends approval-route ECB access for integrated township developers until December 31, 2010; discontinues FCCB buyback permissions from January 1, 2010; allows NBFCs exclusively financing infrastructure to raise ECB from recognised lenders including international banks subject to prudential norms and full currency hedging with AD Category I bank certification; and permits ECB for payment for telecom spectrum allocation, while other ECB conditions remain unchanged.

KYC/AML obligations require authorised persons to collect remitter details and report suspicious transfers promptly to intelligence.
Authorised Persons under MTSS are required by PMLA to adopt Board approved KYC, AML and CFT policies: implement customer acceptance criteria, risk based identification and monitoring, ensure complete remitter information accompanies all inward transfers, assess and document Overseas Principals before tie ups, appoint a Principal Officer to oversee reporting, and maintain transaction and identity records for prescribed retention periods while reporting cash and suspicious transactions to FIU IND.

Know Your Customer requirements: mandatory board approved KYC/AML/CFT policies, due diligence and FIU IND reporting for money changers.
The circular requires Authorised Persons engaged in money changing activities to adopt board approved KYC/AML/CFT policies covering customer acceptance, identification, transaction monitoring and risk management; to implement risk based customer categorisation and enhanced due diligence for higher risk customers (including PEPs and certain non resident or jurisdictional risks); to retain customer identification and transaction records for ten years; to appoint a Principal Officer responsible for CTR/STR filing to FIU IND in prescribed formats; and to ensure internal audit, staff training and customer education, with penalties for non compliance under PMLA and related rules.

Collateral requirement for non-resident exchange houses narrowed, with shorter projected-drawings cover and optional agreement registration.
AD Category-I banks must maintain comprehensive legal documentation with non-resident exchange houses, but formal registration of Rupee/Foreign Currency Drawing Arrangement agreements is now optional. Collateral requirements have been relaxed: prescribed collateral for newer exchange houses reduced, established exchange houses remain without mandatory collateral though banks may require protection, and where auditors cannot be appointed banks may obtain cash deposits or guarantees from banks of international repute. Foreign currency collateral held with AD Category-I banks for specific arrangements has also been reduced, with periodic review of adequacy required.

Suspicious Transaction Reporting requirement: authorised persons must file STRs for suspicious money changing transactions within prescribed timeframe.
Authorised persons engaged in money changing are classed as Financial Institutions under the PMLA and must furnish Suspicious Transaction Reports to FIU IND in prescribed formats for transactions or attempted transactions that give rise to reasonable grounds of suspicion; this reporting duty extends to franchisees, with franchisers responsible for ensuring compliance.

Asian Clearing Union membership expands to include new central bank, requiring banks to follow ACU transaction procedures.
The Maldives Monetary Authority has been admitted to the Asian Clearing Union and will commence ACU operations from January 1, 2010; standard ACU provisions apply unless exempted. Authorised Dealer Category I banks must channel transactions per the Memorandum of Procedure for Channelling Transactions through Asian Clearing Union (Memorandum ACM) and the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000, as amended. Consequential amendments to FEMA regulations and the Memorandum ACM are being issued separately, and the circular is issued under the authority of the Foreign Exchange Management Act.

Diamond Dollar Account eligibility relaxed, permitting firms with reduced track record and lower turnover to open and maintain accounts.
The Government amended Paragraph 4A.19 of the Foreign Trade Policy to relax eligibility for Diamond Dollar Accounts, reducing the required track record and lowering the average annual turnover threshold for firms and companies dealing in diamonds, coloured gemstones and specified jewellery. AD Category I banks are instructed to apply the revised eligibility criteria when opening and maintaining DDAs, while other terms and conditions remain unchanged and banks must remain guided by the Foreign Trade Policy in force.

Line of Credit enables financing of eligible Indian exports to Eritrea, with Indian-sourcing requirement, timelines, and FEMA directions.
Notification of an Exim Bank line of credit to the State of Eritrea for financing eligible goods, services, machinery and consultancy from India for agricultural and educational projects. The facility requires most of contract value to be supplied from India with limited outside procurement permitted for non consultancy items. Prescribed timelines apply for opening letters of credit and disbursement; shipments must be declared on GR/SDF forms. No agency commission is payable under the facility, though exporters may use their own funds or EEFC balances for commission remittance, subject to AD Category I bank compliance and prevailing instructions. The directions are issued under FEMA powers.

Bank guarantees for service imports: limit raised to USD 500,000, subject to bank satisfaction, documentation, and contractual security.
Authorised Dealer Category I banks may issue guarantees up to USD 500,000 for resident service importers in favour of non resident service providers, provided the bank is satisfied about the bonafides, documentary evidence of import of services is ensured, and the guarantee secures a direct contractual liability; Public Sector Companies and Government Departments/Undertakings require government approval for guarantees exceeding USD 100,000.

Advance remittance limit for import of services increased; public sector and government bodies need finance ministry approval for excess.
Increase in permissible advance remittance for import of services to USD 500,000 or its equivalent without bank guarantee applies to admissible current account transactions and is to be implemented by Authorised Dealer Category I banks, while all other terms of the earlier circular remain unchanged; Public Sector Companies and Government Departments/Undertakings remain subject to prior Ministry of Finance approval for amounts exceeding USD 100,000 or its equivalent.

Foreign investment ceilings in commodity exchanges: compliance deadline extended; failure to comply constitutes FEMA violation.
The Government requires affected commodity exchanges to comply with the foreign investment ceilings and related conditions of Press Note 2(2008) by 31.03.2010; exchanges must submit a status report of foreign investment as of 30.09.2009, equity structure, and corrective steps to DIP&P, Department of Consumer Affairs, FIPB, the Forward Market Commission and SEBI. Non-compliance after the date will be a violation of the Foreign Exchange Management Act.

Line of Credit for export finance supports Indian supplies for rural electrification in Mozambique under FEMA compliance and AD bank procedures.
Exim Bank's Line of Credit finances eligible Indian exports for rural electrification in Mozambique, requiring at least eighty five percent of contract value to be supplied from India and permitting up to fifteen percent procurement from outside India (excluding consultancy). Shipments must be reported on GR/SDF forms; no agency commission is payable from the LOC though exporters may use their own or EEFC funds subject to prevailing rules. AD Category I banks must notify exporters and may permit commission remittances after realisation; directions are issued under FEMA.

Visa fee transfer permission lets diplomatic missions credit foreign currency accounts via rupee-to-foreign account transfers.
Credits to foreign currency accounts of diplomatic missions are limited to (i) proceeds of inward remittances received from outside India through normal banking channels and (ii) transfer of funds from the mission's rupee account in India that comprise visa fees collected in India, permitting diplomatic missions to transfer collected rupee visa fees into their foreign currency accounts.

Foreign direct investment into micro and small enterprises allowed subject to sectoral caps and entry route compliance.
FDI into Micro and Small Enterprises is permitted subject to sectoral equity caps, entry routes and applicable sectoral regulations following redefinition of MSEs by investment in plant and machinery/equipment; Press Note 18 (1997) is modified accordingly. Industrial undertakings not qualifying as MSEs that manufacture items reserved for MSEs require an Industrial Licence, must satisfy licensing conditions including an export obligation on new or additional production from commercial commencement, and need prior government approval where foreign equity exceeds the automatic entry threshold.