Evidence of import follow up: banks need not pursue proof for remittances at or below the prescribed threshold when satisfied of genuineness.
AD banks must follow up with importers for submission of evidence of import where remittances exceed the prescribed threshold. For remittances at or below the prescribed threshold, ADs need not pursue evidence provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter; banks should frame Board approved internal policies and guidelines to govern such cases.

Forward contract cancellation and rebooking allowed for resident current account hedges, subject to exposure reporting and specified exceptions.
All forward contracts booked by residents to hedge current account transactions may be cancelled and rebooked freely regardless of tenor, subject to annual submission of corporate-wise foreign currency exposure details as of April 1; exclusions apply to forwards booked on past performance without documents and to forwards for transactions denominated in foreign currency but settled in Indian Rupees.

Use of international debit and smart cards abroad limited to permissible current account transactions, subject to prescribed foreign exchange limits.
Use of international debit, store value, charge and smart cards by resident Indians abroad is allowed solely for permissible current account transactions and is subject to the item-wise and overall limits under the Foreign Exchange Management (Current Account Transactions) Rules. IDCs may be used for overseas cash withdrawals and merchant payments within those limits but not for internet purchases or activities for which drawal of foreign exchange is prohibited. AD banks must comply with documentation requirements and submit an annual proforma statement when aggregate IDC utilisation by holders exceeds the prescribed reporting threshold.

Special currency basket valuation revised; authorised dealer banks notified to adopt the new rupee conversion and update transactions accordingly.
The circular revises the rupee valuation of the special currency basket under the Deferred Payment Protocols and notifies Authorised Dealer banks to adopt the new rupee conversion figure with the stated effective date; banks must inform their constituents and apply the revised valuation in relevant foreign exchange transactions. The direction is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to other statutory permissions or approvals.

Foreign Currency Accounts for project offices allowed with conditions; authorised dealers must ensure compliance and report to the regulator.
Authorised Dealers may open non interest bearing Foreign Currency Accounts for Project Offices established with Reserve Bank permission, limited to one account per project; permitted credits are receipts from the project sanctioning authority and remittances from parent/group companies or international financiers, and debits only for project related expenditure. AD branches must ensure compliance and are subject to 100% concurrent audit. Intermittent remittances pending project winding up are allowed on submission of an auditor's certificate and an undertaking; reporting to the Reserve Bank regional office within two months and annual chartered accountant certification are required.

Remittance of assets by NRIs/PIOs allowed with settlements treated as inheritance, subject to annual limit and compliance.
Banks authorised to deal in foreign exchange may allow NRIs/PIOs to remit assets from NRO balances, sale proceeds, and assets acquired by inheritance, legacy or settlement, subject to the annual limit, only on demise of the settlor for settlements made by parents or close relatives, and after receipt of an undertaking by the remitter and a Chartered Accountant certificate in the prescribed format; country-specific restrictions and other statutory permissions continue to apply.

Overseas investment liberalisation expands automatic-route foreign JV/WOS limits; banks to permit remittances; government securities move to T+1.
Eligible Indian entities may invest abroad in joint ventures and wholly owned subsidiaries under the automatic route up to an enhanced ceiling measured against the investing company's net worth, excluding investments from EEFC balances and ADR/GDR proceeds; authorised dealer banks shall permit remittances up to the ceiling based on the last audited balance sheet and process form ODA proposals. Separately, outright secondary market Government securities transactions are standardised to T+1 settlement, while repo first-leg settlement may be T+0 or T+1.

Line of Credit enables short-term export financing to PTA member countries under FEMA directions with specified validity.
A short-term Line of Credit by Exim Bank to PTA Bank finances exports of raw materials, commodities, goods and services to PTA member countries for tenors up to 180 days under an aggregate cap; the agreement became effective April 1, 2005, with specified last dates for opening letters of credit and for disbursement. Shipments must be declared on GR/SDF Forms, agency commission is ordinarily not payable (exporters may use own funds if needed), and Authorised Dealer Banks must notify exporters. The direction is issued under FEMA without prejudice to other statutory permissions.

External Commercial Borrowings for NGOs in microfinance permitted under automatic route with strict due diligence and compliance requirements.
Access to External Commercial Borrowings is permitted for NGOs engaged in micro finance under the Automatic Route, provided the NGO has a three year satisfactory borrowing relationship with an authorised dealer and a due diligence certificate on the governing body. ECB proceeds must be used only for lending to self help groups, micro credit, bona fide micro finance activities and capacity building. Lenders must be recognised international institutions or overseas entities/individuals meeting due diligence and KYC safeguards, and all standard ECB parameters and reporting obligations, including hedging of forex exposure and loan registration, must be complied with.

Establishment of Liaison Offices: foreign insurers with regulator approval may set up liaison offices subject to FEMA conditions.
General permission is granted for foreign insurance companies to establish Liaison Offices in India with prior approval from the insurance regulator, subject to FEMA conditions and the annexed terms. Liaison Offices are confined to approved liaison activities, must not undertake commercial activities, earn remuneration, borrow or accept deposits locally, and must meet all expenses from funds received from abroad through normal banking channels. They must obtain prior permission for immovable property transactions beyond short-term leases, maintain restricted signing powers and head office accounts for local expenses only, furnish an annual auditor's certificate of compliance, and remain subject to regulatory scrutiny and Indian laws.

Remittance restrictions: Liberalised Remittance Scheme barred to FATF non-cooperative jurisdictions; banks must update lists and notify customers.
Remittances under the Liberalised Remittance Scheme are prohibited, directly or indirectly, to jurisdictions identified by the Financial Action Task Force as non cooperative; Authorised Dealer banks must maintain and periodically update a record of such jurisdictions from the FATF website and ensure branches and customers are informed, pursuant to directions issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.

Resident power of attorney authority to remit from NRE and FCNR B accounts to the non-resident account holder.
Banks authorised to deal in foreign exchange may permit a resident power of attorney holder, when specifically authorised, to remit through normal banking channels funds out of balances in NRE accounts to the non-resident account holder, and the same permissions and conditions apply, mutatis mutandis, to FCNR B accounts.

Prior Government approval required for new foreign technical collaborations when investor already has ventures in the same field.
Prior Government approval is required for new foreign investment or technical collaboration proposals under the automatic route when the foreign investor has an existing joint venture, technology transfer, or trademark agreement in the same field in India; the same field is to be determined by the four digit National Industrial Classification standard, existing tie ups on the date of notification are treated as existing, and previously issued exemptions for the information technology sector, multinational financial institutions, and mining for the same area/mineral continue to apply.

Line of Credit to Senegal enables export finance for rural SMEs and agricultural equipment, subject to GR/SDF declarations.
The circular notifies authorised banks of Exim Bank's Line of Credit to the Government of Senegal for financing exports of eligible Indian goods and services for rural SMEs and agricultural machinery, effective February 9, 2005, requiring shipments to be declared on GR/SDF Forms, specifying deadlines for letters of credit and disbursement, stating that no agency commission is ordinarily payable (exporters may use own funds if necessary), instructing Authorised Dealer Banks to inform exporters and seek full details from Exim Bank, and issued under FEMA Sections 10(4) and 11(1).

FDI in townships allowed under automatic route subject to area, development, capitalization and compliance conditions.
The Government permits 100% FDI under the automatic route in townships, housing, built-up infrastructure and construction projects subject to minimum land or built-up area thresholds, a minimum capitalization requirement with prescribed fund remittance timing, and a repatriation lock-in unless earlier exit is approved. At least 50% of each project must be developed within a stipulated period; sale of undeveloped plots is barred until infrastructure is provided and a completion certificate obtained. Projects must comply with applicable land use, building control and municipal norms, with investors responsible for approvals, charges and compliance, and local bodies monitoring adherence.

Line of Credit enables export finance under specific declaration, commission and approval conditions.
A Line of Credit from Exim Bank to the Government of Lesotho finances exports of capital goods, plant and machinery, industrial manufactures, consumer durables and other items eligible under India's Foreign Trade Policy; the agreement is effective from February 1, 2005 with specified deadlines for letter of credit opening and disbursement, shipments must be declared on GR/SDF Forms, and agency commission is generally not payable though Reserve Bank may permit commission up to a capped rate for exports requiring after sales service with prescribed invoice deduction and reimbursement mechanics.

Gold loan tenor aligned with SBLC validity to permit extended repayment and import-on-loan procedures for exporters.
Permits nominated agencies, approved banks, EOUs and SEZ units in the Gem and Jewellery sector to import gold on loan with a maximum tenor governed by the Foreign Trade Policy and Government notifications, presently 240 days. SBLCs may be opened by Authorised Dealers in line with FEDAI guidelines only for authorised importers and in favour of internationally renowned bullion banks, and ADs must keep documentation linking imports to the SBLC while observing other existing import and L/C instructions and obtaining any additional statutory approvals required.

Special currency basket revision requires authorised dealers to apply the new rupee rate effective mid-January under FEMA directions.
Authorised Dealer banks are notified that the rupee value of the special currency basket has been revised to a new rate, effective January 20, 2005; ADs must apply the revised rupee rate in their dealings and inform constituents. The direction is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to other statutory permissions or approvals.

Overseas direct investment liberalisation: ESOP acquisitions allowed without prior central bank permission for majority indirect holdings.
A consolidated amendment Notification (FEMA.120/2004 RB) integrates prior liberalisations to the foreign security regulations. Under the ESOP provision, a resident employee or director may buy equity of a foreign company offering shares where the Indian company has foreign equity of not less than 51 per cent, and where the foreign company holds indirectly through an SPV or step down subsidiary, no prior Reserve Bank permission is required if such indirect holding is not less than 51 per cent.

Compounding of contraventions under FEMA allows administrative settlement preventing further proceedings once compounded.
Compounding under FEMA provides an administrative settlement whereby the Compounding Authority may compound specified contraventions on application, after which no further proceedings shall be initiated or continued; the Reserve Bank is empowered to compound most contraventions (excluding certain hawala related contraventions retained by the Directorate of Enforcement), and applicants must submit prescribed form, fee and documents to the Compounding Authority, which will decide within 180 days and require payment of the compounding sum within fifteen days of the order.