Overseas investment compliance: regulated financial entities must meet Regulation 7 conditions and obtain commodity trading clearance.
Regulated Indian financial sector entities investing overseas in any activity must comply with the additional conditions in Regulation 7 of the relevant FEMA Transfer or Issue of Foreign Security Regulations; overseas trading in commodities exchanges and related JV/WOS arrangements are treated as financial services activity requiring Forward Markets Commission clearance, while unregulated domestic financial entities may invest abroad in non financial activities subject to Regulation 6.

Mode of payment for NRI/PIO property purchase: only inward remittance or non resident account funds permitted.
The Mode of Payment for acquisition of immovable property by Indian citizens resident outside India and Persons of Indian Origin is limited to funds received in India through normal banking channels by inward remittance from abroad, or funds held in any non-resident account maintained under FEMA and RBI regulations; payments by traveller's cheques, foreign currency notes or other modes are not permitted.

Foreign sovereign securities as collateral permitted for FII derivatives transactions, subject to SEBI guidelines and RBI approvals.
FIIs are permitted to offer foreign sovereign securities with AAA rating as collateral to recognised stock exchanges in India for derivatives transactions; SEBI will issue operational guidelines and recognised exchanges must secure any necessary approvals from the Reserve Bank under the Foreign Exchange Management Act. Amendments to the relevant FEMA regulations will be issued and Authorised Dealer Category I banks should inform their constituents. Directions are issued under sections 10(4) and 11(1) of FEMA, 1999.

Mutual fund overseas investment liberalisation expands eligible securities and removes reciprocal shareholding requirement, subject to SEBI guidelines and RBI reporting.
Liberalisation permits SEBI registered Mutual Funds to invest more broadly overseas by removing the reciprocal shareholding requirement and expanding eligible securities, including specified overseas Exchange Traded Funds for qualified funds; SEBI will prescribe operational guidelines on eligibility, limits, recognised exchanges and monitoring, while monthly RBI reporting by Authorised Dealer Category I banks continues using a modified table and regulatory amendments to FEMA will be issued separately.

Encashment Certificate requirement: authorised dealers may issue ECF on letter head when requested, security paper rule removed.
Encashment Certificate issuance procedures are amended to allow Authorised Dealer banks (Category I) to provide the form ECF on their letter head (with logo), duly signed by authorised officials, when requested by customers, regardless of the amount; the security paper requirement is withdrawn. Proper records of all ECFs must be maintained and customers advised that absence of an ECF may bar conversion of unspent local currency held by non resident visitors into foreign currency. Directions are issued under the Foreign Exchange Management Act and do not affect other statutory permissions.

Revision of special currency basket value requires authorised banks to apply the updated rupee conversion rate from the effective date.
Authorised Dealer banks are required to adopt a revised rupee value for the special currency basket used under the Deferred Payment Protocols, with the circular specifying the new rupee value and its effective date, and directing AD banks to notify their constituents. The directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and are without prejudice to other permissions or approvals under any other law.

FDI ceiling in telecom: compliance deadline extended to give existing licensees additional time to meet prescribed conditions.
The Department amended the compliance timeline under Press Note 5 (2005 Series) for telecom service provider companies, extending the period to meet the conditions set out in that Press Note. An initial four month correction period was provided and previously extended to 2 July 2006; the Department further extended the compliance period w.e.f. 3 July 2006 up to 2 October 2006, and Press Note 5 (2005 Series) is modified to that extent.

Anti-money laundering: revised customer identification, record-retention and cash payment limits for money-changing transactions.
The circular extends Anti-Money Laundering Guidelines for Authorised Money Changers to Authorised Dealers and issues amended operational rules: customer identification is required for all money-changing transactions with prescribed retention of identity-document details or photocopies depending on transaction type, and cash payment/encashment rules set limits and require account-payee cheque or demand draft for larger or other cases, with one-month aggregation of transactions for cash-limit application.

Line of Credit for export finance enables railway equipment exports subject to FEMA compliance and reporting requirements.
Exim Bank's Line of Credit to Mali and Senegal finances exports of equipment, goods and services from India for acquisition of railway coaches and locomotives eligible under the Foreign Trade Policy. Utilisation conditions include terminal dates for opening Letters of Credit and disbursement (48 months from scheduled completion for project exports; 72 months from Credit Agreement execution for other supplies), mandatory GR/SDF shipment declarations, prohibition on agency commission under the LOC (with limited remittance options from exporter resources or EEFC balances), and compliance and notification obligations for Authorised Dealer banks under FEMA.

Line of credit for export financing to Senegal enables Indian exporters to fund irrigation project supplies under FEMA compliance.
A Line of Credit from Exim Bank to the Government of Senegal finances Indian exports for Senegalese irrigation projects; the Credit Agreement is effective May 10, 2006, with terminal LC/disbursement deadlines of 48 months from scheduled completion for project exports and 72 months from execution for other supplies. Shipments must be declared on GR/SDF Forms. No agency commission is payable under the LOC, though exporters may remit commission from own funds or EEFC balances in free foreign exchange after realization, subject to prevailing instructions and Authorised Dealer bank compliance. Directions issued under Sections 10(4) and 11(1) of FEMA.

Line of credit for export financing to support tractor assembly project in Gambia under FEMA permissions.
A line of credit from Exim Bank to the Government of Gambia became effective May 26, 2006 to finance eligible exports for a tractor assembly project. Terminal dates for opening Letters of Credit and disbursement differ for project exports and other supply contracts; shipments must be declared on GR/SDF forms. No agency commission is payable from the credit, though exporters may use own foreign exchange or EEFC balances for commission subject to realisation and instructions. Authorised Dealer banks must notify exporters and may permit commission remittance after full payment realisation. Directions issued under sections 10(4) and 11(1) of FEMA.

Revision of special currency basket value requires authorised dealers to apply updated rupee valuation under FEMA authority.
The circular directs Authorised Dealer banks to implement a revised rupee value of the special currency basket for transactions under the Deferred Payment Protocols and to notify their constituents; it is issued under the Foreign Exchange Management Act while not affecting separate permissions or approvals required under other laws.

Recognition of Overseas Corporate Bodies as lenders prohibited; banks must not treat derecognised OCBs as eligible ECB lenders.
OCBs were derecognised as an eligible class of investor and therefore cannot be treated as recognised lenders for external commercial borrowing; borrowings from or loans to OCBs are impermissible, outstanding facilities were not to be renewed and no interest accrues after the due date; Authorised Dealer banks must notify constituents and ensure compliance with this statutory direction.

Line of Credit enables export finance for Fiji sugar sector with specified utilisation periods and compliance requirements.
Exim Bank extended a Line of Credit to the Fiji Sugar Corporation for financing eligible exports from India for modernization and capacity expansion of sugar plants. Terminal utilisation is 48 months for project exports and 72 months for other supply contracts. Shipments must be declared on GR/SDF forms. No agency commission is payable under the Line of Credit, though exporters may use own funds or EEFC balances for commission payments subject to realisation and prevailing instructions. Authorised dealer banks must notify exporter constituents; directions are issued under the Foreign Exchange Management Act.

Remittance limits for overseas branch expenses increased allowing higher proportions of average turnover for initial and recurring costs.
Authorised Dealer banks may allow remittance for initial and recurring expenses of branch, office, or representative establishments abroad up to increased proportions of the Indian entity's average annual sales/income or turnover for the last two accounting years, subject to existing terms and conditions of the FEMA notification; separate amendments to the Foreign Exchange Management Regulations, 2000 will be issued, and the directions are under Sections 10(4) and 11(1) of the FEMA, 1999.

Extension of export proceeds realization period permits authorised dealer banks to grant time extensions for export receipts subject to conditions.
Authorised dealer banks may grant extensions of time for realization of export proceeds beyond the prescribed period where the invoice value falls within the revised threshold, subject to existing terms and conditions; this change is effective immediately and banks must notify their constituents.

Employees Stock Option Scheme liberalisation allows authorised banks to permit overseas ESOP remittances and repurchases with conditional reporting.
Authorised Dealer banks may permit remittances for acquiring ESOP shares whether issued directly or via trust/SPV/step down subsidiary provided the issuing company holds not less than 51% of the Indian company, the ESOP is offered globally on a uniform basis, and an Annual Return with remittance and beneficiary details is submitted to the Reserve Bank (Annex I). Foreign companies are granted general permission to repurchase such shares if issuance complied with FEMA rules, repurchase follows the initial offer document, and an Annual Return is filed (Annex II).

Overseas investment liberalisation expands guarantee permissions and eases disinvestment and proprietary investor rules under FEMA.
The circular liberalises overseas investment rules: guarantees under the Automatic Route may include corporate or personal guarantees by promoter, group or associate companies provided all commitments remain within the overall overseas investment ceiling, guarantees are not open ended and all guarantees are reported to RBI in Form ODR. Disinvestments in specified categories may proceed without prior RBI approval subject to 30 day reporting via the Authorised Dealer. Recognised proprietorship and unregistered partnership exporters may seek prior RBI approval to establish JVs/WOSs abroad under prescribed eligibility criteria.

Line of Credit to DR Congo finances eligible Indian exports under Foreign Trade Policy while imposing declaration and commission rules.
Exim Bank's Line of Credit to the Government of the Democratic Republic of Congo finances eligible Indian exports subject to the Foreign Trade Policy. Shipments must be declared on GR/SDF forms, adhere to specified terminal utilization periods for project and supply contracts, and no agency commission is payable from the credit (exporters may use their own resources or EEFC balances for commission subject to prevailing rules). Directions are issued under FEMA and do not affect other statutory permissions.

Line of credit for export financing requires specified utilisation periods, GR/SDF shipment declarations and FEMA compliance by authorised banks.
A Line of Credit from Exim Bank to the Government of Ghana finances eligible Indian exports for rural electrification and a presidential office. Shipments must be declared on GR/SDF forms. Distinct terminal utilisation periods apply for project exports and other supplies. No agency commission is payable under the LOC, though exporters may use own funds or EEFC balances for commission subject to realisation and prevailing instructions. Authorised Dealer banks must notify exporter constituents. Directions are issued under statutory foreign exchange powers without prejudice to other legal permissions.