FPI investment limits increased for central and state government securities in two tranches; SEBI to issue guidelines.
Investment limits for FPIs in Central Government Securities and State Development Loans are increased in two scheduled tranches, raising aggregate caps for All FPIs and providing additional allocation for Long Term FPIs. Existing conditions continue: security-wise limits remain, coupons may be invested outside the limits, and investments are restricted to securities with a minimum residual maturity of three years. SEBI will issue operational allocation and monitoring guidelines; separate communication will address transfer of unutilised Long Term FPI allocation. Directions are issued under the Foreign Exchange Management Act without prejudice to other approvals.

Government-supported line of credit: exporters must source majority of contract goods from India and comply with EDF/SDF declarations.
The Line of Credit finances renovation of a foreign power plant and mandates that at least 75% of the contract price for eligible goods, machinery, equipment and services (including consultancy) be supplied from India, with up to 25% procurable from outside India. Shipments must be declared on EDF/SDF forms per Reserve Bank instructions. Agency commission is not payable under the LOC, though exporters may remit commission from their own resources or Exchange Earners' Foreign Currency accounts after full realisation, subject to prevailing rules. Directions are issued under FEMA without prejudice to other legal permissions.

Line of Credit terms impose sourcing and compliance obligations for exporters and authorised banks under FEMA directives.
Government-supported Line of Credit amended to reduce the facility finances eligible exports of goods, machinery, equipment and consultancy services under the Indian Foreign Trade Policy, requiring a substantial share of supplies to originate from India and setting specific terminal utilization periods for project and other supply contracts. Shipments must be declared on EDF/SDF forms. No agency commission is payable under the LOC, though exporters may pay commission from their own resources or Exchange Earners' Foreign Currency accounts after realisation, subject to prevailing instructions and Authorised Dealer Category-I bank oversight. Directions issued under FEMA.

Foreign exchange derivative rules set user classification, hedging limits, settlement rules and reporting duties across OTC and exchange-traded markets.
Foreign exchange derivative and inter-bank dealing directions under FEMA establish the framework for authorised persons, authorised dealer banks, standalone primary dealers, recognised stock exchanges and recognised clearing corporations in OTC and exchange traded currency markets. The directions define key concepts, classify users as retail or non-retail, and prescribe product permissions, hedging restrictions, settlement rules, limits on leveraged structures, and conditions for INR-linked and non-INR-linked contracts. They also set open position, gap, borrowing, reporting and trade repository requirements, together with separate rules for asset-liability hedging, gold hedging, capital hedging and inter-bank foreign exchange dealings.

Discontinuation of reporting requirement: authorised dealer banks need not submit invocation reports for service-import bank guarantees but must retain records.
Authorised Dealer Category-I banks are directed to discontinue submitting reports of invocation of bank guarantees issued for service imports; they must, however, maintain records of such invocations and furnish details to the Reserve Bank when requested. The Master Direction on reporting under the Foreign Exchange Management Act will be updated to reflect this change, and the circular is issued under Sections 10(4) and 11(1) of the Act.

Suspension of ACU Euro operations permits Euro trade settlements outside ACU until further notice under FEMA directions.
The circular temporarily suspends ACU Euro operations while the Euro payment channel is reviewed; accordingly, eligible current account and trade transactions in Euro may be settled outside the ACU mechanism until further notice. Authorised Dealer Category I Banks must notify constituents. The direction is issued under FEMA and is without prejudice to other statutory permissions.

External Commercial Borrowings approval route: referrals to Empowered Committee, with RBI retaining final decision authority.
ECB proposals under the approval route above a prescribed referral threshold will be placed before an Empowered Committee for consideration, and the Reserve Bank will take a final decision after considering the Committee's recommendation; all other ECB policy aspects remain unchanged and the Master Direction will be updated.

Special Currency Basket value revised under FEMA, affecting deferred payment protocols and notified to authorized banks in June.
The circular notifies Authorized Dealer Category I banks of a revised rupee valuation of the Special Currency Basket to be used for settlements under the Deferred Payment Protocols with effect from a specified date in June 2016, directs banks to inform constituents, and states that the Directions are issued under FEMA sections 10(4) and 11(1) without prejudice to other statutory permissions.

Foreign Direct Investment policy updates expand automatic entry for many sectors while retaining conditional government approval for strategic areas.
The FDI policy amendments adjust sectoral entry routes and conditions: Reserve Bank approval is unnecessary for establishment of business places where sectoral approval exists for Defence, Telecom, Private Security and I&B; specified agro activities under "controlled conditions" permit full FDI under the automatic route; manufacturing may sell domestically including via e commerce; Defence, telecom/media, civil aviation, private security, single brand retail and pharmaceuticals have revised caps and conditionalities requiring government approval beyond prescribed thresholds, security clearances, sourcing and R&D maintenance obligations, and disclosure of technology transfer.

Covered options permitted for resident exporters and importers to write against contracted exposures, subject to bank approvals and safeguards.
Permits resident exporters and importers to write standalone plain vanilla European covered call and covered put currency option contracts to AD Category I banks against contracted export or import exposures, treating such covered options as structured derivative products and not as hedges. AD Category I banks must obtain internal approvals, assess the writer's risk management and financial strength, treat the underlying exposures as unhedged for capital and provisioning, may require margin or collateral, report transactions to the designated reporting platform, and observe limits on maturity and permissible combinations.

Foreign currency accounts: startups may receive export proceeds abroad but must repatriate export balances within prescribed realisation period.
Indian startups meeting prescribed eligibility may open an overseas foreign currency account to receive foreign exchange from exports or sales by the startup or its overseas subsidiary, with balances representing exports to be repatriated within the export realisation period; such foreign exchange may alternatively be credited to the startup's Exchange Earners Foreign Currency (EEFC) account in India.

Government-supported Line of Credit permits exports with minimum domestic sourcing and specified utilisation and reporting conditions.
A Government-supported Line of Credit by Export-Import Bank finances specified projects in Bangladesh subject to export eligibility under the Foreign Trade Policy. At least 75% of contract value for goods and services (excluding consultancy) must be sourced from India, reducible to 65% for civil construction and further on a case-by-case basis (not from a third country). Separate terminal utilisation periods apply for project exports and other supply contracts. Shipments must be declared on EDF/SDF forms. No agency commission is payable under the LOC; exporters may use own funds or EEFC balances and AD Category-I banks may permit remittance after full realisation, subject to prevailing rules. Directions are issued under FEMA.

Government backed line of credit supports project exports with specified India sourcing and FEMA compliance conditions.
A Government of India supported Line of Credit by Exim Bank to the Government of Cote d'Ivoire finances eligible goods, machinery, equipment and consultancy services from India for an Electricity Interconnection Project, requiring at least 75% India sourced contract value and allowing up to 25% foreign procurement; the LOC is effective from May 26, 2016, with disbursement ending 60 months after project completion, shipments to be declared on EDF/SDF forms, and no agency commission payable except from exporter resources or EEFC balances subject to prevailing instructions and AD Category I bank compliance.

Foreign direct investment rules set sectoral caps, defined entry routes and compliance obligations for cross border equity investments.
The Circular establishes a consolidated FDI framework effective June 7, 2016, defining eligible investors, investee entities and instruments, and prescribing two entry routes-Automatic and Government-together with sectoral caps, entry conditions, pricing/valuation norms, and reporting and remittance obligations. It details downstream investment calculation, transfer and conversion rules for capital instruments, sector specific limits and conditionalities, FIPB constitution and approval thresholds, and mandatory forms and procedures (including FC GPR and FC TRS) for compliance and documentation.

Caution listing of exporters tightened under EDPMS integration; banks must report advance remittances and old export data.
AD Category I banks must integrate reporting into the Export Data Processing and Monitoring System (EDPMS) to automate cautioning and de cautioning of exporters, report all inward remittances (including advance and outstanding receipts) and electronic FIRCs, discontinue separate quarterly and half yearly returns by uploading overdue advance particulars and migrating Export Outstanding Statement data into EDPMS, and implement necessary IT and operational changes to process transactions only through revised EDPMS message formats.

Foreign exchange compounding orders to be publicly disclosed and computation guidance for penalties published online.
Reserve Bank will publicly host compounding orders on its website and publish the guidance note used to compute amounts under section 13 of FEMA. The guidance prescribes a fixed-plus-variable computation matrix for categories of contraventions, sets ceilings (including a 300% cap and interest-based limits for small contraventions), provides graded multipliers for certain cases, allows neutralisation of undue gains, trebling in specified guarantee reinvestment situations, and enhancement for repeat contraventions; procedural rounding and office-specific ceilings are explained and illustrative calculations are appended.

Minimum transaction thresholds for ACU dollar and euro accounts reduced, easing funding and repatriation requirements.
The Reserve Bank has revised the minimum amount and multiples for receiving and paying in ACU Dollar and ACU Euro accounts, lowering the thresholds for funding or repatriating excess liquidity via the Asian Clearing Union. Authorised Dealer Category I Banks are directed 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 statutory permissions or approvals.

Submission of statement E in XBRL required for authorised dealer banks; register for portal access and provide credentials by deadline.
Authorised Dealer Category I banks must submit statement E for the Rupee Drawing Arrangement via the eXtensible Business Reporting Language (XBRL) system from the quarter ending June 2016, obtain user credentials by submitting Annex I to the RBI by the prescribed deadline, use the RBI XBRL portal for filings, and note that the FED Master Direction will be updated; directions issued under FEMA remain subject to other legal permissions.

XBRL reporting requirement for Money Transfer Service Scheme agents to submit quarterly remittance statements via the secure portal.
Authorised Persons under the Money Transfer Service Scheme must submit quarterly remittance statements in eXtensible Business Reporting Language via the RBI XBRL portal, using supplied user credentials after submitting the required form, and the FED Master Direction will be updated to reflect this procedural change under FEMA.

Uniform interest rate framework: co operative banks must follow board approved, disclosed, non negotiable deposit rates with defined premature withdrawal rules.
RBI prescribes a uniform, board approved interest rate framework for co operative banks: rates must be disclosed, non negotiable, uniform across branches and customers, with daily product calculation for savings, tenor and size based variation for term deposits, prescribed premature withdrawal rules and board approved penalty disclosure. Parallel rules govern NRE/NRO and FCNR(B) deposits including authorised bank acceptance, minimum tenors, LIBOR/SWAP linked ceilings for FCNR(B), conversion treatment for returning NRIs, and prohibitions on incentive based deposit mobilisation.