Foreign portfolio investor limits increased for government securities, with revised allocations effective and SEBI to issue operational guidelines.
Limits for investment by Foreign Portfolio Investors in Central Government Securities and State Development Loans are increased for April-June 2017, effective April 1, 2017; unutilised long term investor limits at end March 2017 will be released to the general category in April 2017. Existing conditions continue to apply, including security wise limits, coupons permitted outside limits, and a minimum residual maturity of three years; SEBI will issue operational allocation and monitoring guidelines.

Purchase of foreign exchange restored to pre temporary limits; authorised persons must follow reinstated operational procedures under FEMA.
The Reserve Bank restores the prior regime for purchase of foreign exchange by authorised persons as set out in paragraph 4.4(e)(iii) of the Annex to A.P. (DIR Series) Circular No.17, reversing temporary amendments that allowed limited weekly exchange for foreign passport holders, and directs authorised persons to follow the reinstated operational procedures; the directions are issued under the Foreign Exchange Management Act and do not affect other statutory permissions.

Hedging by non resident parents permits booking forex derivatives to hedge Indian subsidiary exposures under RBI prescribed conditions.
Non resident parents or their treasuries may enter into FCY INR derivative contracts with AD Category I banks to hedge currency risk of and on behalf of their Indian subsidiaries, subject to Reserve Bank terms. Transactions must be governed by a tri partite agreement detailing roles and settlement; non resident entities must be in FATF or equivalent jurisdictions; AD banks must perform KYC/AML, monitor underlying exposures, ensure profits/losses are settled in the subsidiary's accounts with auditor certification, and report contracts to CCIL with a special tag.

Line of Credit compliance: export eligibility, local content requirement and declaration obligations govern financed shipments.
Government-supported Line of Credit by Export-Import Bank for a Guyana road project sets financing and compliance conditions: eligible exports under India's Foreign Trade Policy may be financed, at least 75 per cent of contract value must be supplied from India with up to 25 per cent sourced abroad, and shipments must be declared on the Export Declaration Form. No agency commission payable from the LOC, but exporters may pay commission from their own funds or exchange-earner balances subject to realisation and remittance rules; AD Category-I banks must inform exporters and obtain LOC details from Exim Bank.

Government-backed line of credit enables export financing for maritime procurement with Indian sourcing and compliance obligations.
A Government of India supported Line of Credit from Exim Bank to Guyana finances an ocean ferry and eligible exports under the Foreign Trade Policy, requiring at least 75% Indian supply and permitting up to 25% foreign procurement. The LOC is effective from March 2017 with a 60 month terminal utilization period post completion; shipments must be declared on the Export Declaration Form. No agency commission is payable under the LOC, though exporters may remit commission from their own resources or EEFC balances subject to realization and extant rules; AD Category I banks must inform exporters and facilitate compliance. Directions are issued under FEMA.

Government-backed line of credit sets export content, shipment declaration, and commission payment rules for project financing.
Exim Bank's Government backed Line of Credit to Tanzania for Zanzibar's water supply conditions exports by requiring at least 75 per cent of contract value to be supplied from India, permitting up to 25 per cent sourcing abroad, mandating declaration of shipments on the Export Declaration Form, restricting agency commission payments to exporters' own funds or Exchange Earners' Foreign Currency Accounts after full realisation, and imposing a terminal utilisation period measured from project completion.

Line of credit to support reconstruction: supply content rules, utilization period, export declaration and commission constraints apply.
Export-Import Bank of India has provided a Government of India supported Line of Credit to Nepal for reconstruction projects, effective February 24, 2017, requiring shipments to be declared on the Export Declaration Form and a terminal utilization period of sixty months after project completion. Contracts must have at least 75% of goods and services supplied from India (50% for civil works). No agency commission is payable under the LOC, though exporters may use their own resources or EEFC balances for commission payments; AD Category-I banks may permit such remittances after full realization and compliance.

Line of Credit terms require majority India-sourced supplies, EDF declarations and a multi-year terminal utilization period.
A Government of India supported Line of Credit to Sierra Leone finances a transmission line project, requiring eligible goods and services with at least 75 per cent sourced from India and the balance procured abroad; the LOC is effective from February 16, 2017, mandates Export Declaration Form shipment declarations, prescribes a multi-year terminal utilization period after project completion, disallows agency commission under the LOC while permitting exporter-paid commissions from own funds or EEFC balances subject to AD Category-I bank approval after full realization, and is issued under the Foreign Exchange Management Act, 1999.

Line of Credit support for export procurement sets Indian supply requirement and foreign exchange and compliance conditions.
A Government of India supported Line of Credit from Exim Bank to the Republic of Senegal finances bus procurement, requiring at least 75% of contract value supplied from India and permitting 25% foreign procurement; the LOC is effective from February 16, 2017 with a 60 month terminal utilization period. Shipments must be declared on the Export Declaration Form. No agency commission is payable under the LOC, though exporters may use own resources or EEFC balances for commission payments subject to realisation and applicable rules; AD Category I banks must notify exporters and may allow remittances accordingly. The directions are issued under the Foreign Exchange Management Act.

Line of Credit supports Malawi water project; majority sourcing from India, shipments require Export Declaration Form compliance.
Exim Bank provided a Government of India supported Line of Credit to Malawi for a water supply project, permitting financing of eligible Indian exports including goods, plant, machinery and consultancy; the contract mandates that the majority of goods and services be supplied from India while a portion may be procured abroad, shipments must be declared on the Export Declaration Form, and the LOC is subject to a terminal utilisation period. No agency commission is payable under the LOC, though exporters may remit commission from own funds or EEFC balances after full realisation, subject to remittance rules and Authorised Dealer Category I bank oversight.

Government-supported Line of Credit requires majority Indian-sourced supplies, EDF shipment declaration, and exporter-funded commissions allowed.
A Government of India supported Line of Credit to Kenya finances eligible exports under India's Foreign Trade Policy, requires a substantial portion of contract value to be supplied from India with the balance possibly procured abroad, mandates Export Declaration Form filing for shipments, sets a terminal utilization period post project completion, disallows agency commission under the LOC while permitting exporter-funded commission remittances from own funds or Exchange Earners' Foreign Currency Account after realization, and directs Authorised Dealer Category I banks to notify exporters; issued under the Foreign Exchange Management Act.

Line of Credit supported by Government enables export financing with Indian content requirement and FEMA-directed compliance.
Exim Bank's Government of India supported Line of Credit to Kenya finances eligible imports of goods, machinery and services from India for a textile factory upgrade, requiring at least 72 per cent Indian-sourced value and permitting up to 28 per cent foreign procurement; the LOC is effective from February 2017 with a terminal utilization period of 60 months. Shipments must be declared on the Export Declaration Form and exporters must follow Reserve Bank and FEMA instructions. No agency commission is payable under the LOC, though exporters may remit commission from their own resources or EEFC balances after full realization and subject to extant rules.

Money Transfer Service Scheme: authorised Indian Agents must meet fund, due diligence, collateral, KYC/AML and reporting requirements.
The Master Direction prescribes the MTSS regulatory framework: only specified authorised entities meeting minimum Net Owned Funds and fitness criteria may be authorised by the Reserve Bank as Indian Agents for inward personal remittances; applications must include due diligence documents on Overseas Principals, audited financials and banker reports; Overseas Principals must meet net worth and AML requirements and remain responsible for agent activities; Sub Agents require specified due diligence and quarterly reporting; operational limits, KYC/AML/CFT controls, collateral requirements and renewal and inspection procedures are mandated.

Foreign investment in stock exchanges permitted under automatic route, subject to securities regulations and SEBI/RBI guidelines.
Foreign investment in stock exchanges, derivative exchanges, depositories and clearing corporations is permitted up to forty-nine percent of equity under the automatic route. Such investment, including by FPIs, is subject to the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, the SEBI (Depositories and Participants) Regulations, 1996, and other guidelines/regulations issued by the Central Government, SEBI and the Reserve Bank of India as amended. Undefined terms in these regulations shall have the meanings assigned in the Companies Act, the Securities Contracts (Regulation) Act, the SEBI Act, the Depositories Act or the relevant SEBI regulations.

Rupee denominated bond investor eligibility expanded to include multilateral and regional financial institutions, effective immediately.
Permit Multilateral and Regional Financial Institutions where India is a member to invest in Rupee denominated bonds issued overseas, expanding the recognised investor class under prior circulars; all other provisions of A. P. (DIR Series) Circular No.60 (April 13, 2016), Master Direction No.5 (January 1, 2016) and A. P. (DIR Series) Circular No.29 (September 29, 2015) remain unchanged. The change is effective from the date of this circular, relevant Master Direction paragraphs will be updated, and the directions are issued under sections 10(4) and 11(2) of FEMA, 1999.

NRI access to exchange traded currency derivatives permitted to hedge Rupee exposure; designated banks must monitor and report positions.
Non resident Indians are permitted to transact in exchange traded currency derivatives to hedge Rupee currency risk from permitted current account transactions or Rupee denominated assets or liabilities, subject to terms and conditions. NRIs must designate an Authorised Dealer Category I bank to receive exchange/clearing transaction details, consolidate OTC and exchange positions, monitor aggregate exposure against underlying Rupee risk, and report transgressions; the onus of proving underlying exposure lies with the NRI and excess hedging may attract statutory penalties. Regulatory amendments and directions implement this framework.

Compounding of FEMA contraventions: regional offices now have expanded authority for delayed FLA filings; exceptions remain.
All Regional Offices of the Reserve Bank, except two specified offices, are authorised to compound delays in filing the Annual Return on Foreign Liabilities and Assets by Indian companies receiving foreign direct investment without any monetary limit; the two specified regional offices retain limited compounding authority while higher-value cases remain with the Central Office. Applications for compounding these contraventions must be submitted to the Regional Office of jurisdiction, and other contraventions continue to be filed with the Central Foreign Exchange Department. The modification is effective immediately and authorised dealers must inform constituents.

Prohibition on direct overseas investment bars investments into FATF non-cooperative jurisdictions, with banks required to notify clients under FEMA.
Indian parties are prohibited from making direct overseas investments-whether as joint ventures, wholly owned subsidiaries, or step down subsidiaries-in jurisdictions identified by the FATF as non co operative countries and territories, as per the FATF list or RBI notification; this prohibition is implemented by amendment to the FEMA notification, Authorised Dealer Category I banks must inform constituents, and Master Directions will be updated, with the directions issued under FEMA without prejudice to other statutory permissions.

Evidence of import via IDPMS replaces hardcopy BoE; AD Category-I banks must match and settle BoEs with remittances.
AD Category-I banks must rely on BoE data in the Import Data Processing and Monitoring System and discontinue hardcopy BoE submission where data exists. Banks shall enter or download BoE details, use the BOE Settlement message to match and settle BoEs with Outward Remittance Messages (permitting multiple ORMs per BoE and vice versa), issue an acknowledgement slip to importers on settlement, require importers to preserve the importer copy and acknowledgement, follow up on unsettled ORMs, and preserve audited BOE Settlement data under the Cyber Security Framework unless investigating agencies direct otherwise.

Line of Credit supports eligible export services requiring majority India-sourced supply and defined disbursement timelines.
A Government of India supported Line of Credit by Exim Bank to Burundi finances a detailed project report for an Integrated Food Processing Complex; services must be eligible under the Foreign Trade Policy and at least 75% of the contract price for services must be supplied by the seller from India with the remainder allowed from outside. The LOC became effective December 20, 2016; letters of credit and disbursements are subject to specified timelines (48 months for project export contracts from scheduled completion dates and 72 months for supply contracts from execution) and shipments must be declared per Reserve Bank instructions. No agency commission is payable under the LOC, but exporters may remit commission from own funds or EEFC balances after realization subject to prevailing rules.