Line of Credit conditions: Exim Bank credit to Vietnam requires majority Indian content and FEMA compliance.
Exim Bank's Line of Credit to Vietnam finances eligible Indian exports for two projects, requiring at least 75% of the contract price to be supplied from India and permitting up to 25% of non consultancy goods and services to be procured abroad. The Credit Agreement is effective from December 27, 2013, with specified deadlines for opening Letters of Credit and disbursements for project and supply contracts; shipments must be declared on GR/SDF Forms. No agency commission is payable under the LOC, though exporters may pay commission from own resources or EEFC balances subject to realization and prevailing instructions.

KYC authorisation change: corporates may use MD/CFO signed official lists instead of board resolutions for forex transactions.
The requirement for corporates to submit a Board resolution and a power of attorney for forex transactions has been replaced: a corporate may now submit a list of officials with names, designations and signatures authorised by the Managing Director or Chief Financial Officer to conduct foreign exchange transactions; franchisers remain responsible for ensuring agents and franchisees comply; corporates must pay the rupee leg of forex transactions through the corporate cheque or bank account; other instructions remain unchanged under FEMA and PMLA.

Remittance through any bank permitted: foreign investors may route funds to designated custodian; KYC and FIRC required.
Foreign investors may remit funds through any bank for permitted transactions and transfer those funds to the designated custodian bank via the banking channel. The remittance receiving bank and the beneficiary bank share joint KYC responsibility: the first bank holds remitter and purpose details while the receiving bank holds recipient information. The remittance receiving bank must issue a Foreign Inward Remittance Certificate (FIRC) to the bank receiving the proceeds. Prior circular conditions on hedging of investments apply mutatis mutandis and statutory permissions under foreign exchange law remain applicable.

Merchanting trade rules require same bank routing, document verification, earmarked advances, credit facilities, and strict reporting.
Revised guidelines require AD Category I banks to route both export and import legs of merchanting or intermediary trade transactions through the same bank, verify transactional documents for genuineness, complete transactions within prescribed timeframes, permit short term supplier's or buyer's credit and export LC discounting, ensure one to one matching and trader capability, hold and earmark advance export receipts, secure import advances by reputable bank guarantees, and file gross reporting for R returns with half yearly default reporting to the Reserve Bank under FEMA.

Exchange rate for conversion of foreign currency liabilities into equity clarified: use rate on agreement date; fair value at conversion.
Where an Indian company converts a foreign currency liability into equity, the rupee equivalent shall be calculated by applying the exchange rate prevailing on the date of the agreement; the borrower may, by mutual agreement with the non resident, issue shares for a lower rupee amount, and the fair value of the equity is to be determined with reference to the date of conversion. The same principle applies, mutatis mutandis, to conversion of lump sum fees, royalties and similar payables into equity or securities.

Prior approval requirement for establishing liaison or branch offices by Hong Kong and Macau entities in India reiterated.
Entities registered in or resident of Hong Kong and Macau must obtain prior Reserve Bank approval before establishing a liaison office, branch office, project office or any other place of business in India under Regulation 4; AD Category I banks should notify their constituents. The Regulations were amended in 2013 to incorporate this requirement and the directions are issued under the foreign exchange statute without prejudice to other legal permissions.

Forward contract cancellation and rebooking allowed for contracted current and short term capital account exposures, with limited rebooking for portfolio investors.
Permits cancellation and rebooking of forward contracts for contracted current account transactions and for contracted capital account transactions with residual maturities of one year or less; portfolio investors may rebook only a capped portion of cancelled contracts, though rollovers on or before maturity are permitted; AD Category I banks must inform constituents; directions issued under the Foreign Exchange Management Act and subject to other required approvals.

Line of Credit export financing requires major domestic supply content and specific L/C/disbursement timelines under FEMA directions.
Exim Bank's Line of Credit to Sudan finances eligible exports for the Mashkour Sugar Project, requiring at least 75 per cent of contract value supplied from India and permitting up to 25 per cent procurement abroad; the Credit Agreement fixes distinct deadlines for L/C opening and disbursement for project and supply contracts. Shipments must be declared on GR/SDF forms; no agency commission is payable under the LOC though exporters may remit commission from their own funds or EEFC balances after full realization, subject to prevailing rules. AD Category I banks must notify exporters and the directions are issued under FEMA.

Retention and transfer of foreign assets: residents may hold and utilise foreign assets acquired while non resident under specified conditions.
Section 6(4) FEMA allows residents to hold, transfer or invest in foreign currency, foreign securities or immovable property abroad if acquired or owned while non resident or inherited from a non resident. Covered transactions include foreign currency accounts maintained when non resident; income from employment, business, vocation or investments undertaken while non resident; gifts or inheritances received while non resident; and foreign exchange or related income held outside India acquired by inheritance. Residents returning to India may utilise eligible assets abroad and related income or sale proceeds for payments or fresh investments abroad without RBI approval, provided such payments and investments are funded exclusively from those eligible assets and comply with FEMA.

Line of Credit conditions require predominant Indian supply content and prescribe disbursement, documentation and commission rules.
Exim Bank has extended a LOC of USD 42.61 million to the Government of Benin to finance eligible Indian-sourced goods, services, machinery, equipment and consultancy for water-supply upgrades, requiring at least 75 percent Indian supply content and permitting 25 percent foreign procurement. The LOC specifies effectiveness and disbursement timelines, mandatory GR/SDF shipment declarations, prohibition of agency commission from LOC funds (with limited exporter-funded alternatives), and directions issued under the Foreign Exchange Management Act; AD Category-I banks must inform exporters and refer them to Exim Bank for details.

Rupee Drawing Arrangements expanded to allow utility, tax and EMI remittances from non-resident exchange house vostro accounts.
Rupee Drawing Arrangements with non-resident exchange houses are expanded to include additional permitted transactions through vostro accounts while retaining their focus on personal remittances and preserving the prohibition on routing donations. The amendment expressly permits payments to utility service providers in India, tax payments in India, and EMI repayments to banks and NBFCs, alongside pre-existing permitted items such as credits to non-resident rupee accounts, family payments, insurance and investment premia, education and medical expenses, hotel and travel bookings, and limited trade transactions, with all other instructions remaining operative.

Resident bank account joint operation: non-resident close relatives may be joint holders on either-or-survivor basis subject to conditions.
Non-resident close relatives may be joint holders in resident bank accounts on an Either or Survivor basis while the account remains a resident bank account; the NRI cannot credit their own proceeds, may operate the account only for the resident for domestic payments without creating beneficial interest, and must notify the bank to reclassify the account as NRO if they become the survivor, with banks obtaining a signed FEMA compliance declaration.

Optionality clauses in FDI instruments permit investor exit at prevailing market-linked price after applicable lock-in period.
Permits inclusion of optionality clauses in equity and in compulsorily/mandatorily convertible securities issued to non residents under the FDI scheme, requiring buy back at the price prevailing at exercise so investors exit without assured returns. A minimum lock in period applies from allotment. After lock in, listed investees permit exit at recognised exchange market price; unlisted investees permit exit not exceeding a price based on Return on Equity from the latest audited balance sheet; CCDs and CCPS may be priced at an internationally accepted methodology certified by a Chartered Accountant or SEBI registered merchant banker.

Non-compete restriction in pharmaceutical FDI: clauses prohibited except in special cases with FIPB approval now required
Foreign direct investment in pharmaceuticals remains at 100% for both greenfield (automatic approval) and brownfield (government approval subject to conditions). Newly imposed restriction disallows non-compete clauses except in exceptional cases with prior approval from the designated foreign investment approval authority; this restriction takes immediate effect.

Infrastructure classification broadened: MRO now treated as airport infrastructure for External Commercial Borrowings eligibility.
For ECB purposes the Airport sub sector in the Transport Sector of Infrastructure is expanded to treat Maintenance, Repairs and Overhaul (MRO) as part of airport infrastructure; services not constituting infrastructure remain excluded. All other ECB policy provisions are unchanged and AD Category I banks must inform constituents; the directions are issued under statutory foreign exchange powers without prejudice to other legal permissions.

Issue of non-convertible bonus preference shares permitted to non-resident shareholders under approved scheme, subject to tax no-objection.
An Indian company may issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including depositories for ADR/GDR holders, by way of bonus distribution from general reserves under a Scheme of Arrangement approved by an Indian court, subject to no-objection from the Income Tax Authorities; other types of preference shares and convertible debentures remain subject to existing FDI circulars.

Rollover of guarantees: not treated as new financial commitment if conditions on end use, terms, reporting, and investigations are met.
Rollover of guarantees for Overseas Direct Investment will not be treated as a fresh financial commitment if the original guarantee was issued under then-prevailing FEMA guidelines, the end use by the JV/WOS/step-down subsidiary remains unchanged, no terms or amount change occurs except for validity, the rollover is reported in Part II of Form ODI, and any ongoing investigations are notified; otherwise prior Reserve Bank approval via the designated Category I Authorised Dealer bank is required.

Gold import controls: refiners' dore imports limited, FIFO refining and export-linked accrual restrictions enforced under FEMA directives
Refiners may import dore initially up to a capped share of their license entitlement for exporters on a FIFO basis; subsequent import quantities are to be lot wise based on export performance. Imported dore must be refined and released under the 20:80 principle, with customs monitoring. Further imports are allowed only against export proof on an accrual, export linked basis; Authorized Dealers must inform constituents. Directions issued under Sections 10(4) and 11(1) of FEMA, 1999.

Foreign investment in rupee bonds: non-residents may subscribe to tax-free secured non-convertible bonds enabling on-lending to infrastructure or deposit placement.
Resident entities authorised by the Government of India may issue tax-free, secured, redeemable, non-convertible bonds in Rupees to persons resident outside India; proceeds may be used only for on-lending/re-lending to the infrastructure sector or placed in fixed deposits with banks in India pending utilisation, pursuant to amendments to the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations and under the authority of the Foreign Exchange Management Act, 1999.

Special Currency Basket valuation revised, requiring authorised dealer banks to apply new rupee conversion and notify constituents under FEMA.
Revision of the Special Currency Basket rupee valuation is fixed at the updated value to apply from the specified effective date; Authorised Dealer Category I banks are required to apply this revised rupee value in their dealings and to notify their constituents. The Directions are issued under FEMA and are without prejudice to permissions or approvals required under other laws.