Foreign investment cap in insurance maintained on automatic route, subject to licensing, Indian ownership and regulatory compliance.
A consolidated foreign investment cap permits foreign equity up to forty nine percent in Indian insurance companies and designated intermediaries on the automatic route, subject to IRDAI verification and licensing and compliance with the Insurance Act, 1938. Ownership and control must remain with resident Indian entities as defined in the relevant notification. Foreign portfolio investment follows FEMA and SEBI rules; increases in foreign equity must comply with RBI pricing guidelines. The same cap and conditions apply to brokers, TPAs, surveyors, loss assessors and other IRDA appointed intermediaries; additional conditions govern bank promoted entities and non insurance primary business revenue thresholds for intermediaries.

Diamond Dollar Account reporting requirement relaxed; banks must retain DDA records and provide them to the regulator on request.
Mandatory quarterly and fortnightly submissions on Diamond Dollar Accounts by Authorised Dealer Category I banks to the Reserve Bank are dispensed with; banks must nevertheless maintain an internal database with account holder identity, opening/closing dates and balance data and make it available to the Reserve Bank on demand. Amendments to the Foreign Currency Accounts Regulations effect this change and the Master Directions are being updated. The directions are issued under FEMA statutory powers without prejudice to other legal permissions.

Benchmark-based lending: internal MCLR and Base Rate frameworks require banks to price loans by benchmark plus spread.
Banks must adopt a Board approved interest rate policy and price rupee advances (subject to specified exemptions) by reference to an internal or external benchmark plus a bank defined spread. The internal benchmarks are the Base Rate and the Marginal Cost of Funds based Lending Rate (MCLR), the latter comprising marginal cost of funds, negative carry on CRR, operating costs and a tenor premium; MCLR is tenor linked and published at specified maturities, reviewed monthly (or quarterly where permitted), and governs reset mechanics of floating rate loans.

Interest Rate Regulation: banks must follow board approved, uniform, transparent deposit interest policies with benchmark linkage.
These Directions require scheduled commercial banks to adopt board approved, publicly disclosed and uniform interest rate policies for domestic and specified non resident deposit accounts, mandate non negotiability and transparency of rates, prescribe interest calculation conventions (including daily product for savings and benchmark linkage for floating term deposits), set rules for tenor and size based rate differentiation, govern premature withdrawal interest and penalty disclosure, allow limited additional interest schemes for staff and senior citizens, regulate conversion and treatment of non resident deposits on return to India, and prohibit incentive based deposit mobilisation except narrow permitted exceptions.

EDF waiver for free-of-cost exports: status holders' entitlement now capped by revised annual limit, banks to consider requests.
Status Holders' entitlement to export freely exportable items free of cost for export promotion is limited by an annual monetary cap and a percentage based cap on average annual export realization, with the revised rule applying the lower of the two limits; AD Category I banks may consider requests for EDF waiver from Status Holder exporters under this revised norm, and banks should inform constituents of the change under FEMA authority.

Know Your Customer rules: mandatory risk based CDD, digital/V CIP onboarding, CKYCR uploads, sanctions screening and FIU reporting.
Know Your Customer (KYC) Direction, 2016 requires Reserve Bank regulated entities to implement Board approved KYC policies comprising Customer Acceptance Policy, Risk Management, Customer Identification Procedures and transaction monitoring; mandates documented ML/TF risk assessments and a Risk Based Approach, prescribes Customer Due Diligence for individuals and legal entities including Aadhaar/PAN/OVDs and beneficial owner identification, sets rules for non face to face onboarding (OTP e KYC and V CIP) with technical and audit standards, requires periodic KYC updation, CKYCR upload of KYC records, reporting to FIU IND, wire transfer traceability, and daily sanctions screening and freezing obligations under UAPA and WMD Act procedures.

Issue of shares without cash: sweat equity and share issuance against owed payments permitted with FEMA and FDI compliance.
Permits issue of equity to non-residents without cash remittance where: (a) sweat equity schemes comply with SEBI rules for listed companies or the Companies (Share Capital and Debentures) Rules for others, and (b) shares are issued against legitimate payments owed where remittance does not require prior FEMA permission, subject to FDI policy, sectoral caps, pricing guidelines and applicable tax laws; AD Category I banks must notify constituents and refer to the relevant FEMA notifications.

Foreign currency account pooling for start ups enables repatriation of subsidiary receivables subject to RBI conditions.
An Indian start-up with an overseas subsidiary may open a foreign currency account abroad to pool export/sales receipts, and the overseas subsidiary may pool receivables from transactions with Indian residents and non residents into that account. Balances due to the Indian start-up must be repatriated to India within the period applicable to realisation of export proceeds. Start ups may use OPGSPs for realising subsidiary receivables or repatriation subject to an RBI permitted value cap, and must have appropriate contractual arrangements among the parties.

Foreign exchange reporting under FETERS moved to secure web-portal with revised purpose codes and online Form A2 submission.
FETERS reporting shifts from email to an RBI web-portal with supplied logins, downloadable Java/Excel validators, master-files, upload acknowledgements, two-fortnight file access, and RBI-authenticated revision of purpose codes and AD-master entries. ENC.TXT and SCH3-6.TXT reporting and their linked purpose codes are discontinued. LRS transactions must be reported under specific FETERS purpose codes matching the nature of the remittance rather than a single aggregated code; Form A2 is revised (LRS checkbox) and may be submitted online with initial per-transaction limits, subject to Authorised Dealer bank satisfaction and compliance by April 1, 2016.

Permission to purchase foreign exchange at post offices allowed via postal or money orders, requiring banks to inform constituents.
A general permission permits any person to buy foreign exchange from post offices in India by means of postal orders or money orders; the Notification supersedes the earlier instrument and is effective from the date of notification. Authorised Dealer Category I banks are to inform their constituents. The directions are issued under statutory foreign exchange powers and are without prejudice to other legal permissions or approvals.

Currency definition expands to include debit and ATM cards and instruments creating financial liability under foreign exchange rules.
The statutory definition of currency is amended to include debit cards, ATM cards and any other instrument capable of creating a financial liability, thereby placing such payment instruments within the scope of foreign exchange regulation; the amendment supersedes the earlier notification and is effective from the notified date.

Possession limits for foreign currency: specified categories may retain currency subject to origin and residency conditions.
The Regulations permit possession without limit of foreign currency and coins by authorised persons within their authority and possession without limit of foreign coins by any person. Residents may retain foreign currency notes, bank notes and travellers' cheques up to US$2000 (or equivalent) in aggregate if acquired abroad while on visit for non business services, received from a non resident visitor as honorarium, gift, payment for services or settlement of lawful obligation, received as honorarium or gift while abroad, or represent unspent travel foreign exchange. Non permanently resident persons may possess without limit foreign currency acquired while resident abroad and brought into India in compliance with FEMA rules.

Duty to repatriate foreign exchange: residents must realise, repatriate and surrender receipts to authorised persons within prescribed periods.
A resident entitled to foreign exchange must realise and repatriate it to India, selling it to an authorised person for rupees, holding it with an authorised dealer as permitted by the Reserve Bank, or using it to discharge foreign currency liabilities as specified. Receipt in rupees from an overseas bank or exchange house account maintained with an authorised dealer is deemed repatriation. Specified surrender periods apply for non individuals, unspent acquired foreign exchange, travel balances, and resident individuals, and currency of Nepal and Bhutan is exempted.

Currency export and import limits govern carrying of Indian notes and declaration requirements for foreign exchange on arrival.
Regulations prescribe per person limits for taking and bringing Indian currency notes and commemorative coins for residents and qualifying non residents, allow unrestricted transmission of foreign exchange into India except for currency notes which require a Currency Declaration Form above specified thresholds, permit authorised persons to export foreign currency acquired in business and persons to export specified lawful foreign exchange and unspent retained foreign exchange, provide special rules for Nepal and Bhutan movements, and prohibit export of coins covered by the Antique and Art Treasure Act.

Foreign currency accounts by residents: regulated account types, eligibility and mandatory conversion and holding conditions.
The Regulations define permissible foreign currency account types that a person resident in India may open or maintain with authorised dealers in India or outside India, specify eligibility categories (including exporters, SEZ units, project offices, ship manning agencies, organisers of international events and persons raising external commercial borrowings), set account forms and permitted credits/debits, prohibit credit facilities against certain balances, and require monthly conversion of accruals into rupees by the end of the succeeding calendar month unless used for approved purposes, with operational duties on Authorised Dealers and provisions for transfer of balances on change of residential status.

Acquisition of immovable property abroad requires prior regulatory approval, subject to specified exceptions and company remittance limits.
Acquisition or transfer of immovable property outside India by a person resident in India requires prior approval of the Reserve Bank, subject to specified exceptions including gifts, inheritance, RFC-account-funded purchases, joint acquisition with a non-resident without outflow of Indian funds, and certain pre-1947 holdings; Indian companies with overseas offices may acquire property within prescribed remittance limits for initial and recurring expenses.

Settlement in beneficiary currency allowed when AD banks confirm customer, invoice, consent, bonafides and high risk jurisdiction checks.
AD Category I banks may permit settlement of export and import transactions in the beneficiary's currency where the contract/invoice is in a freely convertible currency, the exporter/importer is a customer of the AD bank, the beneficiary agrees to receive payment in its currency as full settlement, the AD bank is satisfied of the transaction's bonafides, and the counterparty is not from jurisdictions on the updated high risk/non cooperative list; these transactions exclude the ACU mechanism and are reflected in updated Master Directions on exports and imports.

Special Currency Basket value revised, altering rupee conversion rate effective January 25, 2016 under FEMA directions.
Revision of the Rupee value of the Special Currency Basket has been fixed effective January 25, 2016; AD Category I banks are to implement and notify constituents. The directions are issued under FEMA, relying on sections 10(4) and 11(1) of the Act, and apply to transactions under the Deferred Payment Protocols between India and the erstwhile USSR.

FDI reporting now requires mandatory online filing of ARF, FCGPR and FC-TRS via e Biz platform.
The Reserve Bank mandates mandatory online filing of ARF, FCGPR and FC-TRS through the e Biz portal; physical filing of these FDI reporting forms is discontinued from February 8, 2016. AD Category I banks must inform and assist their customers with e Biz submissions. The directions are issued under sections 10(4) and 11(1) of FEMA, 1999 and do not affect other statutory permissions.

Project export approvals: AD banks and Exim Bank may grant unlimited post award approvals and amend terms under FEMA guidelines.
Authorized Dealer banks and Exim Bank may consider and grant post award approvals for project exports and deferred service export proposals without monetary limits and permit subsequent changes in approval terms under relevant FEMA guidelines; the Memorandum of Instructions on Project and Service Exports is revised to reflect the renaming of OCCI as Project Export Promotion Council and to expand the definition of civil construction contracts to include turnkey engineering contracts, process and engineering consultancy services and project construction items (excluding steel and cement).