Industrial licence for defence items: specified military systems and components require licensing; general dual-use goods are exempt.
A mandatory industrial licence is required for the annexed categories of defence items read with Entry No.13 of Schedule II, covering ground combat vehicles, electronic aerospace and defence equipment, military aircraft and unmanned systems, warships and naval systems, and a comprehensive range of arms, ammunition, energetic materials, munitions, countermeasures, high-velocity kinetic and directed energy weapons, their specially designed components, test models and associated military systems. Items not listed and general dual-use goods are exempt from defence-related industrial licensing unless specifically included.

Record retention obligations: MTSS Indian agents must maintain records for the revised period under amended PMLA and FEMA.
Authorised Persons who are Indian Agents under MTSS must comply with KYC, AML and CFT obligations and, pursuant to the amendment to Section 12 of the Prevention of Money Laundering Act, are required to maintain and preserve the records specified in earlier RBI guidance for a period of at least five years; the directions are issued under the Foreign Exchange Management Act and the Prevention of Money Laundering Act and are without prejudice to permissions required under other laws.

Record-retention requirement for money changers revised to shorter statutory period under PMLA amendment, affecting KYC and AML obligations.
Authorised Persons engaged in money-changing activities and subject to KYC/AML/CFT obligations must maintain and preserve the required customer and transaction records for at least five years, replacing the prior ten-year requirement; this change follows the amendment to the Prevention of Money Laundering Act and is issued under the Foreign Exchange Management Act and the Prevention of Money Laundering Act, without prejudice to permissions or approvals under other laws.

FPI access to currency derivatives permitted for hedging, subject to exchange position limits and custodian monitoring and reporting.
FPIs are allowed to participate in exchange traded currency derivatives to hedge currency risk on their Indian debt and equity exposures, trading through registered exchange members and subject to prescribed exchange-level position limits; positions beyond limits require demonstrable underlying exposure with the onus on the FPI. Exchanges must report FPI-wise positions to custodian banks, which aggregate positions across venues and OTC contracts, monitor excesses relative to market value of holdings, report transgressions, and trigger applicable penal and foreign exchange actions where aggregated contracts exceed holdings.

Position limits in ETCD require auditor certified underlying exposure beyond set thresholds; AD banks may net and proprietary trade within NOPL.
Domestic participants may take intraday long and short positions in ETCDs up to a prescribed exchange threshold without proving underlying exposures; positions beyond that threshold require auditor certified evidence of contracted export/import or other foreign currency exposures and a CFO undertaking that combined OTC and ETCD contracts correspond to actual exposures. Trading members may book contracts up to a specified fraction of eligible limits on that certificate and, with further auditor certification, book up to the eligible limit. AD Category I banks must verify exposures when acting as trading members and may face regulatory action for non compliance.

Currency export/import limits increased for residents and non-residents, excluding Pakistan and Bangladesh, airport-only entry/exit for visitors.
The circular raises the ceiling on Indian currency notes that residents and most non-residents may carry into and out of India, while excluding movements to and from Nepal and Bhutan and excluding citizens and travellers to and from Pakistan and Bangladesh; non-residents' entry and exit with currency notes is restricted to airports. Authorised Persons are directed to inform constituents, and the change amends the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 under provisions of the Foreign Exchange Management Act, 1999.

Annual Return on Foreign Liabilities and Assets: revised reporting format mandates electronic filing and valuation rules.
The circular mandates electronic annual filing of the Annual Return on Foreign Liabilities and Assets by Indian companies receiving or making foreign investments, revises the FLA form to collect Outward FATS data, prescribes valuation methods (market value for listed equity; OFBV for unlisted; nominal value for most debt/claims), details sectioned reporting of liabilities and assets (direct investment, portfolio investment, other investment), defines classification and exchange rate rules, and requires submission in the prescribed format to the designated e-mail address, while preserving confidentiality and noting regulatory amendment under the Transfer or Issue of Security Regulations.

Director's enforcement powers expanded under PMLA: warnings, compliance directions, reporting obligations and fines for non compliance.
Amendment expands the Director's enforcement powers to issue warnings, direct compliance measures, require periodic reports, or levy monetary fines for failures by reporting entities, designated directors or employees to meet KYC, AML, CFT and PMLA obligations; Authorised Persons under MTSS should nominate a designated Director to ensure compliance, and the directions are issued under the foreign exchange regulatory provisions and PMLA without prejudice to other legal permissions.

Powers of Director under PMLA enable warnings, compliance directions, reporting and fines; authorised persons must appoint a designated Director for compliance.
Amendment to Section 13(2) of the PMLA empowers the Director to issue warnings, direct specific compliance measures, require periodic reports, or levy fines where reporting entities fail to meet PMLA obligations. Authorised Persons should nominate a Board member as a designated Director to ensure compliance with KYC, AML and CFT requirements; the circular is issued under FEMA and the PMLA and does not affect other statutory permissions.

Delegation of powers to AD banks permits transfer of foreign office assets to Indian entities on closure, subject to specified documentary safeguards.
AD Category I banks may permit transfer of assets of Liaison, Branch and Project Offices to Indian subsidiaries, joint ventures or other entities when the foreign entity intends to close its operations, provided the office has complied with reporting and registration requirements, a Statutory Auditor certificate detailing acquisition, book value and sale consideration (not exceeding book value) is furnished, assets derive from inward remittances and applicable taxes are paid; AD banks must preserve documents and ensure subsequent closure procedures are followed.

Pledge of non-resident-held listed shares in favour of NBFCs permitted by AD banks subject to compliance and concentration norms.
AD Category-I banks may allow pledge of listed equity shares held by non-resident investors in favour of NBFCs to secure credit to the resident investee company, subject to: only listed shares being eligible; transfer on invocation complying with credit concentration norms and rectification within 30 days if breached; optional ex ante board resolution and ex post statutory auditor certificate evidencing utilisation of loan proceeds for declared purpose; and compliance with applicable SEBI disclosure norms. Directions derive from amended FEMA regulations and are issued under sections 10(4) and 11(1) of the FEMA, 1999.

Foreign investment in non-convertible securities permitted for registered FPIs, SEBI long term investors and NRIs within corporate debt limits.
SEBI registered FIIs, QFIs deemed as FPIs, registered FPIs, and SEBI registered long term investors may invest on a repatriation basis in non convertible/redeemable preference shares and non convertible debentures of Indian companies-issued under a court approved Scheme of Arrangement and listed on recognized exchanges-provided such investments are within the overall corporate debt limit. NRIs may invest in these instruments on repatriation or non repatriation basis. Authorized Dealer Category I banks must notify constituents; directions are issued under the Foreign Exchange Management Act.

FDI cap in the insurance sector allowed under automatic route, subject to prescribed Press Note conditions and RBI amendment.
The circular permits FDI up to 26% under automatic route in the insurance sector to include FDI, investments by FIIs/FPIs and NRIs, subject to the conditions in Press Note 2 (2014 Series) dated February 4, 2014; it notes RBI's amendment to the Foreign Exchange Management Regulations to implement the Press Note and instructs AD Category I banks to inform customers, issued under Sections 10(4) and 11(1) of the FEMA, 1999.

Liberalised Remittance Scheme limit increased, allowing higher annual remittances for permitted current and capital account transactions.
Authorised Dealer Category I banks may allow remittances by resident individuals up to the enhanced LRS annual ceiling of USD 125,000 for any permitted current or capital account transaction or combination thereof; remittances for prohibited activities such as margin trading and lotteries remain barred, all other terms unchanged, and banks must notify customers and implement the directions issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.

Line of Credit financing for defence equipment procurement requires majority India sourced supplies and FEMA compliance.
Exim Bank's Line of Credit to Mauritius finances procurement of eligible goods, machinery, equipment and services from India for specialised defence related equipment and vehicles; sellers must supply a majority of the contract value from India with up to 25 percent procured abroad. The Agreement was executed February 12, 2014 and effective May 15, 2014; last dates for Letters of Credit and disbursement are 48 months from scheduled completion for project exports and 72 months from execution for supply contracts. Shipments must be declared on GR/SDF forms; no agency commission is payable under the LOC, subject to FEMA compliance.

Crystallization of inoperative foreign currency deposits mandates conversion to Indian Rupee after inactivity; depositor may claim rupee proceeds or equivalent.
Authorised dealers must convert inoperative foreign currency deposits into Indian Rupee at the prevailing exchange rate after the prescribed inactivity period. For fixed maturity deposits the conversion occurs at the end of the inactivity period following maturity; for non maturing deposits conversion follows a prior notice to the depositor and excludes debits for bank charges as operations. Depositors may claim either the Indian Rupee proceeds with interest or the foreign currency equivalent calculated at the rate prevailing on the date of payment.

Hedging flexibility for resident importers expanded under past-performance route, permitting increased forward cover subject to existing operational conditions.
Importers may book forward contracts under the past performance route for a larger share of the eligible import limit, as computed by the higher of the three year average import turnover or the prior year's actual turnover; importers who previously booked up to the earlier threshold may avail the incremental entitlement, and all existing operational guidelines, terms and conditions apply while AD Category I banks must inform constituents. Directions issued under FEMA remain subject to other statutory permissions.

Special Currency Basket value revised, changing rupee conversion for deferred payment protocols under FEMA with immediate bank compliance.
The Reserve Bank revised the rupee valuation of the Special Currency Basket for deferred payment protocols with the erstwhile USSR, directed Authorised Dealer Category I banks to apply the revised value from the stated effective date, and required banks to notify their constituents; the Directions are issued under the Foreign Exchange Management Act and are without prejudice to other statutory permissions.

Gold import regulation: revised 20:80 scheme allows nominated agencies imports with export-linked discipline and Gold Metal Loans.
Revised guidelines permit STH/PTHs registered as DGFT nominated agencies to import gold under the 20:80 scheme subject to prior import history, Customs verification, submission of port-wise import plans, a first-lot cap based on highest monthly import in the prior 24 months (subject to a maximum), and the continued requirement that 20% of each consignment be exported before the next import. Nominated banks may provide Gold Metal Loans to domestic jewellery manufacturers from the 80% domestic quota to the extent of GML outstanding as on March 31, 2013; imports must route through bonded warehouses and domestic sales require upfront payment except for permitted GML.

Long term export advances: banks may fund long term supply contracts subject to eligibility, compliance and reporting requirements.
Authorised Dealer Category I banks may permit exporters with three years' satisfactory track record to receive long term export advances up to ten years for long term supply contracts, subject to conditions including firm irrevocable orders, demonstrable execution capacity, routing through one AD bank, adjustment through future exports, prohibition on using advances to repay NPA rupee loans, avoidance of double financing, AML/KYC and overseas buyer due diligence, and an interest cap at LIBOR plus 200 basis points; banks must report large advances and submit annual progress reports to the Reserve Bank.