LLP recognition as Indian Party for overseas direct investment permits financial commitments under FEMA, subject to ODI reporting.
LLPs are notified as Indian Party under the FEMA regulations, allowing them to undertake financial commitments for JVs or WOS abroad under Regulation 6 (and 7 if applicable). The change became effective on Gazette publication; AD Category I banks must report LLP financial commitments in Form ODI Part I and II and meet existing reporting obligations including APR and disinvestment filings, without prejudice to other legal permissions.

External commercial borrowing simplification: AD banks may approve specified FEH and group-company ECBs under the automatic route.
RBI delegates authority to AD Category-I banks to approve under the automatic route ECBs from direct and indirect foreign equity holders and group companies for specified sectors (manufacturing, infrastructure, hotels, hospitals, software), miscellaneous services (limited to training, R&D and infrastructure-support), ECBs for general corporate purpose from direct equity holders, and change-of-lender requests where the ECB originates from a foreign equity holder or group company, subject to all existing ECB terms and conditions.

External Commercial Borrowings restriction bars ECBs from overseas branches or subsidiaries of domestic banks for rupee loan repayment.
Eligible Indian companies are prohibited from raising External Commercial Borrowings from overseas branches or subsidiaries of Indian banks to refinance or repay Rupee loans raised from the domestic banking system, covering take-out financing, infrastructure loan repayments, spectrum-related refinancing, and general Rupee loan repayment. The prohibition implements an earlier DBOD position, is effective immediately, leaves other ECB policy aspects unchanged, and requires Authorised Dealer banks to notify constituents; directions are issued under the Foreign Exchange Management Act.

ECB Reschedulement: delegated to authorised banks for one-time pre maturity adjustment subject to cost and compliance conditions.
Designated Authorised Dealer Category I banks may permit a one-time re-schedulement of ECB drawdown or repayment schedules before original maturity, for ECBs under both automatic and approval routes but excluding FCCBs, provided there is no increase in interest rate or additional cost, any all-in-cost change only reflects average maturity alteration and complies with guidelines, borrower eligibility and lender prudential norms are met, borrowers are not on default/caution lists or under enforcement investigation, and revised details are reported on the prescribed form.

FC-TRS filing requirement: investee companies must file for transfers by non-resident buyers; banks may seek regulator approval for late filings.
Where a non-resident investor acquires specified securities on an Indian stock exchange under the FDI scheme, the investee company must file form FC-TRS with the AD Category I bank; AD Category I banks may approach the Reserve Bank's Regional Office to regularise delayed FC-TRS submissions beyond the prescribed period and must continue consolidated monthly reporting of branch-level transactions as per existing instructions.

Reporting of Cross Border Wire Transfers required via FIU-IND Transaction Reporting Format on FINnet with monthly submission deadline.
Every reporting entity must maintain records of cross border wire transfers where origin or destination is in India and furnish information to the Director, FIU IND by the fifteenth day of the succeeding month using the FIU IND Transaction Based Reporting Format (TRF) submitted electronically through the FIN Net/FINnet module; sample formats are available on the FIU IND website.

Cross-border wire transfer reporting requires authorised MTSS agents to submit TRF reports electronically via FINnet to FIU-IND monthly.
Authorised Persons under the Money Transfer Service Scheme must report cross border wire transfers where either origin or destination is in India that exceed the prescribed threshold using the Transaction Based Reporting Format (TRF) and submit the information electronically via the FIN Net module to FIU IND by the monthly deadline; the TRF format and sample are available on the FIU IND website and these directions are issued under FEMA and PMLA without prejudice to other statutory permissions.

Non-compete restrictions in pharmaceutical foreign investment barred except in special circumstances with government approval.
Policy permits full foreign equity in pharmaceuticals for greenfield projects under the automatic route and for brownfield investments under the government approval route; non-compete clauses are disallowed except in special circumstances with prior government approval, and RBI has amended FEMA regulations to implement this clarification.

Foreign Direct Investment rules: consolidated policy sets entry routes, sectoral caps, valuation and reporting obligations.
The consolidated FDI policy establishes a transparent framework to promote Foreign Direct Investment, specifying eligible investors and instruments, two entry routes-Automatic Route and Government Route-and detailed pricing, lock in and minimum capitalisation rules. It prescribes sectoral caps and sector specific conditionalities (including security clearances and sourcing requirements), sets out computation rules for direct and indirect/downstream foreign investment, and mandates standardized reporting, remittance and approval procedures under FEMA with enforcement and penalties for contraventions.

Foreign Direct Investment in LLPs requires prior government approval plus specific valuation, payment and reporting conditions under FEMA.
Foreign direct investment in LLPs is allowed only in LLPs formed under the LLP Act and limited to sectors permitting 100% automatic FDI without performance conditions. All foreign investment requires prior Government/FIPB approval. Eligible investment is capital contribution (profit share treated as reinvestment). Pricing must meet fair price valuation certified by an approved valuer or prescribed accountant. Payments must be by inward remittance or debit to specified non resident accounts via AD Category I banks. LLPs must report transactions to the Reserve Bank through AD Category I banks with supporting FIRCs, valuation and KYC documentation to obtain a Unique Identification Number.

All-in-cost ceiling for trade credits extended, remaining subject to review and existing policy unchanged under FEMA authority.
The circular extends the all-in-cost ceiling applicable to trade credits for imports into India until June 30, 2014, subject to review thereafter; it leaves all other aspects of Trade Credit policy unchanged and instructs Authorised Dealer Category I banks to inform their constituents, issued under the Foreign Exchange Management Act, 1999.

All-in-cost ceiling for External Commercial Borrowings extended, maintaining existing ECB conditions and requiring banks to notify customers.
The Reserve Bank directs continuation of the existing all-in-cost ceiling for External Commercial Borrowings until June 30, 2014, subject to review, leaves all other ECB policy provisions unchanged, and requires Authorised Dealer Category I banks to notify constituents; the directions are issued under the Foreign Exchange Management Act and are without prejudice to other legal permissions.

Foreign inward remittances direct-to-account facility permitted subject to KYC, originator information and AML reporting obligations.
Foreign inward remittances under the Rupee Drawing Arrangement may be credited directly to beneficiary accounts at other banks via electronic transfer, provided the Recipient Bank credits only KYC compliant accounts or completes KYC/CDD before credit/withdrawal of non compliant accounts; the Partner Bank must mark transfers as foreign inward remittances and include accurate originator and beneficiary information in the electronic message. Recipient Banks must maintain identification records under PML Rules and report suspicious transactions to FIU IND, and both banks must comply with RBI KYC/AML/CFT guidelines.

Booking of foreign exchange forward contracts: residents may self-declare exposures to book forwards without underlying documentation.
Resident individuals, firms and companies with actual or anticipated foreign exchange exposures may book foreign exchange forward contracts on the basis of a simple self-declaration without producing underlying documents; SMEs' prior facilities for booking, canceling or rolling over forwards without documentation remain unchanged. Authorised Dealer Category I banks must use the revised reporting format and continue to apply other conditions, including tenor, as prescribed earlier. The directions are issued under the Foreign Exchange Management Act and are without prejudice to other statutory permissions.

Foreign investment in government securities confined to longer term dated securities, barring fresh short term treasury investments.
Foreign investment is limited to Government dated securities having residual maturity of one year and above; existing investments in Treasury Bills and in dated securities with less than one year residual maturity may taper off on maturity or sale, while no fresh investment in short term government instruments is permitted. Operational guidelines to implement the maturity restriction will be issued and all other existing investment conditions remain unchanged.

Compounding powers delegated to regional offices for specified FEMA contraventions, with high value cases retained at central cell.
Regional Offices of the Reserve Bank are empowered to compound six specific FEMA contraventions concerning share issuance and related foreign inward remittances, filing of form FC(GPR), delayed issue or refund of share monies, pricing guideline violations, issuance of ineligible instruments, and issuance without requisite approvals. All Regional Offices except Kochi and Panaji may compound these contraventions without monetary limit; Kochi and Panaji may compound such contraventions below a prescribed monetary threshold, with higher-value cases and all other contraventions referred to CEFA, Mumbai. Applications to compound must be submitted to the relevant Regional Office or to CEFA as applicable.

Advance remittance for rough diamonds: banks may allow guarantee-free payments subject to due diligence and reporting.
Reserve Bank authorises AD Category - I banks to permit advance remittance without bank guarantee or standby letter of credit for imports of rough diamonds, replacing RBI notification of approved overseas mining companies. Banks may decide which overseas mining companies may receive such payments for importers (other than public sector or government entities), subject to safeguards: GJEPC recommendation, recognised importer status and track record, commercial judgment and bonafides checks, contractual direct payments to ultimate beneficiary, Kimberly Certification to avoid conflict diamonds, KYC/due diligence, and follow-up for Bill of Entry or equivalent import evidence. Reporting to the RBI regional office for large advances is required in the annexed format each half year.

Merchanting trade compliance: banks must verify dual leg transactions, limit exposure, and report defaults under forex rules.
Revised guidelines specify merchanting trade qualification where goods do not enter the Domestic Tariff Area and remain untransformed, require compliance with applicable export/import formalities, and mandate that both legs be routed through the same AD Category I bank which must verify transactional documents, observe KYC/AML, enforce time and outlay limits, permit short term credit and limited advance handling subject to safeguards, allow EEFC utilization and LCs against confirmed orders, and require one to one matching, half yearly default reporting and caution listing for significant defaults.

Hedging cancellation flexibility now permits limited cancellable forward contracts, altering exporter/importer gain loss entitlement under foreign exchange rules.
Forward contracts booked up to seventy five percent of the eligible hedging limit may be cancelled with the exporter/importer bearing losses or receiving gains; contracts booked in excess of that threshold must be fully deliverable and cannot be cancelled, meaning the exporter/importer will bear any loss on cancellation but will not be entitled to any gain. Eligibility for hedging continues to be based on historical export or import turnover, and Authorised Dealer Category I banks must notify their constituents.

External Commercial Borrowings for civil aviation sector extended under approval-route with existing conditions maintained until further review.
External Commercial Borrowings for the civil aviation sector may continue to be raised for working capital under the approval route on the terms of the A.P. (DIR Series) Circular dated April 24, 2012; all conditions remain unchanged and AD Category I banks are to notify their constituents. The directions are issued under the Foreign Exchange Management Act and are without prejudice to any other required permissions.