Restriction on overseas guarantees: prior Reserve Bank approval required for rupee denominated structured obligations, with infrastructure exceptions.
Restriction requires that no company registered under the Companies Act shall avail domestic rupee denominated structured obligations by obtaining credit enhancement in the form of guarantees from international banks, international financial institutions or joint venture partners except with the prior approval of the Reserve Bank; provided that companies engaged exclusively in infrastructure development and infrastructure financial companies may obtain such overseas guarantees for domestic capital market instruments without prior approval subject to terms and conditions stipulated by the Reserve Bank.

Regulatory amendment to foreign exchange borrowing and lending removes a Schedule provision, applied retrospectively with non adverse clarification.
The Reserve Bank of India has amended the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations by omitting paragraph 5 of Schedule II, thereby modifying the regulatory provisions governing borrowings and lendings in foreign exchange. The amendment is effected by notification as the Fourth Amendment Regulations, 2012, includes a short title and commencement clause and states the amendment has retrospective effect while asserting no person will be adversely affected by that retrospective application.

Foreign currency borrowings for affordable housing allowed for developers, HFCs and NHB subject to FEMA compliance and RBI conditions.
The amendment permits developers/builders, Housing Finance Companies and the National Housing Bank to avail foreign currency loans for financing developers or prospective owners of low cost affordable housing projects or units, in accordance with the Foreign Exchange Management Act and related rules and subject to terms and conditions specified by the Reserve Bank of India.

Overseas direct investment approvals: investment in Pakistan moved to approval route and reporting regimes tightened.
The amendment reclassifies overseas direct investment by Indian parties into Pakistan to be considered under the approval route. It tightens reporting by requiring Annual Performance Reports based on audited accounts to be submitted to the Reserve Bank through the designated authorised dealer, and adds a requirement to file an Annual Return on Foreign Liabilities and Assets to the Director, Balance of Payment Statistics Division, DSIM. Form ODI Part I Sections E and F are revised to add an Indian party declaration and a statutory auditor's certificate confirming compliance with investment conditions, valuation norms, funding limits and applicable prudential requirements.

Foreign currency bridge finance for spectrum bidders permitted, with RBI-specified conditions and refinancing and repayment exemptions.
Authorises foreign currency borrowings as bridge finance for successful spectrum reauction bidders to make upfront payments, permitting refinancing by fresh foreign currency borrowings under the Act and regulations subject to Reserve Bank-specified terms. Exempts such bridge finance from sub-paragraph (v) of paragraph 1 and allows refinancing of rupee loans used for upfront payments without application of the repayment restriction in sub-paragraph (iv)(B); permits borrowings from the ultimate parent company subject to Reserve Bank conditions.

Foreign investment by Pakistani persons allowed with prior government approval, subject to sectoral prohibitions and Schedule conditions.
Amendment adds a provision allowing citizens of Pakistan and entities incorporated in Pakistan to purchase shares and convertible debentures of Indian companies under the Foreign Direct Investment scheme with prior approval of the Foreign Investment Promotion Board, subject to Schedule 1 terms and conditions; the recipient Indian company must not engage in defence, space, atomic energy or other sectors prohibited for foreign investment, and Schedule 1 is revised to state that persons referred in Regulation 5(1) may acquire securities only to the extent and on the terms set out in the Schedule.

Qualified Foreign Investor status permits a single non interest Rupee account to route eligible securities transactions subject to conditions.
A Qualified Foreign Investor (QFI) is defined by residency and compliance criteria tied to FATF and IOSCO cooperation, KYC requirements, and exclusions for jurisdictions with strategic AML/CFT deficiencies, residents of India, and entities already registered as FIIs, Sub Accounts of FIIs or FVCIs. A QFI may open a single non interest bearing Rupee account with an Authorised Dealer without prior Reserve Bank approval solely to route receipts and payments for purchase and sale of eligible securities, subject to funding by inward remittance or sale proceeds, restricted uses for purchase or outward remittance, and operation by Qualified Depository Participants under securities regulator norms.

Qualified Foreign Investor rules enable targeted foreign investment with SEBI pricing, single demat/account and enhanced reporting.
The amendments create and define the Qualified Foreign Investor (QFI) category with eligibility linked to FATF/IOSCO adherence and SEBI KYC, integrate QFIs across the Regulations, permit QFI investments in specified rupee denominated mutual fund units and, under Schedule 8, in listed equity subject to SEBI pricing rules, require a single demat account and single non interest bearing rupee account for QFI transactions, and strengthen reporting, pricing certification and AD bank/KYC obligations while maintaining existing FDI sectoral caps and prohibitions.

Gift transfer cap for securities to non-residents set as prescribed foreign-currency equivalent, applied retrospectively in regulation.
Substitution to Regulation 10 (sub regulation A, clause (a), sub clause (e)) fixes that the value of securities transferred by a donor together with any securities transferred as gifts to persons residing outside India during a financial year shall not exceed the rupee equivalent of the prescribed foreign currency cap; the amendment takes effect from 15 September 2011 and is framed under the Foreign Exchange Management Act, with a clarification that retrospective effect will not adversely affect any person.

Advance payment rule allows exporters to receive payments for shipments agreed beyond one year from receipt.
The amendment substitutes sub regulation (2) of Regulation 16 to provide that an exporter may receive advance payment where the export agreement itself duly provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment, notwithstanding the prior one year limitation.

Cross-currency option cost reduction structures permitted to hedge trade and external commercial borrowings with authorised dealers under amended rules.
The amendment inserts American Depository Receipts into Schedule I, removes a proviso restricting net inflow of premium for certain cost-effective risk reduction strategies, and adds permission for residents to enter into cross-currency option cost reduction structures (excluding the rupee) and foreign currency-rupee option cost reduction structures with authorised dealers to hedge exchange risk from trade transactions or external commercial borrowings, subject to Reserve Bank stipulated terms and conditions, with specified retrospective effect.

Joint holding by close relatives in resident foreign currency accounts on former-or-survivor basis, but operation restricted during primary holder's lifetime.
Resident individuals are permitted to include resident close relative(s) as a joint holder(s) in their Resident Foreign Currency account and EEFC account on 'former or survivor' basis; such resident close relative joint account holder shall not be eligible to operate the account during the life time of the resident account holder. For this purpose 'close relative' means relative as defined in Section 6 of the Companies Act, 1956. The amendment is made to Regulation 5 and the Schedule and is given retrospective effect with a clarification against adverse effect.

Rupee loans to non-resident Indians permitted from resident relatives under specified conditions and repayment channels.
The amendment adds definitions for Liberalised Remittance Scheme and relative and inserts Regulation 7A allowing a borrower's relative in India to repay a loan to a non-resident by crediting the borrower's loan account through the relative's bank account. Regulation 8B permits resident individuals to grant interest-free rupee loans to NRI relatives by crossed cheque/electronic transfer subject to a minimum one-year maturity, adherence to the lender's Liberalised Remittance Scheme limit, restricted end-uses excluding specified prohibited activities, credit to the borrower's NRO account, prohibition on outward remittance of the loan amount, and specified inward-remittance or account-debit repayment routes.

Gift in Rupees to NRI/PIO close relatives permitted, credited to NRO account within remittance scheme limits.
An individual resident may gift rupees to an NRI/PIO close relative by crossed cheque or electronic transfer, credited to the recipient's NRO account and treated as eligible credit, provided the gift is within the overall per financial year limit under the Liberalised Remittance Scheme and the donor ensures aggregate LRS remittances/credits do not exceed that limit; a resident may also grant a rupee loan to an NRI relative by crossed cheque or electronic transfer subject to compliance with the Borrowing and Lending in Rupees regulations.

Joint NRI accounts: amended rules permit joint holdings with resident close relatives and rupee receipt provisions for NRIs.
The regulations amend Schedule 1 to permit joint accounts for two or more non resident individuals (all being of Indian nationality or origin), allow joint accounts between non residents and residents including resident close relatives on a 'former or survivor' basis with resident close relatives authorised to operate as Power of Attorney holders during the NRI's lifetime, and define 'close relative' by reference to the Companies Act. Schedule 3 is amended to insert clauses permitting rupee amounts credited to NRI accounts subject to compliance with rules on receipts/payments with persons resident outside India and provisions on borrowing and lending in rupees.

Adjudicating officers appointed to determine legacy contraventions under the repealed foreign exchange law, superseding earlier notifications.
The Central Government appoints specified officers of the Directorate of Enforcement as adjudicating officers to adjudicate contraventions under the repealed Foreign Exchange Regulation Act committed on or before 31st May, 2002, and, in exercise of its statutory powers, supersedes earlier notifications appointing officers for similar adjudicatory functions. The notification allocates adjudicatory jurisdiction by officer designation against prescribed monetary bands, assigning the Director and Special Director to the highest-value contraventions and progressively lower ranks to smaller-value matters, while preserving actions completed prior to supersession.

Retention limits for foreign gifts require declaration and deposit with sponsoring ministry, triggering valuation and possible Toshakhana assessment.
Members of Indian delegations must, within thirty days of receipt or of return to India, report gifts or presentations to the Secretary of the sponsoring Ministry or Department, providing details including the foreign source, approximate market value, date and place. Gifts above the recipient's valuation threshold or whose aggregate value exceeds the threshold must be deposited with the Secretary, who forwards them to the Toshakhana for assessment by a designated Board; valuation disputes go to the Home Affairs Secretary. Gifts assessed below the retention threshold may be returned, with one gift returnable when multiple items are involved and a final purchase option available to the recipient.

Adjudicating authority appointments under FEMA assign Enforcement Directorate officers specified monetary-threshold jurisdiction for section 13 adjudications.
The Central Government appoints specified officers of the Directorate of Enforcement as adjudicating authorities under section 13 of the Foreign Exchange Management Act, 1999, superseding the earlier G.S.R. 535(E) dated 1-6-2000 except as regards prior actions; the notification allocates jurisdiction by designation according to defined monetary thresholds, assigning different tiers of cases to Director, Special Director, Additional Director, Joint Director, Deputy Director and Assistant Director.

Officers of enforcement expanded to include Joint Director of Enforcement under FEMA amendment, renumbering clauses and commencing on publication.
The amendment to the enforcement notification under the Foreign Exchange Management Act inserts Joint Director of Enforcement as a designated officer, renumbers existing clauses so former (d)-(g) become (e)-(h), and provides that the notification takes effect upon publication in the Official Gazette.

Borrowing in foreign exchange: amended limits and maturity conditions for NGOs and MFIs, subject to compliance and no investigations.
Amendments to the FEMA borrowing regulations permit non government organisations and micro finance institutions to borrow in foreign exchange under Reserve Bank specified terms if they have not violated the regulations and face no pending investigations; they impose an annual ceiling on such borrowings, set minimum average maturities for different borrowing categories, and allow call/put options for smaller borrowings only where the minimum average maturity requirement is complied with before exercise.