Foreign investment commitment limits expanded and shareholding threshold removed, altering overseas security transfer rules.
The amendment raises the total financial commitment ceiling for Indian parties in Joint Ventures and Wholly Owned Subsidiaries to 400% of the Indian party's net worth, unifying previous differentiated caps into a single 400% net-worth limit and updating explanatory provisions. It removes the prior requirement that an investing party hold at least 10% in a listed Indian company as of 1 January of the investment year, and increases a specified net-worth-linked investor threshold from 35% to 50% of net worth; the changes operate retrospectively from 26 September 2007.

Foreign investment limits increased for Indian parties in overseas joint ventures and subsidiaries; domestic shareholding criterion removed.
Amendments raise the permissible total financial commitment of an Indian party in overseas joint ventures and wholly owned subsidiaries to a uniform ceiling measured against the Indian party's net worth, replacing prior differentiated percentage limits; Explanation clauses and sub provisions are adjusted accordingly. The instrument also removes a domestic shareholding qualification from one clause and increases a separate net worth based investment threshold. The amendments are given retrospective effect from the stated commencement date and the notification clarifies no person will be adversely affected by the retrospective operation.

EEFC account requirement: accounts must be opened and maintained in the form prescribed by the Reserve Bank.
The EEFC account referred to in Regulation 4 must be opened, held and maintained only in the form specified by directions issued by the Reserve Bank; the substituted proviso makes adherence to such regulatory directions a prerequisite for EEFC accounts under Regulation 9, effective from the 6th day of October, 2007.

Refund obligation for unissued overseas subscription proceeds beyond prescribed period; RBI may allow delayed refund on application.
If shares or convertible debentures are not issued within 180 days from the date of receipt of inward remittance or debit to an NRE/FCNR(B) account, the consideration received must be refunded to the person by outward remittance through normal banking channels or by credit to the person's NRE/FCNR(B) account; the Reserve Bank may, on application and for sufficient reasons, permit an Indian company to refund consideration outstanding beyond the 180 day period.

Surrender of foreign exchange: resident individuals must deliver received or unspent foreign currency to authorised persons promptly.
The amendment narrows applicability of certain provisions to persons not being individual residents in India and inserts regulation 6A requiring resident individuals to surrender received, realised, unspent or unused foreign exchange, including currency notes, coins and travellers cheques, to an authorised person within a specified period from receipt, realisation, purchase, acquisition or return to India.

Remittance of FCNR(B) maturity proceeds to third parties permitted if authorised by account holder and bona fides are satisfied.
Authorised dealers may permit remittance of maturity proceeds of FCNR (B) deposits to third parties outside India provided the remittance is specifically authorised by the account holder and the authorised dealer is satisfied about the bona fides of the transaction.

Foreign direct investment access from Bangladesh allowed with prior approval under the FDI scheme, subject to specified conditions.
Regulation 5 is amended to permit citizens of Bangladesh and entities incorporated in Bangladesh to purchase shares and convertible debentures of Indian companies under the FDI Scheme, subject to prior approval of the Foreign Investment Promotion Board and the terms and conditions specified in Schedule 1; Schedule 1 is substituted to state that persons referred to in clauses (i) and (ii) of sub regulation (1) of Regulation 5 may purchase such securities to the extent and on the terms set out in the Schedule.

Foreign central bank purchases of government securities authorised, subject to regulatory conditions for secondary market trading.
The regulations define Foreign Central Bank as an institution outside India with central bank functions and amend Regulation 5(4) to allow a non-resident Indian, a registered FII, or a Foreign Central Bank to purchase securities other than shares or convertible debentures under Schedule 5. Schedule 5 is further amended to permit a Foreign Central Bank to purchase and sell dated Government securities and treasury bills in the secondary market, subject to conditions stipulated by the Reserve Bank.

Foreign exchange drawal limits for resident individuals increased and restricted from use with non-cooperative jurisdictions.
The amendment raises the annual ceiling on foreign exchange drawal by a resident individual for specified capital account transactions in phased steps, subsumes gift and donation remittances into that annual limit, and provides that where drawals exceed the annual ceiling the transaction-specific regulatory limit applies. It further prohibits using any portion of the annual ceiling drawal for remittances to jurisdictions designated as non-cooperative by the Financial Action Task Force, subject to the Act and related rules and directions.

Overseas investment limits expanded, increasing permissible financial commitment and recognising full value of guarantees under amended FEMA rules.
The amendments expand permitted overseas investment exposure by increasing the total financial commitment ceilings for Indian parties, distinguishing higher limits for corporates and lower limits for registered partnership firms, and by recognising one hundred per cent of guarantees when calculating commitment. They define Venture Capital Fund, permit specified proprietorship exporters to form overseas ventures subject to Schedule II criteria and prior approval, and modify ESOP rules to allow acceptance, transfer and repurchase of foreign company shares with annual reporting and repatriation requirements.

Escrow account access for non-resident acquirers permitted without prior RBI approval, subject to SEBI and schedule conditions.
Non-resident acquirers may open, hold and maintain Escrow Account and Special Account with Authorised Dealers in India without prior RBI approval for acquisition/transfer of shares or convertible debentures through open offers, delisting or exit offers, subject to Schedule 8 terms and compliance with SEBI (including SAST) Regulations and applicable Companies Act provisions. Schedule 8 requires non interest bearing rupee accounts, permitted credits/debits as per SEBI regulations, authorised resident operation with AD approval, no bank facilities against balances, KYC compliance by the AD, repatriation rules and immediate closure upon completion.

Remittance of assets permitted without central approval where authorised dealers comply with court orders and statutory certifications.
Authorised dealers may, without Reserve Bank approval, effect remittance of assets by eligible persons and remittance out of assets of Indian companies under liquidation, provided the remittance complies with a court or liquidator order and the applicant furnishes: a no objection or tax clearance certificate from the income tax authority; an auditor's certificate that all Indian liabilities are paid or adequately provided for; an auditor's certificate that winding up complies with the Companies Act, 1956; and, where winding up is not by a court, an auditor's certificate that no legal proceedings or impediments exist.

Authorised Dealer rupee loans for ESOP purchases allowed with caps and prudential oversight, repayment via specified non-resident accounts.
The Reserve Bank permits Authorised Dealers to grant Rupee loans to NRI employees for purchase of shares under ESOP schemes, subject to conditions: board approved ESOP policy; loan capped by a per employee ceiling or percentage of purchase price; bank determined interest and margins within RBI directives; payment directly to the company; repayment by inward remittance or debit to NRO/NRE/FCNR(B) accounts; and inclusion of such loans in capital market exposures for compliance with prudential limits.

Remittance for commodity derivative contracts authorised for option premiums and incidental payments, subject to regulatory approval and conditions.
A new provision permits authorised dealers to remit foreign exchange abroad for payments connected to commodity derivative transactions, including option premiums payable by residents to non-residents, amounts incidental to commodity derivative contracts entered under regulation 6, and other remittances related to such contracts subject to regulatory approval. Schedule amendments create a forward-contract mechanism for hedging economic exposure, allowing residents to enter forward contracts with authorised dealers under regulator-prescribed terms, and permit cancellation and rebooking or rollover of forward contracts subject to regulatory conditions.

Power of Attorney operations on non-resident rupee accounts: limited local payments and restricted repatriation subject to tax compliance.
The amendment allows resident Power of Attorney holders to operate NRO accounts limited to local rupee payments (including eligible investments per Reserve Bank regulations) and remittance abroad of the non-resident account holder's current income net of taxes; it bars the PoA holder from repatriating funds except to the non-resident account holder, making gifts to residents on behalf of the account holder, or transferring funds to another NRO account; outward remittances are subject to Bank-prescribed ceilings and tax compliance.

Foreign borrowing limits now tied to permissible end use and maturity, with RBI approval for rupee denominated structures.
Amendments restrict borrowings up to USD 500 million per borrower per financial year to foreign currency expenditures for permissible end use, omit an earlier Note, and expand eligible entities. Corporates are prohibited from availing domestic rupee denominated structured obligations credit enhanced by international banks, IFIs or joint venture partners without Reserve Bank approval. A graduated maturity regime with minimum average maturities is prescribed, prepayment and call/put options are limited for larger borrowings, and prior approval is required for ECBs up to USD 20 million per company per year for rupee expenditures.

Regulatory directions: loans and facilities under deposit regulations now expressly subject to central bank directions.
The 2007 amendment inserts a new sub paragraph into Schedule 1, paragraph 6 of the Deposit Regulations providing that loans and facilities granted under that paragraph shall be subject to such directions as may be issued by the central banking authority from time to time.

Acquisition of immovable property abroad permitted for Indian companies with overseas offices subject to central bank directions.
Indian companies that have overseas offices may acquire immovable property outside India for business purposes and for residential accommodation of their staff, subject to directions issued by the Reserve Bank of India; the amendment substitutes Regulation 5(3) of the principal Regulations and is given retrospective effect, with clarification that no person will be adversely affected by that retrospectivity.

EEFC Account: residents may credit full foreign exchange earnings; revised remittance limits introduced for branch expenses.
Residents may credit 100 per cent of specified foreign exchange earnings to an EEFC Account with an Authorised Dealer (effective 30 November 2006). Regulation 7(4A) proviso, clause (b) revises remittance limits to overseas branches/offices: initial expenses permitted up to 15 per cent of average annual sales/income or turnover (last two years) or up to 25 per cent of net worth, whichever is higher; recurring expenses permitted up to 10 per cent of average annual sales/income or turnover (last financial year). Certain amendments have retrospective effect.

Central bank access to government securities permitted, subject to Reserve Bank stipulated conditions and Gazette commencement.
The amendment inserts paragraph 2A in Schedule 5 to permit a person resident outside India who is a central bank under its domestic law to purchase and sell dated Government securities and treasury bills, subject to conditions stipulated by the Reserve Bank of India; the Regulations are titled as the 2007 Amendment and commence on publication in the Official Gazette.