Guarantee in lieu of bid bond permitted for exporters bidding abroad without prior approval, subject to a statutory cap.
A resident Indian exporter company may furnish a guarantee in lieu of a Bid Bond Guarantee for bidding on contracts outside India without approval of the Approving Authority, subject to a statutory cap expressed as a proportion of the contract value; the amendment to Regulation 5 inserts this exemption and takes effect upon publication in the Official Gazette.

Foreign Currency Convertible Bonds: automatic issuance permitted under specified eligibility, caps and RBI approval requirements for larger issues.
The amendment substitutes Regulation 18 to create a tiered authorization regime for FCCBs: an automatic route for issues up to a prescribed ceiling subject to Schedule II conditions; issues above that ceiling require Reserve Bank permission in a specified form; issues beyond a higher threshold require Government approval. Schedule II sets substantive conditions for automatic issuance including conformity with FDI policy and RBI directions, permissible investors for private placements, minimum maturity, prohibition of attached warrants, composition and caps on all in costs and issue expenses, permitted uses of proceeds, repatriation rules, and mandatory post issue reporting to the Reserve Bank through an authorised dealer.

Verification of underlying exposure requires authorised dealers to examine documentary evidence, subject to otherwise permitted exceptions.
Authorised dealers may enter into relevant foreign exchange derivative-contract arrangements after verifying documentary evidence and satisfying themselves that the underlying exposure is genuine. Such arrangements may also be undertaken where otherwise permitted from time to time. The amendment substitutes paragraph A.1(a) of Schedule 1 to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 and took effect upon publication in the Official Gazette.

Foreign exchange threshold increase expands permissible foreign security exposure and raises the net worth cap for such transactions.
Amends Regulation 6 of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations to substitute a higher foreign investment ceiling in sub regulation (2)(i) and to increase the permissible exposure in sub regulation (3)(ii) measured as a percentage of net worth; issued under the Reserve Bank's powers under Section 6(3)(a) and Section 47 of the Foreign Exchange Management Act and operative from publication in the Official Gazette.

Restriction on Non-Resident Rupee Accounts: prohibition of new NRNR and NRSR accounts with transitional conversion rules for existing deposits.
The Regulations prohibit opening or renewal of NRNR and NRSR accounts from 1 April 2002. Existing NRNR deposits may continue only until maturity and on maturity must be credited to the holder's NRE account after notice. Existing NRSR term deposits may continue until maturity and be credited to the holder's NRO account on maturity; non-term NRSR accounts must be closed or credited to NRO by 30 September 2002. "Existing deposit" or "existing account" means held on 31 March 2002.

Inward remittance rules: normal banking channel credits permitted to resident foreign currency accounts, with specified exclusions.
Amendment permits inward remittance through normal banking channel as qualifying credit to foreign currency accounts of persons resident in India, effective on Gazette publication, and substitutes paragraph 1(1)(i) of the Schedule to Regulation 4 to exclude remittances pursuant to undertakings to the Reserve Bank, foreign currency loans or investments from outside India, and receipts for meeting specific obligations of the account holder.

Foreign investment restriction: firms and proprietary concerns engaged in print media are excluded from permitted investment.
The Reserve Bank of India amended the Foreign Exchange Management (Investment in Firm or Proprietary concern in India) Regulations, 2000, inserting a proviso requiring that a firm or proprietary concern receiving foreign investment not be engaged in print media, and providing that the amendment takes effect from its publication in the Official Gazette under powers granted by the Foreign Exchange Management Act.

Investment ceiling exemption: SEZ units may use EEFC account balances to fund foreign security investments beyond the limit.
The Second Amendment clarifies that the ceiling of US $50 million does not apply to financial commitments by a unit located in a Special Economic Zone where the investment is made out of balances held in its EEFC account maintained under the foreign currency accounts regulations, creating a source of funds based exemption within Regulation 6.

Valuation requirements tighten for overseas equity investments; specified expert valuations and disclosure required in ODI applications.
Valuation and documentation requirements mandate that overseas investments by remittance be supported by share valuations: investments above a specified threshold require valuation by a Category I Merchant Banker registered with SEBI or an appropriately registered foreign investment/merchant banker; other investments may be valued by a Chartered Accountant or Certified Public Accountant. Share acquisitions paid for by issuance of the Indian party's shares must always be valued by a Category I Merchant Banker or an appropriately registered foreign banker. Form ODI applications must include the prescribed valuation reports. A new Form ODB permission permits proprietary concerns to accept foreign shares as fees subject to caps of fifty percent of fees per company and a ten percent shareholding limit per foreign company.