Pledge of promoter shares allowed to secure external commercial borrowings subject to authorised dealer no objection and conditions.
Promoters of Indian companies that have raised external commercial borrowings may pledge shares of the borrowing company or its resident associates to secure those ECBs only with prior no objection from a bank authorised dealer. The authorised dealer must ensure compliance with ECB guidelines, an executed loan agreement containing a security clause, and that a Loan Registration Number has been obtained. The pledge must be co terminous with the ECB maturity; transfers on invocation must comply with FDI policy and Reserve Bank directions; and the statutory auditor must certify permitted use of ECB proceeds.

Retrospective amendment to foreign exchange derivative regulations removes listing requirement for contracts, broadening eligibility under FEMA.
The Second Amendment Regulations, 2009 omit the words "and listed on a recognised stock exchange" from Regulation 6(II) of the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000, thereby removing the listing requirement for certain derivative contracts. The amendment is made under clause (h) of sub section (2) of Section 47 of the Foreign Exchange Management Act, 1999, and is deemed to have come into effect from 3 June 2008 with a clarification that no person will be adversely affected by its retrospective effect.

Citizenship by descent clarified: parental or grandparental Indian citizenship qualifies under FEMA rules for immovable property acquisition.
The 2009 Second Amendment revises regulation 2(c)(ii) of the 2000 Regulations to state that an eligible person for acquisition of immovable property includes one who, or either of whose father or mother or whose grandfather or grandmother, was a citizen of India by virtue of the Constitution or the Citizenship Act, 1955; the amendment takes effect on publication in the Official Gazette.

Foreign currency accounts allowed for certain resident employees, contingent on payment of Indian income tax on salary.
Amendment allows certain residents to open and maintain foreign currency accounts abroad to receive whole salary for services rendered in India, provided income-tax chargeable under the Income-tax Act, 1961 is paid on the salary accrued or received in India.

Remittance of assets compliance now requires tax clearance, litigation-free confirmation, and registrar report for winding-up remittances.
Amendment to Regulation 6(1)(iii) of the Remittance of Assets Regulations mandates production of a no-objection or tax clearance certificate from the income-tax authority, a confirmation that no legal proceedings or impediments to the remittance exist, and a report from the Registrar of Companies regarding Companies Act, 1956 compliance where remittance relates to winding up of an Indian office.

Non violation and no pending investigation requirement limits eligibility for borrowing or lending in foreign exchange under FEMA.
The amendment inserts identical provisos after clauses (a), (b) and (c) of paragraph (1), sub paragraph (i) of Schedule I to the Regulations, conditioning applicability on the entity having not at any time violated any provision of these regulations and on there being no investigation pending against them for contravention of these regulations under the Act; the amendment is made under Section 6(3)(d) and Section 47(2) of the Act and comes into force from June 30, 2009.

Securities terminology corrected to add 'Securities and', amending specific provisions while keeping principal regulations in force.
The corrigendum directs that the word 'Security' be substituted with the words 'Securities and' in regulation 2A and in paragraph 1 of Schedule 8 of Notification No. FEMA.162/2007-RB; as so rectified and modified, the Principal Regulations remain in full force and effect.

Regulatory title correction: substitutes earlier year references to correct year in regulations, preserving principal regulations' force.
Corrigendum directs substitution of the year reference '2007' with '2008' in the Regulations' title and short title; the correction is editorial only and the Principal Regulations remain in full force and effect.

Regulatory amendment substituting 2007 with 2008 in FEMA notification titles, preserving the principal regulations' force.
Corrigendum effects a technical amendment by directing that the figures '2007' be substituted with '2008' in both the title and short title of Notification No. FEMA.164/2007-RB, and states that, as rectified, the Principal Regulations remain in full force and effect.

Investment by Indian financial services entities abroad allowed subject to profit, registration, regulatory approvals and capital adequacy compliance.
The amendment to Regulation 7(1) permits an Indian party in the financial services sector to invest abroad provided it has earned net profit in the preceding three financial years from such activities, is registered with the Indian regulatory authority, has obtained approvals from concerned regulatory authorities in India and abroad for the activity, and has complied with prudential capital adequacy norms prescribed by the Indian regulator.

Currency carrying limit increase for export and import of currency establishes a higher threshold for physical carriage under amended regulations.
The amendment substitutes the figures in Regulation 3, sub regulation (1), clauses (a) and (c) of the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, raising the currency carrying limit by replacing the earlier figures with higher figures, effective from publication in the Official Gazette.

Cap on foreign currency borrowings set and parking of loan proceeds permitted pending utilisation under regulator directions.
The Regulations amend the principal FEMA borrowing/lending rules to permit borrowings in foreign exchange per borrower company per financial year up to such amounts as directed by the Reserve Bank for RBI permitted end uses; specify qualifying infrastructure sectors (power; telecommunication; railways; road including bridges; sea port and airport; industrial parks; urban infrastructure; and mining, exploration and refining); and allow the parking of loan amounts abroad or in India pending utilisation, subject to Reserve Bank directions, with specified retrospective effective dates and a clarification that no person will be adversely affected by the retrospective effect.

Permitted credits to deposit accounts limited to inward remittances and visa fee transfers from diplomatic rupee accounts.
Regulation 4(3)(a) is amended to permit credits to the account only by (i) proceeds of inward remittances received from outside India through normal banking channels, and (ii) transfer of funds from the rupee account of the diplomatic mission in India that are collected in India as visa fees and credited to such account.

Investment by Indian Party engaged in financial services sector now permitted to invest abroad subject to Part I regulations.
The Third Amendment clarifies that Regulation 7 applies where an investment is made by an Indian Party engaged in the financial services sector, retitles Regulation 7 to Investment by Indian Party engaged in Financial Services Sector, and substitutes sub regulation (1) to permit such Indian Parties, subject to Part I Regulations, to invest in entities outside India, with retrospective effect from 6 September 2006 and a proviso that no person will be adversely affected by the retrospective application.

Foreign exchange limits revised to regulate remittances for private visits, gifts, donations, consultancy fees and reimbursements.
Amendments to Schedule III revise thresholds for private visit exchange, gift remittances, donations and consultancy fee remittances, subsume resident gifts and donations under the Liberalised Remittance Scheme, define higher consultancy ceilings for specified infrastructure projects, and introduce limits on reimbursement of pre incorporation expenses by Indian entities linked to investment brought into India; certain amendments are retrospective with a non adverse effect clarification.

Freight hedge permits residents to enter foreign freight derivative contracts to hedge freight risk subject to RBI approval.
The amendment adds a regulation allowing residents to enter into freight derivative contracts overseas to hedge freight risk, subject to Reserve Bank approval on application and to any terms, conditions and procedures the Reserve Bank prescribes; authorised dealers specially authorised by the Reserve Bank may permit oil refining and shipping companies to undertake such hedges under Reserve Bank directions and guidelines. The regulations are given retrospective effect with a clarification against adverse effect on persons.

Adjudicating authority jurisdiction limited for Deputy Directors of Enforcement, with cases confined to specified monetary threshold and zone assignment.
The notification substitutes Sl. No. 6 to designate Deputy Directors of Enforcement at specified zonal offices and at Headquarters Delhi as adjudicating authorities. Their jurisdiction is limited to cases involving an amount not exceeding Rupees 75 lakhs falling within their respective zones or to matters assigned by the Director of Enforcement, thereby specifying territorial and monetary thresholds and preserving assignment discretion.

Guarantees for margin money allowed by authorised dealers for approved commodity hedging, subject to central bank terms and conditions.
An authorised dealer in India may give guarantee or standby letter of credit for obligations of an Indian resident owed to a non resident to cover payment of margin money for approved commodity hedging transactions, subject to terms and conditions stipulated by the Reserve Bank, and the amendment is given retrospective effect without adversely affecting any person.

Foreign Currency Exchangeable Bonds: promoter-group issuers may issue FCEBs to non-residents subject to RBI approval and conditions.
A regulatory framework authorises promoter-group issuing companies to issue Foreign Currency Exchangeable Bonds to non-residents with prior Reserve Bank approval, subject to eligibility of the issuing and offered companies, subscriber compliance with foreign direct investment policy, restrictions on entities barred from securities markets, limitations on end-use of proceeds (no investment in Indian capital markets or real estate by promoter group recipients), adherence to all-in-cost ceilings, prescribed pricing and minimum maturity, mandatory delivery of shares on exchange, and ECB-style reporting and audit trail requirements.

Guarantee permission: authorised dealer banks may allow residents to issue guarantees securing external commercial borrowings under FEMA.
An amendment inserts a provision in Regulation 5 permitting an authorised dealer bank, subject to central bank directions, to permit a resident or on behalf of a resident to issue a guarantee in favour of an overseas lender or security trustee to secure an external commercial borrowing; the insertion is deemed effective from 11 July 2008 and is certified not to adversely affect any person despite retrospective effect.