RBI during the credit policy
2006-07 announced to increase the limits for resident individuals for drawal
of foreign exchange from the current US $ 25,000 to US $ 50,000 for specified
current or capital account transactions or a combination of both. In keeping
with the same, RBI vide AP Dir Series Circular 24 dated 20-12-2006 raised the
ceiling to US $ 50,000 by way of modification in US $ 25,000 Scheme for
the resident Individuals issued vide AP Dir. Series Circular 64 dated 4th
February, 2004. The salient features of the modified scheme are as follows:
Eligibility
Only resident individuals
are eligible to avail of the facility under the scheme. The facility is not be
available to corporates, partnership firms, HUF, Trusts, etc.
Purpose
This facility is now
available for making remittance up to US$ 50,000 without prior approval of the
Reserve Bank and is in addition to those already available for private travel,
business travel, studies, medical treatment etc. as described in Schedule III
of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
However, henceforth limit of US$ 50,000 under the Scheme would also include
remittances towards gift and donation by a resident individual (Refer AP
Para 2 of Dir Cir. 24 dt. 20-12-2006) and no separate remittance will be
available under Schedule III of Current Account Transactions Rules, 2000.
This additional facility is
available for any current or capital account transactions or a combination of
both to acquire and hold immovable property or shares or any other asset
outside India. Under the Liberalised Remittance Scheme of US$ 50,000,
investment by resident individual in overseas companies would be subsumed
under the Scheme of US$ 50,000. The requirement of 10 per cent reciprocal
shareholding in the listed Indian companies by such overseas companies has
been dispensed with. Earlier to this, vide AP Dir. Series Circular 66 dated
13-1-2003, resident Individuals were permitted to invest in overseas companies
indicated above without any monetary limit. Individuals can also open,
maintain and hold foreign currency accounts with banks outside India for
making remittances under the scheme. The foreign currency account may be used
for putting through all transactions connected with or arising from
remittances eligible under this scheme.
With effect from 20th
December 2006, the period of eligibility is changed from per calendar
year to per financial year.
Facility under the scheme
cannot be availed for the following:
-
Remittance for any purpose specifically
prohibited under Schedule I (like purchase of lottery/sweep stakes, tickets
proscribed magazines etc) or any item restricted under Schedule II of
Foreign Exchange Management (Current Account Transactions) Rules, 2000.
(Annexure B).
-
Remittances made directly or indirectly to
Bhutan, Nepal, Mauritius or Pakistan.
-
Remittances made directly or indirectly to
countries identified by the Financial Action Task Force (FATF) as non
co-operative countries and territories viz. As on 13th October 2006, there
are no countries designated as non co-operative countries and territories..
ADs are instructed to keep a record of the countries identified by FATF as
non co-operative countries and territories and accordingly update the list
from time to time for necessary action by their branches handling the
transactions under the Liberalised Remittance Scheme. For this purpose, they
may access the website www.fatf-gafi.org to obtain the latest list of
non-co-operative countries notified by FATF.]
-
Remittances directly or indirectly to those
individuals and entities identified as posing significant risk of committing
acts of terrorism as advised separately by the Reserve Bank to the banks.
Procedure for remittance
The individual will have to
designate a branch of an AD through which all the remittances under the scheme
will be made and should furnish an application cum declaration in the
prescribed format (attached as Annexure 1) outlining the purpose of the
remittance and declaration that the funds belong to the remitter and will not
be used for the prohibited purposes as detailed above.
Authorised dealers are
required to ensure compliance with Know Your Customer Guidelines and
the Anti-Money Laundering Rules in force while allowing the facility.
The applicants should have
maintained the bank account with the bank for a minimum period of one year
prior to the remittance. If the applicant seeking the remittance is a new
customer of the bank, due diligence on the opening, operation and maintenance
of the account should be carried out. Further the AD should also obtain bank
statement for the previous year from the applicant to satisfy themselves
regarding the source of funds. If such a bank statement is not available,
copies of the latest Income Tax Assessment Order or Return filed by the
applicant may be obtained.
The AD should ensure that the
payment is received out of funds belonging to the person seeking to make the
remittance, by a cheque drawn on the applicants bank account or by debit to
his account or by Demand Draft/Pay Order. Authorised dealer should also
certify that the remittance is not being made directly or indirectly by/or to
ineligible entities and that the remittances are made in accordance with the
instructions contained herein.
Reporting of the
transactions
The resident individual
seeking to make the remittance should furnish an Application cum- Declaration
in the revised format as at Annex-1. ADCategory I banks should furnish
information on the number of applicants and total amount remitted under the
Scheme, on a quarterly basis, in the Format at Annex-2, to the Chief General
Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (EPD),
Reserve Bank of India, Central Office, Mumbai 400 001 within 10 days of the
reporting quarter.
(Source: AP Dir Series
Circular No. 24 dated 20th December, 2006)
To give stimulus to the
investment in the infrastructure sector, the Government of India in
consultation with RBI has allowed foreign investment in Infrastructure
Companies in Securities Markets, namely stock exchanges, depositories and
clearing corporations, in compliance with SEBI Regulations and subject to the
following conditions:
-
Foreign investment up to 49 per cent will be
allowed in these companies with a separate Foreign Direct Investment (FDI)
cap of 26 per cent and Foreign Institutional Investment (FII) cap of 23 per
cent;
-
FDI will be allowed with specific prior
approval of FIPB; and
-
FII will be allowed only through purchases in
the secondary market.
Many domestic issues stalled
due to the ambiguity in the interpretation, FIIs and the Foreign Real Estate
Venture Funds are likely to benefit from the changes.
[(Source: AP Dir. Series
Circular No. 25 dated 22nd December, 2006)]
Hitherto banks were allowed
to lend to NRIs or third parties without any limit against the security of NRE/FCNR
deposits. However, pursuant to the Third Quarter Review of the Annual
Statement on Monetary Policy for the year 2006-07 and taking into account the
prevailing monetary conditions, banks in India are now prohibited to grant
fresh loans or renew the existing loans in excess of Rs. 20 lakhs against
security of NRE/FCNR deposits. The banks are also advised not to undertake
artificial slicing of the loan amount to circumvent the ceiling.
(Source: AP Dir. Series
Circular No. 29 dated 31st January, 2007)
Annex-1
[A.P.(DIR Series) Circular No. 24
dated December 20, 2006]
Application cum Declaration for
purchase of foreign exchange under the Liberalised Remittance Scheme of US$
50,000
(To be completed by the applicant)
-
Details of the applicant
-
Name
..
-
Address
-
Account No
-
PAN No
.
-
Details of the foreign exchange
required
-
Amount (Specify currency)
-
Purpose
.
-
Source of funds
.
-
Nature of instrument
Draft
..
Direct remittance
-
Details of the remittance made
under the Scheme in the financial year (April-March) 200
Date :
Amount :
.
-
Details of the beneficiary
-
Name
..
-
Address
-
Country
-
*. Name and address of the bank
.
-
*. Account No.
..
(* Required only when the remittance is to be directly credited to the bank
account of the beneficiary)
This is to authorize you to
debit my account and effect the foreign exchange remittance/issue a draft as
detailed above. (Strike out whichever is not applicable).
Declaration
I,
.
(Name), hereby
declare that the total amount of foreign exchange purchased from or remitted
through, all sources in India during the financial year as per item No. V of the
Application, is within the limit of US$ 50,000/- (US Dollar Fifty Thousand
only), which is the limit prescribed by the Reserve Bank for the purpose and
certify that the source of funds for making the said remittance belongs to me
and will not be used for prohibited purposes.
Signature of the applicant
(Name)
Certificate by the Authorised
Dealer
This is to certify that the
remittance is not being made by/ to ineligible entities and that the remittance
is in conformity with the instructions issued by the Reserve Bank from time to
time under the Scheme.
Name and designation of the
authorised official:
Place:
Signature
Date: Stamp and seal
