RBI has delegated the power to ADs to grant permission to airline companies (other than a PSU or a Department/Undertaking of the Central/State Government/s) to remit up to US$ 1,000,000 (US Dollar one million only) per aircraft towards security deposit for payment of lease rentals of aircraft/aircraft engine/helicopter on operating lease without a standby letter of credit or a guarantee subject to following conditions:

1. The AD is satisfied about the bona fides of the transaction.
    

2. The airline company has obtained necessary approval from appropriate authority like Ministry of Civil Aviation/Director General of Civil Aviation, Government of India for importing the aircraft/helicopter on operating lease.
    

3. Remittance is permitted as per the Policy on Advance Remittances approved by the Board of Directors of the bank or with the specific approval of the Board of Directors of the bank.
    

4. The final maturity of the security deposit should not be beyond the date of the last instalment towards lease rental or date of return of the aircraft/ helicopter to the lessor, whichever is later. If required, the deposit amount may be adjusted towards lease rentals. However, the balance security deposit, if any, should be repatriated before expiry of the lease period.

In case of an airline belonging to PSU or a Department/Undertaking of the Central/ State Government/s, remittance for amount exceeding US$ 1,00,000 per aircraft towards security deposit for payment of lease rentals can be allowed subject to conditions (i) to (iv) 3 above and a specific waiver of bank guarantee from the Ministry of Finance, Government of India.

[Source: A.P. (Dir Series) Circular No. 13 dated September 27, 2005]

2. Amendment to the FCCB Scheme of 1993

With a view to bring the ADR/GDR guidelines in alignment with guidelines on domestic capital issues framed by the SEBI, the Government of India vide Press Note No 15-4-2004 dated 31st August, 2005 has brought about certain changes in GDR/ADR guidelines by amending the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 as follows:–

1. Changes applicable for listed companies:

• Eligibility of issuer:  An Indian company not eligible to raise funds from the Indian Capital Market/ restrained from accessing the securities market by SEBI will not be eligible to issue FCCBs/ Ordinary Shares under the above Scheme.
   

• Eligibility of subscriber:  Erstwhile OCBs will not be eligible to subscribe to FCCBs/Ordinary Shares under the Scheme.
   

• Pricing: The pricing of GDR and FCCB issues should be made at a price not less than the higher of the following two averages: 

1. The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date;
    

2. The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.

3. Clarification – Transfer of Shares/Convertible Debentures by way of sale

The RBI has in response to queries from the banks clarified that their authority for general permission under automatic route also includes the authority to grant permission for transfer of shares/convertible debentures which earlier required FIPB/SIA approval and the transfer of shares through buy-back or capital reduction subject to the terms and conditions stipulated in A. P. (DIR Series) Circular No. 16 dated October 4, 2004./ Annex attached to the circular.

[Source: A.P. (DIR Series) Circular No. 10 dated August 30, 2005]

4. Overseas Direct Investment (ODI) in Bhutan

Hither to Overseas Direct Investment in Nepal and Bhutan was permissible only in Indian Rupees. It has now been decided to allow direct investments in Bhutan also in freely convertible currencies. This facility will be in addition to the existing facility of making investments in Indian Rupees. All dues receivable on such investments as well as their sale/winding up proceeds are required to be repatriated to India in freely convertible currencies only. As hitherto, direct investments in Nepal can only be made in Indian Rupees.

[Source: A.P. (DIR Series) Circular No. 9 dated August 29, 2005]

5. Modification in procedure for transfer of Shares by way of Gift to Non Residents

On a review, the RBI has modified the procedure for obtaining approval for transfer of any security including shares/convertible debentures, by way of gift, to a person resident outside India. The applicant is now required to submit certain prescribed information/documents (Prescribed in Annex 1 which is attached to the Circular). Applications in this regard should be submitted to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Foreign Investment
Division, Central Office, 11th Floor, Fort, Mumbai – 400 001.

Reserve Bank has clarified that it would, henceforth, consider following factors while considering such applications:

1. The transferee (donee) is eligible to hold such security under Schedules 1, 4 and 5 of the Notification ibid.
    

2. The gift does not exceed 5 per cent of the paid-up capital of the Indian company/each series of debentures/each mutual fund scheme.
    

3. The applicable sectoral cap/foreign direct investment (FDI) limit in the Indian company is not breached.
    

4. The transferor (donor) and the transferee (donee) are close relatives as defined in section 6 of the Companies Act, 1956.
    

5. The value of security to be transferred together with any security transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of US$ 25,000 during a calendar year.
    

6. Such other conditions as considered necessary in public interest by the Reserve bank.

[Source: A.P. (DIR Series) Circular No. 8 dated August 25, 2005]

6. Foreign Investment in print media sector

Reserve Bank has withdrawn the prohibitions placed on FIIs, NRIs and FVCIs on purchase of shares of Indian companies engaged in print media sector in line with the decision of the Government of India to permit Foreign Direct Investment (FDI) and portfolio investment within the composite ceiling of 26 per cent of the paid-up capital of an Indian company publishing newspapers and periodicals dealing with news and current affairs. Indian company accepting FDI would have to comply with the guidelines issued on July 13, 2005 by the Ministry of Information and Broadcasting in this regard. (Available on http://mib.nic.in/informationb/CODES/FDI2130705.htm )

[Source: A.P. (DIR Series) Circular No. 6 dated August 11, 2005]