Taxmann's Foreign Exchange Management Manual (Set of 2 Volumes)

I-7 CONTENTS
PAGE
CONTENTS
PAGE
Division Heads I-5-I-6
List of Basic Notifications I-21-I-28
List of Amending Notifications I-29-I-48
List of Notifications I-49-I-88
List of Master Directions I-89-I-90
List of FDI Circulars and Press Notes I-91
List of Prescribed Forms I-93-I-98
DIVISION ONE
FEMA GLOSSARY
1.1 Glossary of Important Definitions 1.3
DIVISION TWO
FOREIGN EXCHANGE MANAGEMENT ACT, 1999
CHAPTER I
PRELIMINARY
1. Short title, extent, application and commencement 2.3
2. Definitions 2.3
CHAPTER II
REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE
3. Dealing in foreign exchange, etc. 2.6
4. Holding of foreign exchange, etc. 2.7
5. Current account transactions 2.7
6. Capital account transactions 2.7
7. Export of goods and services 2.10
8. Realisation and repatriation of foreign exchange 2.10
9. Exemption from realisation and repatriation in certain cases 2.10
I-7

CONTENTS I-8
PAGE
CHAPTER III
AUTHORISED PERSON
10. Authorised person 2.11
11. Reserve Bank’s powers to issue directions to authorised person 2.12
12. Power of Reserve Bank to inspect authorised person 2.12
CHAPTER IV
CONTRAVENTION AND PENALTIES
13. Penalties 2.13
14. Enforcement of the orders of Adjudicating Authority 2.14
14A. Power to recover arrears of penalty 2.15
15. Power to compound contravention 2.15
CHAPTER V
ADJUDICATION AND APPEAL
16. Appointment of Adjudicating Authority 2.15
17. Appeal to Special Director (Appeals) 2.16
18. Appellate Tribunal 2.17
19. Appeal to Appellate Tribunal 2.17
20. [Omitted by the Finance Act, 2017, w.e.f. 26-5-2017] 2.18
21. Qualifications for appointment of Special Director (Appeals) 2.18
23. Terms and conditions of service of Special Director (Appeals) 2.19
27. Staff of Special Director (Appeals) 2.20
28. Procedure and powers of Appellate Tribunal and Special
Director (Appeals) 2.20
32. Right of appellant to take assistance of legal practitioner or
chartered accountant and of Government, to appoint
presenting officers 2.21
33. Officers and employees, etc., to be public servant 2.21
34. Civil court not to have jurisdiction 2.21
35. Appeal to High Court 2.22
CHAPTER VI
DIRECTORATE OF ENFORCEMENT
36. Directorate of Enforcement 2.22
37. Power of search, seizure, etc. 2.22

I-9 CONTENTS
PAGE
37A. Special provisions relating to assets held outside India in contravention of section 4 2.23
38. Empowering other officers 2.23
CHAPTER VII
MISCELLANEOUS
39. Presumption as to documents in certain cases 2.24
40. Suspension of operation of this Act 2.24
41. Power of Central Government to give directions 2.25
42. Contravention by companies 2.25
43. Death or insolvency in certain cases 2.25
44. Bar of legal proceedings 2.25
44A. Powers of Reserve Bank not to apply to International Financial Services Centre 2.25
45. Removal of difficulties 2.26
46. Power to make rules 2.26
47. Power to make regulations 2.27
48. Rules and regulations to be laid before Parliament 2.28
49. Repeal and saving 2.28
DIVISION THREE
RULES & REGULATIONS UNDER FEMA
LIST OF RULES AND REGULATIONS
3.1 Foreign Exchange Management (Encashment of Draft, Cheque,
Instrument and Payment of Interest) Rules, 2000 3.3
3.2 Foreign Exchange (Authentication of Documents) Rules, 2000 3.5
3.3 Foreign Exchange Management (Current Account Transactions)
Rules, 2000 3.6
3.4 Foreign Exchange Management (Adjudication Proceedings and Appeal)
Rules, 2000 3.11
3.5 Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
3.6 Foreign Exchange Management (Permissible Capital Account
Transactions) Regulations, 2000 3.22
3.7 Foreign Exchange Management (Issue of Security in India by a Branch,
Office or Agency of a Person Resident outside India) Regulations, 2000 3.26
3.8 Foreign Exchange Management (Borrowing and Lending) Regulations,
2018 3.27
3.9 Foreign Exchange Management (Deposit) Regulations, 2016 3.37
3.10 Foreign Exchange Management (Export and Import of Currency)
Regulations, 2015 3.55
3.11 Foreign Exchange Management (Acquisition and Transfer of Immovable
Property outside India) Regulations, 2015 3.58
3.12 Foreign Exchange Management (Guarantees) Regulations, 2000 3.60
3.13 Foreign Exchange Management (Realisation, Repatriation and Surrender
of Foreign Exchange) Regulations, 2015 3.65

CONTENTS I-10
PAGE
3.14 Foreign Exchange Management (Foreign Currency Accounts by a Person
Resident in India) Regulations, 2015 3.68
3.15 Foreign Exchange Management (Possession and Retention of Foreign
Currency) Regulations, 2015 3.79
3.16 Foreign Exchange Management (Insurance) Regulations, 2015 3.81
3.17 Foreign Exchange Management (Remittance of Assets) Regulations, 2016 3.83
3.18 Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 3.87
3.19 Foreign Exchange Management (Non-debt Instruments) Rules, 2019 3.93
3.20 Foreign Exchange Management (Debt Instruments) Regulations, 2019 3.154
3.21 Foreign Exchange Management (Mode of Payment and Reporting of Non-debt
Instruments) Regulations, 2019 3.160
3.22 Foreign Exchange Management (Establishment in India of a Branch Office or a
Liaison Office or a Project Office or any other Place of Business) Regulations, 2016 3.167
3.23 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 3.178
3.24 Foreign Exchange Management (Foreign Exchange Derivative Contracts)
3.25 Currency Futures (Reserve Bank) Directions, 2008 3.193
3.26 Foreign Exchange Management (Transfer or Issue of any Foreign Security)
3.27 Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances &
Other Conditions of Service of Chairperson & Members) Rules, 2000 3.262
3.28 Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 3.265
3.29 Foreign Exchange Management [Withdrawal of General Permission
to Overseas Corporate Bodies (OCBs)] Regulations, 2003 3.267
3.30 Exchange Traded Currency Options (Reserve Bank) Directions, 2010 3.271
3.31 Foreign Exchange Management (Crystallization of Inoperative Foreign Currency
Deposits) Regulations, 2014 3.275
3.32 Foreign Exchange Management (International Financial Services Centre)
3.33 Foreign Exchange Management (Regularization of Assets held Abroad by a Person
3.34 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 3.280
3.35 Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank)
Directions, 2018 3.284
3.36 Currency Futures in International Financial Services Centre (Reserve Bank) Directions,
2020 3.287
3.37 Currency Options in International Financial Services Centre (Reserve Bank) Directions,
2020 3.289
3.38 Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 3.291
ALPHABETICAL LIST OF RULES & REGULATIONS
u Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances &
Other Conditions of Service of Chairperson & Members) Rules, 2000 3.262
u Currency Futures (Reserve Bank) Directions, 2008 3.193
u Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 3.287
u Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 3.289
u Exchange Traded Currency Options (Reserve Bank) Directions, 2010 3.271

I-11 CONTENTS
PAGE
u Foreign Exchange (Authentication of Documents) Rules, 2000 3.5
u Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
u Foreign Exchange Management (Acquisition and Transfer of Immovable Property
outside India) Regulations, 2015 3.58
u Foreign Exchange Management (Adjudication Proceedings and Appeal)
Rules, 2000 3.11
u Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 3.27
u Foreign Exchange Management (Cross Border Merger) Regulations, 2018 3.280
u Foreign Exchange Management (Crystallization of Inoperative Foreign Currency
Deposits) Regulations, 2014 3.275
u Foreign Exchange Management (Current Account Transactions) Rules, 2000 3.6
u Foreign Exchange Management (Debt Instruments) Regulations, 2019 3.154
u Foreign Exchange Management (Deposit) Regulations, 2016 3.37
u Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and
Payment of Interest) Rules, 2000 3.3
u Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison
Office or a Project Office or any other Place of Business) Regulations, 2016 3.167
u Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 3.55
u Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 3.178
u Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in
India) Regulations, 2015 3.68
u Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 3.185
u Foreign Exchange Management (Guarantees) Regulations, 2000 3.60
u Foreign Exchange Management (Insurance) Regulations, 2015 3.81
u Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 3.277
u Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency
of a Person Resident outside India) Regulations, 2000 3.26
u Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 3.87
u Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020 3.291
u Foreign Exchange Management (Mode of Payment and Reporting of Non-debt
Instruments) Regulations, 2019 3.160
u Foreign Exchange Management (Non-debt Instruments) Rules, 2019 3.93
u Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002 3.265
u Foreign Exchange Management (Permissible Capital Account Transactions) Regulations,
2000 3.22
u Foreign Exchange Management (Possession and Retention of Foreign Currency)
u Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign
Exchange) Regulations, 2015 3.65
u Foreign Exchange Management (Regularization of Assets held Abroad by a Person
u Foreign Exchange Management (Remittance of Assets) Regulations, 2016 3.83
u Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 3.197

CONTENTS I-12
PAGE
u Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate
Bodies (OCBs)] Regulations, 2003 3.267
u Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank)
Directions, 2018 3.284
CHRONOLOGICAL LIST OF RULES & REGULATIONS
CENTRAL GOVERNMENT
u GSR 379(E), dated 3-5-2000 - Foreign Exchange Management (Encashment of Draft,
Cheque, Instrument and Payment of Interest) Rules, 2000 3.3
u GSR 380(E), dated 3-5-2000 - Foreign Exchange (Authentication of Documents)
Rules, 2000 3.5
u GSR 381(E), dated 3-5-2000 - Foreign Exchange Management (Current Account
Transactions) Rules, 2000 3.6
u GSR 382(E), dated 3-5-2000 - Foreign Exchange Management (Adjudication Proceedings
and Appeal) Rules, 2000 3.11
u GSR 383(E), dated 3-5-2000 - Foreign Exchange (Compounding Proceedings) Rules, 2000 3.18
u GSR 677(E), dated 28-8-2000 - Appellate Tribunal for Foreign Exchange (Recruitment,
Salary and Allowances and other Conditions of Service of Chairperson and Members)
Rules, 2000 3.262
u S.O. No. 3732(E), dated 17-10-2019 - Foreign Exchange Management (Non-debt
Instruments) Rules, 2019 3.93
u GSR 796(E), dated 17-10-2019 - Foreign Exchange Management (Debt Instruments)
RBI
u FEMA 1/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Permissible
Capital Account Transactions) Regulations, 2000 3.22
u FEMA 2/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Issue of Security in
India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000 3.26
u FEMA 3(R)/2018-RB, dated 17-12-2018 - Foreign Exchange Management (Borrowing and
Lending) Regulations, 2018 3.27
u FEMA 5(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Deposit)
u FEMA 6(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Export and Import
of Currency) Regulations, 2015 3.55
u FEMA 7(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Acquisition and
Transfer of Immovable Property outside India) Regulations, 2015 3.58
u FEMA 8/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Guarantees)
u FEMA 9(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Realisation,
Repatriation and Surrender of Foreign Exchange) Regulations, 2015 3.65
u FEMA 10(R)/2015-RB, dated 21-1-2016 - Foreign Exchange Management (Foreign Currency
Accounts by a Person Resident in India) Regulations, 2015 3.68
u FEMA 10A/2014-RB, dated 21-3-2014 - Foreign Exchange Management (Crystallization of
Inoperative Foreign Currency Deposits) Regulations, 2014 3.275
u FEMA 11(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Possession and
Retention of Foreign Currency) Regulations, 2015 3.79

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PAGE
u FEMA 12(R)/2015-RB, dated 29-12-2015 - Foreign Exchange Management (Insurance)
u FEMA 13(R)/2016-RB, dated 1-4-2016 - Foreign Exchange Management (Remittance of
Assets) Regulations, 2016 3.83
u FEMA 14(R)/2016-RB, dated 2-5-2016 - Foreign Exchange Management (Manner of Receipt
and Payment) Regulations, 2016 3.87
u FEMA 22(R)/2016-RB, dated 31-3-2016 - Foreign Exchange Management (Establishment in
India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business)
u FEMA 23(R)/2015-RB, dated 12-1-2016 - Foreign Exchange Management (Export of Goods
and Services) Regulations, 2015 3.178
u FEMA 25/2000-RB, dated 3-5-2000 - Foreign Exchange Management (Foreign Exchange
Derivative Contracts) Regulations, 2000 3.185
u FEMA 120/2004-RB, dated 7-7-2004 - Foreign Exchange Management (Transfer or Issue
of any Foreign Security) Regulations, 2004 3.197
u FEMA 71/2002-RB, dated 7-9-2002 - Foreign Exchange Management (Offshore Banking
Unit) Regulations, 2002 3.265
u FEMA 101/2003-RB, dated 3-10-2003 - Foreign Exchange Management [Withdrawal
of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003 3.267
u FEMA 339/2015-RB, dated 2-3-2015 - Foreign Exchange Management (International
Financial Services Centre) Regulations, 2015 3.277
u FEMA 348/2015-RB, dated 25-9-2015 - Foreign Exchange Management (Regularization
of Assets held Abroad by a Person Resident in India) Regulations, 2015 3.279
u FEMA 389/2018-RB, dated 20-3-2018 - Foreign Exchange Management (Cross Border
Merger) Regulations, 2018 3.280
u FEMA 395/2019-RB, dated 17-10-2019 - Foreign Exchange Management (Mode of
Payment and Reporting of Non-debt Instruments) Regulations, 2019 3.160
u FEMA 399/2020-RB, dated 23-10-2020 - Foreign Exchange Management (Margin for
Derivative Contracts) Regulations, 2020 3.291
u FED 1/DG(SG)-2008, dated 6-8-2008 - Currency Futures (Reserve Bank) Directions, 2008 3.193
u FED 01/ED(HRK)-2010, dated 30-7-2010 - Exchange Traded Currency Options
(Reserve Bank) Directions, 2010 3.271
u FMRD.FMD.01/ED(TRS)-2020, dated 20-1-2020 - Currency Futures in International
Financial Services Centre (Reserve Bank) Directions, 2020 3.287
u FMRD.FMD.02/ED(TRS)-2020, dated 20-1-2020 - Currency Options in International
Financial Services Centre (Reserve Bank) Directions, 2020 3.289
DIVISION FOUR
NOTIFICATIONS UNDER FEMA
4.1 Notification under section 1(4) of FEMA/Enforcement of Amendments to provisions
of FEMA 4.3
4.2 Notification under section 2(h) of FEMA 4.4
4.3 Notification under section 2(za) of FEMA 4.5
4.4 Notifications under section 3 of FEMA 4.6

CONTENTS I-14
PAGE
4.5 Notification under section 6 of FEMA 4.9
4.6 Orders under section 16 of FEMA 4.10
4.10 Notifications under section 36 of FEMA 4.15
4.11 Notifications under section 37A of FEMA 4.17
4.13 Notification under section 40 of RBI Act 4.19
4.16 Removal of Difficulties Order 4.23
DIVISION FIVE
MASTER DIRECTIONS
5.1 Master Direction on Risk Management and Inter-Bank Dealings 5.3
5.2 Master Direction on Opening and Maintenance of Rupee/Foreign Currency Vostro
Accounts of Non-resident Exchange Houses 5.29
5.3 Master Direction on Money Changing Activities 5.39
5.4 Master Direction on Compounding of Contraventions under FEMA, 1999 5.57
5.5 Master Direction on External Commercial Borrowings, Trade Credits and structured
obligations 5.67
5.6 Master Direction on Borrowing and Lending transactions in Indian Rupee between
Persons Resident in India and Non-Resident Indians/Persons of Indian Origin 5.85
5.7 Master Direction on Liberalised Remittance Scheme (LRS) 5.92
5.8 Master Direction on other Remittance Facilities 5.106
5.9 Master Direction on Insurance 5.130
5.10 Master Direction on Establishment of Branch Office (BO)/Liaison Office (LO)/Project
Office (PO) or any other place of business in India by foreign entities 5.137
5.11 Master Direction on Foreign Investment in India 5.151
5.12 Master Direction on Acquisition and Transfer of Immovable Property under Foreign
Exchange Management Act, 1999 5.187
5.13 Master Direction on Remittance of Assets 5.198
5.14 Master Direction on Deposits and Accounts 5.202
5.15 Master Direction on Direct Investment by Residents in Joint Venture (JV)/Wholly
Owned Subsidiary (WOS) Abroad 5.221
5.16 Master Direction on Export of Goods and Services 5.245
5.17 Master Direction on Import of Goods and Services 5.275
5.18 Master Direction on Reporting under Foreign Exchange Management Act, 1999 5.298
5.19 Master Direction on Miscellaneous 5.392
5.20 Master Direction on Money Transfer Service Scheme (MTSS) 5.398

I-15 CONTENTS
PAGE
DIVISION SIX
MEMORANDUM OF INSTRUCTIONS
u PEM : Memorandum of Instructions on Project Exports and Service Exports 6.3
u ACM : Memorandum of procedure for channelling transactions through
Asian Clearing Union (ACU) 6.68
u GIM : Revised Instructions under GIM 6.89
u LIM : Revised Instructions under LIM 6.94
DIVISION SEVEN
FOREIGN CONTRIBUTIONS
7.1 Foreign Contribution (Regulation) Act, 2010 7.3
7.2 Foreign Contribution (Regulation) Rules, 2011 7.26
7.3 Foreign Contribution (Acceptance or Retention of Gifts or Presentations) Rules, 2012 7.67
7.4 Notifications issued under Foreign Contribution (Regulation) Act, 2010 7.69
7.5 Guidelines issued under section 36(1)(a) of the Banking Regulation Act, 1949 -
Implementation of the Provisions of Foreign Contribution (Regulation) Act, 2010 7.78
7.6 Guidelines for consideration of proposals for acceptance of foreign hospitality
under the Foreign Contribution (Regulation) Act, 2010 7.84
7.7 Exemption from provisions of section 14(3) of Foreign Contribution (Regulation) Act,
2010 7.89
7.8 Procedure for opening & operating the designated “FCRA Account” as provided under
the amended Section 17(1) of the Foreign Contribution (Regulation) Act, 2010 7.90
7.9 Notified agencies not to be covered by definition of ‘Foreign Sources’ 7.92
7.10 Standard Operating Procedure (SOP) to open and operate the “FCRA Account” as
provided under Section 17(1) of the amended Foreign Contribution (Regulation) Act,
2010 with SBI, New Delhi Main Branch in terms of FCRA (Amendment) Act, 2020 7.97
7.11 Advisory for Compliance by FCRA NGOs/Associations with the Amended Provisions in
FCRA, 2010 and FCRR, 2011 7.100
7.12 FAQs on FCRA, 2010 7.103
7.13 Case Laws Digest 7.122
DIVISION EIGHT
PREVENTION OF MONEY LAUNDERING
8.1 Prevention of Money Laundering Act, 2002 8.3
8.2 Notifications 8.57
8.3 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of
ProvisionalAttachmentofPropertyalongwiththeMaterial,andCopyoftheReasonsalong
with the Material in Respect of Survey, to the Adjudicating Authority and its Period of
Retention) Rules, 2005 8.77
8.4 Prevention of Money-Laundering (Receipt and Management of Confiscated Properties)
Rules, 2005 8.82
8.5 Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 8.85

CONTENTS I-16
PAGE
8.6 Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and the
Manner of Forwarding the Reasons and Material to the Adjudicating Authority,
Impounding and Custody of Records and the Period of Retention) Rules, 2005 8.116
8.7 Prevention of Money-Laundering (the Forms and the Manner of Forwarding a Copy of
Order of Arrest of a Person along with the Material to the Adjudicating Authority and
its Period of Retention) Rules, 2005 8.127
8.8 Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of
Retention of Seized Property along with the Material to the Adjudicating Authority and the
Period of its Retention) Rules, 2005 8.132
8.9 Prevention of Money-Laundering (Manner of Receiving the Records Authenticated
outside India) Rules, 2005 8.136
8.10 Prevention of Money-Laundering (Appeal) Rules, 2005 8.137
8.11 Adjudicating Authority (Procedure) Regulations, 2013 8.140
8.12 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson
and Members of Appellate Tribunal) Rules, 2007 8.154
8.13 Prevention of Money-Laundering (Appointment and Conditions of Service of Chairperson
and Members of Adjudicating Authorities) Rules, 2007 8.160
8.14 Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013 8.163
8.15 Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties
Confirmed by the Adjudicating Authority) Rules, 2013 8.165
8.16 Prevention of Money-Laundering (Restoration of Property) Rules, 2016 8.171
8.17 Know Your Customer (KYC) Directions, 2016 8.173
DIVISION NINE
EURO ISSUE AND ISSUE OF FOREIGN CURRENCY CONVERTIBLE
BONDS/ORDINARY SHARES THROUGH DEPOSITORY RECEIPT
MECHANISM/ISSUE OF FOREIGN CURRENCY EXCHANGE BONDS
9.1 Euro Issue 9.3
9.2 Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depositary Receipt Mechanism) Scheme, 1993 9.33
9.3 Issue of Foreign Currency Exchangeable Bonds Scheme, 2008 9.49
9.4 Depository Receipts Scheme, 2014 9.52
9.5 Companies (Issue of Global Depository Receipts) Rules, 2014 9.56
DIVISION TEN
ALLIED ACTS/RULES AND GUIDELINES
10.1 Foreign Trade (Development and Regulation) Act, 1992 10.3
10.2 Notification under section 9A of the Foreign Trade (Development & Regulation) Act,
1992 10.18
10.3 Foreign Trade (Regulation) Rules, 1993 10.20
10.4 Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 10.28
10.5 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 10.33

I-17 CONTENTS
PAGE
10.6 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 10.40
10.7 Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for
Forfeited Property) Rules, 1977 10.51
10.8 Appellate Tribunal for Forfeited Property (Procedure) Rules, 1986 10.60
10.9 Appellate Tribunal for Forfeited Property (Fees) Rules, 1987 10.68
10.10 Smugglers and Foreign Exchange Manipulators (Receipt, Management and Disposal
of Forfeited Property) Rules, 2006 10.69
10.11 Safeguard Measures (Quantitative Restrictions) Rules, 2012 10.75
DIVISION ELEVEN
FOREIGN DIRECT INVESTMENT POLICY
11.1 Consolidated Foreign Direct Investment Policy 11.3
11.2 Circulars issued in 2017-20 11.71
DIVISION TWELVE
TRIBUNAL, APPELLATE TRIBUNAL AND OTHER AUTHORITIES
12.1 Relevant sections of Finance Act, 2017 12.3
12.2 Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and
Other Conditions of Service of Members) Rules, 2020 12.8
DIVISION THIRTEEN
INTERNATIONAL FINANCIAL SERVICES
CENTRES AUTHORITY ACT, 2019
13.1 International Financial Services Centres Authority Act, 2019 13.3
13.2 International Financial Services Centres Authority (Salary, Allowances and other
Terms and Conditions of Service of Chairperson and Members) Rules, 2020 13.21
13.3 International Financial Services Centres Authority (Procedure for Authority
Meetings) Regulations, 2020 13.26
13.4 International Financial Services Centres Authority (Global In-house Centres)
13.5 International Financial Services Centres Authority (Employees’ Service) Regulations,
2020 13.33
13.6 International Financial Services Centres Authority (Banking) Regulations, 2020 13.82
13.7 Notifications 13.89
DIVISION FOURTEEN
FEMA & FDI READY RECKONER
CHAPTER 1 : FEMA - Overview 14.3*
CHAPTER 2 : Authorised Person under FEMA 14.10*
CHAPTER 3 : Accounts in India by person resident out of India 14.17*
CHAPTER 4 : Accounts of Indian residents in Foreign Currency 14.30*
CHAPTER 5 : Receipt and payment in foreign exchange 14.41*
*See Volume 2.

CONTENTS I-18
PAGE
*See Volume 2.
CHAPTER 6 : Realisation, repatriation and surrender of foreign exchange 14.46*
CHAPTER 7 : Money Changing Activities 14.49*
CHAPTER 8 : Money Transfer Service Scheme (MTSS) 14.61*
CHAPTER 9 : Possession and Retention of Foreign Currency 14.66*
CHAPTER 10 : Export and Import of Currency or Currency Notes 14.68*
CHAPTER 11 : Remittances on current account 14.71*
CHAPTER 12 : Liberalised Remittance Scheme (LRS) 14.86*
CHAPTER 13 : Export of Goods and Services 14.94*
CHAPTER 14 : Import of Goods and Services 14.134*
CHAPTER 15 : Project exports and Service Exports 14.156*
CHAPTER 16 : Foreign exchange rates 14.158*
CHAPTER 17 : Overview of Capital account transactions 14.165*
CHAPTER 18 : Foreign Investment in India 14.170*
CHAPTER 19 : FDI in Indian company 14.179*
CHAPTER 20 : Sector wise FDI Policy at a glance 14.200*
CHAPTER 21 : FDI - Downstream investment i.e. indirect investment 14.209*
CHAPTER 22 : FDI through rights, bonus, sweat equity or merger/amalgamation 14.216*
CHAPTER 23 : FDI - Transfer of securities 14.222*
CHAPTER 24 : FDI in LLP 14.237*
CHAPTER 25 : FDI in GDR/ADR 14.240*
CHAPTER 26 : Investment by NRI or OCI 14.246*
CHAPTER 27 : FDI in startup company 14.260*
CHAPTER 28 : Investment by Foreign Portfolio Investor 14.263*
CHAPTER 29 : FDI in investment vehicle 14.270*
CHAPTER 30 : FDI by FVCI 14.273*
CHAPTER 31 : FDI - Investment in securities by Funds, Foreign Central Bank etc. 14.276*
CHAPTER 32 : Investment by Indian entity in JV/WOS abroad 14.278*
CHAPTER 33 : Guarantees 14.307*
CHAPTER 34 : Insurance 14.312*
CHAPTER 35 : Borrowing and Lending in foreign currency 14.320*
CHAPTER 36 : Borrowing and lending in Indian Rupees 14.325*
CHAPTER 37 : Foreign Investment in Debt Instruments 14.332*
CHAPTER 38 : External Commercial Borrowings 14.343*
CHAPTER 39 : Trade Credit (TC) and Structured Obligations 14.359*
CHAPTER 40 : Acquisition and transfer of immovable property in India 14.366*
CHAPTER 41 : Acquisition and Transfer of Immovable Property out of India 14.372*
CHAPTER 42 : Remittance of Assets 14.374*
CHAPTER 43 : Branch/LO/Project Office in India by foreign entities 14.378*
CHAPTER 44 : Indian Depository Receipts 14.394*
CHAPTER 45 : Risk Management and Inter-Bank Dealings 14.401*

I-19 CONTENTS
PAGE
CHAPTER 46 : Vostro Account of Non-Resident Exchange Houses 14.404*
CHAPTER 47 : Industrial Policy of Government of India 14.407*
CHAPTER 48 : Enforcement of FEMA 14.413*
CHAPTER 49 : Penalties under FEMA 14.416*
CHAPTER 50 : Appeals under FEMA 14.422*
CHAPTER 51 : Compounding of Contraventions under FEMA 14.426*
CHAPTER 52 : Prevention of Money Laundering Act 14.437*
CHAPTER 53 : Foreign Contribution (Regulation) Act (FCRA) 14.470*
CHAPTER 54 : COFEPOSA, 1974 14.491*
SUBJECT INDEX 14.505*
DIVISION FIFTEEN
FEMA CASE LAWS DIGEST
15.1 FEMA 1999 15.3*
15.2 Foreign Contribution (Regulation) Act, 1976 15.25*
15.3 Foreign Contribution (Regulation) Act, 2010 15.27*
15.4 Foreign Exchange Regulation Act, 1973 15.29*
DIVISION SIXTEEN
RBI’s CIRCULARS & CLARIFICATIONS
16.1 List of RBI’s Circulars & Clarifications 16.3*
16.2 RBI’s Circulars & Clarifications 16.153*
16.3 Other Circulars & Clarifications 16.228*
APPENDIX I
u Relevant Provisions of Exchange Control Manual A1-A101*
APPENDIX II
u Foreign Exchange Regulation Act, 1973 A103-A135*
APPENDIX III
u FEDAI Rules A137-A155*
APPENDIX IV
u Asian Clearing Union (Procedure) Rules A157-A161*
SUBJECT INDEX i-l
*See Volume 2.

1
FEMA - OVERVIEW
1.1 Background of FEMA
I n d i a h a d f o r l o n g t i m e a d v e r s e b a l a n c e o f p a y m e n t p o s i t i o n i n i n t e r n a t i o n a l t r a d e
i.e.
i m p o r t s w e r e m o r e t h a n e x p o r t s ; d u e t o w h i c h t h e r e w a s s h o r t a g e o f f o r e i g n
e x c h a n g e i n I n d i a . F o r e i g n E x c h a n g e R e g u l a t i o n A c t w a s i n t r o d u c e d i n 1 9 4 7 . T h i s
w a s l a t e r r e p l a c e d w i t h ‘ t h e F o r e i g n E x c h a n g e R e g u l a t i o n A c t , 1 9 7 3 ’ ( F E R A ) , w h i c h
c a m e i n t o e f f e c t o n 1 s t J a n . , 1 9 7 4 . G o v e r n m e n t i n i t i a t e d p r o c e s s o f l i b e r a l i s a t i o n o f
I n d i a n e c o n o m y i n 1 9 9 1 . F o r e i g n I n v e s t m e n t i n v a r i o u s s e c t o r s w a s p e r m i t t e d . T h i s
i n c r e a s e d fl o w o f f o r e i g n e x c h a n g e t o I n d i a a n d f o r e i g n e x c h a n g e r e s e r v e s h a v e i n
-c r e a s e d s u b s t a n t i a l l y . I n v i e w o f t h i s , F E R A h a s b e e n r e p e a l e d a n d F E M A ( F o r e i g n
E x c h a n g e M a n a g e m e n t A c t , 1 9 9 9 ) h a s b e e n p a s s e d . T h e A c t h a s b e e n m a d e e f f e c t i v e
f r o m 1 s t J u n e , 2 0 0 0 .
A s p e r S t a t e m e n t o f O b j e c t s t o t h e F E M B i l l , t h e o b j e c t o f F E M B i l l i s t o c o n s o l i d a t e
a n d a m e n d t h e l a w r e l a t i n g t o f o r e i g n e x c h a n g e w i t h t h e o b j e c t o f f a c i l i t a t i n g e x t e r n a l
t r a d e a n d p a y m e n t s a n d f o r p r o m o t i n g t h e o r d e r l y d e v e l o p m e n t a n d m a i n t e n a n c e
o f f o r e i g n e x c h a n g e m a r k e t s i n I n d i a .
R e s e r v e B a n k o f I n d i a i s t h e o v e r a l l c o n t r o l l i n g a u t h o r i t y i n r e s p e c t o f F E M A .
1.1-1 Extra territorial jurisdiction of FEMA
T h i s A c t e x t e n d s t o w h o l e o f t h e I n d i a . I t h a s s o m e e x t r a t e r r i t o r i a l j u r i s d i c t i o n t o o
i.e.i t a l s o a p p l i e s t o a l l b r a n c h e s , o f fi c e s a n d a g e n c i e s o u t s i d e I n d i a o w n e d a n d c o n t r o l l e d
b y a p e r s o n r e s i d e n t i n I n d i a a n d a l s o t o a n y c o n t r a v e n t i o n t h e r e u n d e r c o m m i t t e d
o u t s i d e I n d i a b y a n y p e r s o n t o w h o m t h e A c t a p p l i e s [ s e c t i o n 1 o f F E M A ]
I n
British India Steam Navigation Co. Ltd.
v .
Shanmugha Vilas Cashew Industries( 1 9 9 0 ) 4 8 E L T 4 8 1 ( S C ) , i t w a s h e l d t h a t f o r e i g n s h i p o n h i g h s e a s , o r h e r f o r e i g n
o w n e r s o r t h e i r a g e n t s i n a f o r e i g n c o u n t r y a r e n o t c o v e r e d u n d e r F E R A u n l e s s t h e
f o r e i g n s h i p e n t e r s I n d i a n p o r t o r t e r r i t o r i a l w a t e r s .
1.1-2 Salient provisions of FEMA
F E M A p r o v i d e s * F r e e t r a n s a c t i o n s o n c u r r e n t a c c o u n t s u b j e c t t o r e a s o n a b l e r e
-s t r i c t i o n s t h a t m a y b e i m p o s e d * R B I c o n t r o l o v e r c a p i t a l a c c o u n t t r a n s a c t i o n s *
C o n t r o l o v e r r e a l i s a t i o n o f e x p o r t p r o c e e d s * D e a l i n g i n f o r e i g n e x c h a n g e t h r o u g h
‘ A u t h o r i s e d P e r s o n s ’ l i k e A u t h o r i s e d D e a l e r / M o n e y C h a n g e r / O f f - s h o r e b a n k i n g u n i t
14.3

* A d j u d i c a t i o n o f O f f e n c e s * A p p e a l p r o v i s i o n s i n c l u d i n g S p e c i a l D i r e c t o r ( A p p e a l s )
a n d A p p e l l a t e T r i b u n a l * D i r e c t o r a t e o f E n f o r c e m e n t .
Enforcement of FEMA -
T h o u g h R B I e x e r c i s e s o v e r a l l c o n t r o l o v e r f o r e i g n e x c h a n g e
t r a n s a c t i o n s , e n f o r c e m e n t o f F E M A h a s b e e n e n t r u s t e d t o a s e p a r a t e ‘ D i r e c t o r a t e o f
E n f o r c e m e n t ’ f o r m e d f o r t h i s p u r p o s e . [ s e c t i o n 3 6 o f F E M A ] .
T h o u g h F E M A d o e s n o t t r e a t v i o l a t i o n o f F E M A p r o v i s i o n s a s c r i m i n a l o f f e n c e , p r e
-v e n t i v e d e t e n t i o n u n d e r C O F E P O S A f o r v i o l a t i o n o f F E M A i s p e r m i s s i b l e , a s F E M A
a n d C O F E P O S A o c c u p y d i f f e r e n t fi e l d s . -
UOI
v .
Venkateshan
2 0 0 2 A I R S C W 1 9 7 8
= 3 8 S C L 6 6 9 ( S C ) .
RBI to administer FEM (Non-debt Instruments) Rules
- F E M ( N o n - d e b t I n s t r u
-m e n t s ) R u l e s , 2 0 1 9 , t h o u g h n o t i f i e d b y C e n t r a l G o v e r n m e n t , s h a l l b e a d m i n i s t e r e d
b y t h e R e s e r v e B a n k o f I n d i a . W h i l e a d m i n i s t r a t i n g t h e s e r u l e s , R B I m a y i n t e r p r e t
a n d i s s u e s u c h d i r e c t i o n s , c i r c u l a r s , i n s t r u c t i o n s , c l a r i f i c a t i o n s , a s i t m a y d e e m
n e c e s s a r y , f o r e f f e c t i v e i m p l e m e n t a t i o n o f t h e p r o v i s i o n s o f t h e s e r u l e s - R u l e 2 ( A )
o f F E M ( N o n - d e b t I n s t r u m e n t s ) R u l e s , 2 0 1 9 i n s e r t e d w . e . f . 2 7 - 7 - 2 0 2 0 .
1.1-3 Suspension of Act in extraordinary situations
F E M A h a s c o n s i d e r a b l y l i b e r a l i s e d p r o v i s i o n s i n r e s p e c t o f f o r e i g n e x c h a n g e . H o w e v e r ,
s o m e t i m e s , a n e x t r a o r d i n a r y s i t u a t i o n m a y a r i s e . I n s u c h c a s e s , C e n t r a l G o v e r n
-m e n t c a n s u s p e n d o p e r a t i o n o f a n y o r a l l p r o v i s i o n s o f F E M A i n p u b l i c i n t e r e s t , b y
i s s u i n g a n o t i fi c a t i o n . T h e s u s p e n s i o n c a n b e r e l a x e d b y i s s u i n g a n o t i fi c a t i o n . C o p y
o f n o t i fi c a t i o n s h a l l b e p l a c e d b e f o r e P a r l i a m e n t f o r 3 0 d a y s . [ s e c t i o n 4 0 o f F E M A ]
1.2 FEMA in changed situation
I n J u n e 1 9 9 1 , f o r e i g n e x c h a n g e r e s e r v e s h a d f a l l e n t o o n l y 1 . 1 b i l l i o n U S $ , a n d i t
w a s f e a r e d t h a t I n d i a m i g h t d e f a u l t i n f o r e i g n e x c h a n g e p a y m e n t s . H o w e v e r , a f t e r
l i b e r a l i s a t i o n , f o r e i g n c o m p a n i e s a r e n o w w e l c o m e t o i n v e s t i n I n d i a .
T h e f o r e i g n e x c h a n g e a s s e t s w i t h R B I s t a r t e d r i s i n g . F o r e i g n e x c h a n g e r e s e r v e s ( w h i c h
i n c l u d e G o l d a n d S D R ) w e r e 2 9 . 9 6 7 b i l l i o n U S $ i n D e c e m b e r 1 9 9 8 , w h i c h w e n t u p
t o U S $ 3 8 b i l l i o n b y e n d M a r c h 2 0 0 0 .
T h e f o r e i g n e x c h a n g e r e s e r v e s [ i n c l u d i n g g o l d a n d S p e c i a l D r a w i n g R i g h t s ( S D R ) ]
w e r e 2 5 1 . 9 8 b i l l i o n U S d o l l a r s o n 3 1 - 3 - 2 0 0 9 , U S D 2 9 7 . 3 b i l l i o n a s o n 3 1 - 1 2 - 2 0 1 0 . T h e s e
w e r e 2 9 2 . 0 o n 3 1 - 3 - 2 0 1 3 , 3 0 4 . 2 b i l l i o n U S D o n 3 1 - 3 - 2 0 1 4 a n d 3 5 0 . 3 8 b i l l i o n U S D o n
3 1 - 1 2 - 2 0 1 5 .
M o s t o f t h e g o o d s c a n b e i m p o r t e d u n d e r O G L ( O p e n G e n e r a l L i c e n c e ) , r e d u c i n g t h e
‘
licence and permit Raj
’ . G o l d a n d S i l v e r c a n b e o f fi c i a l l y i m p o r t e d .
R u p e e h a s b e e n m a d e f u l l y c o n v e r t i b l e o n c u r r e n t a c c o u n t . I t i s n o t f u l l y c o n v e r t i b l e
o n c a p i t a l a c c o u n t . C a p i t a l a c c o u n t m e a n s t e r m l o a n s , f u n d s b r o u g h t f o r l o n g t e r m
i n v e s t m e n t i n t h e f o r m o f s h a r e s e t c . T h u s , f u n d s b r o u g h t i n I n d i a f o r l o n g t e r m
i n v e s t m e n t a n d l o a n s a r e n o t f r e e l y r e p a t r i a b l e .
S i n c e R u p e e i s c o n v e r t i b l e o n c u r r e n t a c c o u n t , a l l c u r r e n t i n c o m e ( i n c l u d i n g r e n t ,
d i v i d e n d , i n t e r e s t s a l a r y e t c . ) i s r e p a t r i a b l e , e v e n i n c a s e s w h e r e p r i n c i p a l a m o u n t i s
Para 1.2
F E M A - O V E R V I E W
14.4

n o t r e p a t r i a b l e . - - C u r r e n t i n c o m e o f N R I l i k e d i v i d e n d , i n t e r e s t , p e n s i o n , r e n t e t c .
c a n b e c r e d i t e d t o N R E a c c o u n t o f N R I s u b j e c t t o T D S a n d o b t a i n i n g C A c e r t i fi c a t e .
A n I n d i v i d u a l c a n n o w o p e n a c c o u n t i n f o r e i g n b a n k , c a n r e m i t u p t o L R S l i m i t s p e r
c a l e n d a r y e a r f o r p u r c h a s e o f i m m o v a b l e a s s e t o r s h a r e s a b r o a d .
R B I h a s a n n o u n c e d c e r t a i n s c h e m e s f o r i n v e s t m e n t o n r e p a t r i a t i o n b a s i s
e.g.
p o r t f o l i o
i n v e s t m e n t s c h e m e s , i n v e s t m e n t b y F I I s e t c . I f a m o u n t i s i n v e s t e d i n s u c h s c h e m e s ,
t h e a m o u n t i s f r e e l y r e p a t r i a b l e . O t h e r w i s e , r e p a t r i a t i o n o r e v e n t r a n s f e r o f s h a r e s
i s n o t p e r m i s s i b l e w i t h o u t a p p r o v a l o f R B I .
1.3 Overall scheme of FEMA
B a s i c a l l y , F E M A m a k e s p r o v i s i o n s i n r e s p e c t o f d e a l i n g s i n f o r e i g n e x c h a n g e .
S e c t i o n 3 o f F E M A p r o v i d e s t h a t m a k i n g a n y p a y m e n t t o p e r s o n n o t r e s i d e n t o f I n d i a
a n d r e c e i v i n g a n y p a y m e n t f r o m p e r s o n r e s i d e n t o u t s i d e I n d i a , a c q u i r i n g a n y a s s e t
o u t o f I n d i a o r d e a l i n g w i t h f o r e i g n c u r r e n c y o r f o r e i g n s e c u r i t y c a n b e o n l y a s p e r
g e n e r a l o r s p e c i a l p e r m i s s i o n o f R B I .
S e c t i o n 4 o f F E M A p r o v i d e s t h a t n o p e r s o n r e s i d e n t i n I n d i a s h a l l a c q u i r e , h o l d , o w n
o r p o s s e s s o r t r a n s f e r a n y f o r e i g n e x c h a n g e , f o r e i g n s e c u r i t y o r a n y i m m o v a b l e
p r o p e r t y o u t s i d e I n d i a o n l y a s p e r p r o v i s i o n s o f F E M A .
B r o a d l y , a l l c u r r e n t a c c o u n t t r a n s a c t i o n s a r e f r e e . H o w e v e r , C e n t r a l G o v e r n m e n t
c a n i m p o s e r e a s o n a b l e i n s t r u c t i o n s b y i s s u i n g r u l e s . [ s e c t i o n 5 o f F E M A ] .
C a p i t a l A c c o u n t T r a n s a c t i o n s a r e p e r m i t t e d t o t h e e x t e n t s p e c i fi e d b y R B I o r C e n t r a l
G o v e r n m e n t b y i s s u i n g r e g u l a t i o n s . [ s e c t i o n 6 o f F E M A - p o w e r s r e l a t i n g t o n o n - d e b t
c a p i t a l a c c o u n t t r a n s a c t i o n s h a v e b e e n t r a n s f e r r e d t o C e n t r a l G o v e r n m e n t w . e . f .
1 5 - 1 0 - 2 0 1 9 ] .
F E M A e n v i s a g e s t h a t R B I w i l l h a v e a c o n t r o l l i n g r o l e i n m a n a g e m e n t o f f o r e i g n
e x c h a n g e . S i n c e R B I c a n n o t d i r e c t l y h a n d l e f o r e i g n e x c h a n g e t r a n s a c t i o n s , i t a u
-t h o r i s e s ‘ A u t h o r i s e d P e r s o n s ’ t o d e a l i n f o r e i g n e x c h a n g e a s p e r d i r e c t i o n s i s s u e d b y
R B I . [ s e c t i o n 1 0 o f F E M A ] .
R B I i s e m p o w e r e d t o i s s u e d i r e c t i o n s t o s u c h ‘ A u t h o r i s e d P e r s o n s ’ u n d e r s e c t i o n 1 1
o f F E M A . T h e s e d i r e c t i o n s a r e i s s u e d t h r o u g h A P ( D I R ) c i r c u l a r s .
F E M A a l s o m a k e s p r o v i s i o n s f o r e n f o r c e m e n t , p e n a l t i e s , a d j u d i c a t i o n a n d a p p e a l s .
1.3-1 General relaxations from section 3 of FEMA
S e c t i o n 3 o f F E M A p r o v i d e s t h a t m a k i n g a n y p a y m e n t t o p e r s o n n o t r e s i d e n t o f I n d i a
a n d r e c e i v i n g a n y p a y m e n t f r o m p e r s o n r e s i d e n t o u t s i d e I n d i a , a c q u i r i n g a n y a s s e t
o u t o f I n d i a o r d e a l i n g w i t h f o r e i g n c u r r e n c y o r f o r e i g n s e c u r i t y c a n b e o n l y a s p e r
g e n e r a l o r s p e c i a l p e r m i s s i o n o f R B I .
F o l l o w i n g g e n e r a l r e l a x a t i o n s h a v e b e e n g i v e n
vide
R B I N o t i fi c a t i o n F E M A 1 6 / 2 0 0 0 -
R B d a t e d 3 - 5 - 2 0 0 0 [ G S R 4 0 3 ( E ) d a t e d 3 - 5 - 2 0 0 0 ] .
u
R e c e i v i n g p a y m e n t (
a
) m a d e i n R u p e e s w h e n p e r s o n r e s i d e n t o u t s i d e I n d i a
v i s i t s I n d i a (
b
) b y c h e q u e , b a n k d r a f t s , p o s t a l o r d e r (
c
) m a d e i n f o r e i g n c u r r e n c y
o u t o f I n d i a
14.5
O V E R A L L S C H E M E O F F E M A
Para 1.3

u
M a k i n g p a y m e n t i n R u p e e s (
i
) b o a r d i n g , l o d g i n g a n d t r a v e l l i n g a n d m e d i c a l
e x p e n s e s w h e n p e r s o n r e s i d e n t o u t o f I n d i a v i s i t s I n d i a (
ii
) p a y m e n t i n R u p e e s
f o r p a y m e n t o f g o l d a n d s i l v e r b r o u g h t i n I n d i a a s p e r l a w
u
M a k i n g p a y m e n t t o p e r s o n r e s i d e n t o u t o f I n d i a f o r g u a r a n t e e g i v e n a s p e r
l a w
u
P a y m e n t b y c o m p a n y t o n o n w h o l e t i m e d i r e c t o r w h e n h e v i s i t s I n d i a f o r h i s
t r a v e l a n d s i t t i n g f e e s
u
G i f t t o N R I / O C I c l o s e r e l a t i v e b y c h e q u e / D D i n h i s N R O a c c o u n t w i t h i n L R S
l i m i t
u
L o a n i n R u p e e s t o N R I r e l a t i v e i n R u p e e s b y c h e q u e
1.3-2 Functions of Reserve Bank of India
F E M A e n v i s a g e s t h a t R B I w i l l h a v e a k e y r o l e i n m a n a g e m e n t o f f o r e i g n e x c h a n g e .
I n
LIC
v .
Escorts Ltd.
- ( 1 9 8 6 ) 8 E C C 1 8 9 ( S C ) = A I R 1 9 8 6 S C 1 3 7 0 = ( 1 9 8 4 ) 1 S C C
2 6 4 = ( 1 9 8 6 ) 5 9 C o m p C a s 5 4 8 ( S C ) , i t h a s b e e n h e l d t h a t R B I i s e n t r u s t e d w i t h s o l e
r e s p o n s i b i l i t y o f F E R A a n d R B I i s ‘ s o l e g u a r d i a n a n d o n l y c u s t o d i a n ’ o f f o r e i g n e x
-c h a n g e o f I n d i a . - - - R B I a l o n e i s t h a t h a s t o d e c i d e w h e t h e r p e r m i s s i o n m a y o r m a y
n o t b e g r a n t e d . [ d e c i s i o n u n d e r F E R A , b u t e q u a l l y a p p l i c a b l e t o F E M A a l s o ] .
P o s i t i o n o f R B I a s e x p e r t r e g u l a t o r y a u t h o r i t y i n m a t t e r s o f e c o n o m i c a n d fi n a n c i a l
p o l i c y h a s b e e n r e i t e r a t e d i n s e v e r a l d e c i s i o n s o f S u p r e m e C o u r t -
Chitra Sharma
v .
UOI
( 2 0 1 8 ) 1 4 8 S C L 8 3 3 = 9 6 t a x m a n n . c o m 2 1 6 ( S C ) .
Main functions of RBI under FEMA
- T h e m a i n f u n c t i o n s o f R B I u n d e r F E M A a r e
a s f o l l o w s -

(
a
)

C o n t r o l o v e r d e a l i n g s i n f o r e i g n e x c h a n g e b y g i v i n g g e n e r a l o r s p e c i a l p e r
-m i s s i o n f o r d e a l i n g i n f o r e i g n e x c h a n g e , e x c l u d i n g t h o s e c a s e s w h e r e s p e c i fi c
p r o v i s i o n s h a v e b e e n m a d e i n A c t , r u l e s o r r e g u l a t i o n s - s e c t i o n 3 o f F E M A

(
b
)

R B I c a n n o t i m p o s e a n y r e s t r i c t i o n s o n c u r r e n t a c c o u n t t r a n s a c t i o n s . T h e s e c a n
b e i m p o s e d o n l y b y C e n t r a l G o v e r n m e n t i n c o n s u l t a t i o n w i t h R B I - s e c t i o n 5
o f F E M A .

(
c
)

S p e c i f y i n g c o n d i t i o n s f o r p a y m e n t i n r e s p e c t o f c a p i t a l a c c o u n t t r a n s a c t i o n
i n v o l v i n g d e b t i n s t r u m e n t s - s e c t i o n 6 ( 2 ) o f F E M A [ p o w e r s i n r e s p e c t o f n o n -
d e b t i n s t r u m e n t s a r e w i t h C e n t r a l G o v e r n m e n t w . e . f . 1 5 - 1 0 - 2 0 1 9 ] .

(
d
)

R e g u l a t e / p r o h i b i t / r e s t r i c t s p e c i fi e d t r a n s a c t i o n s i n f o r e i g n e x c h a n g e - s e c t i o n
6 ( 3 ) o f F E M A

(
e
)

S p e c i f y ( b y r e g u l a t i o n ) p e r i o d a n d m a n n e r i n w h i c h f o r e i g n e x c h a n g e d u e
f r o m e x p o r t o f g o o d s a n d s e r v i c e s s h o u l d b e r e c e i v e d - s e c t i o n 8

(
f
)

T o g r a n t e x e m p t i o n f r o m r e a l i s a t i o n a n d r e p a t r i a t i o n i n c a s e s s p e c i fi e d u / s 9
[ T h e s e c o v e r p r o v i s i o n s i n r e s p e c t o f p o s s e s s i o n o f f o r e i g n c u r r e n c y o r f o r e i g n
c o i n s , f o r e i g n c u r r e n c y a c c o u n t s , f o r e i g n e x c h a n g e a c q u i r e d f r o m e m p l o y m e n t ,
b u s i n e s s , t r a d e , s e r v i c e s e t c . ]
Para 1.3
14.6

(
g
)

G r a n t i n g a u t h o r i s a t i o n t o ‘ A u t h o r i s e d P e r s o n ’ t o d e a l i n f o r e i g n e x c h a n g e , t o
g i v e d i r e c t i o n s t o t h e m a n d t o i n s p e c t t h e a u t h o r i s e d p e r s o n - s e c t i o n s 1 0 , 1 1
a n d 1 2 .

(
h
)

T o m a k e r e g u l a t i o n s - s e c t i o n 4 7

(
i
)

A d m i n i s t e r F E M ( N o n - d e b t I n s t r u m e n t s ) R u l e s , 2 0 1 9
RBI can give ex post facto approval -
I n
LIC of India
v .
Escorts Ltd.
A I R 1 9 8 6 S C 1 3 7 0
= ( 1 9 8 6 ) 5 9 C o m p C a s 5 4 8 ( S C ) = ( 1 9 8 6 ) 1 S C C 2 6 4 = ( 1 9 8 6 ) 8 E C C 1 8 9 , i t h a s b e e n
h e l d t h a t a p p r o v a l [ u n d e r s e c t i o n 2 9 ( 1 ) o f e r s t w h i l e F E R A - c o m p a r a b l e t o s e c t i o n
3 o f F E M A ] c a n b e g r a n t e d
ex post facto
(
i.e.
a f t e r t h e t r a n s a c t i o n h a s a l r e a d y t a k e n
p l a c e ) . S u c h a p p r o v a l m a y b e c o n d i t i o n a l o r u n c o n d i t i o n a l . A s l o n g a s l a w d o e s n o t
s t a t e t h a t p r i o r a p p r o v a l s h o u l d b e o b t a i n e d , s u c h a p p r o v a l c a n b e g i v e n l a t e r w i t h
r e t r o s p e c t i v e e f f e c t . - f o l l o w e d i n
Dale & Carrington Investment
v .
P K Prathapan( 2 0 0 4 ) 5 4 S C L 6 0 1 = 1 2 2 C o m p C a s 1 6 1 = A I R 2 0 0 5 S C 1 6 2 4 = 2 0 0 4 A I R S C W 5 1 4 3
*
Texmaco Ltd.
v .
Dy Director, Enforcement
( 1 9 9 7 ) 8 8 C o m p C a s 2 2 8 ( C a l H C D B ) .
Approval and permission - Distinction
- W h e n a n a p p r o v a l i s r e q u i r e d , a n a c t i o n
h o l d s g o o d . O n l y i f i t i s d i s a p p r o v e d , i t l o s e s i t s f o r c e . O n l y w h e n a p e r m i s s i o n i s r e
-q u i r e d , t h e d e c i s i o n d o e s n o t b e c o m e e f f e c t i v e t i l l p e r m i s s i o n i s o b t a i n e d -
High Court
of Judicature for Rajasthan
v .
P P Singh
( 2 0 0 3 ) 4 S C C 2 3 9 = 2 0 0 3 A I R S C W 5 3 9 = A I R
2 0 0 3 S C 1 0 2 9 - q u o t e d w i t h a p p r o v a l i n c o n c u r r i n g j u d g m e n t o f J u s t i c e S B S i n h a ,
i n
Prohibition & Excise Supdt
. V .
Toddy Tappers Coop Society
2 0 0 3 A I R S C W 6 2 7 1 .
Foreign Exchange department of RBI -
R B I e x e r c i s e s c o n t r o l t h r o u g h i t s f o r e i g n
e x c h a n g e d e p a r t m e n t ( F E D ) a t C e n t r a l O f fi c e , M u m b a i a n d p a r t l y a t D e l h i . I t a l s o
h a s r e g i o n a l o f fi c e s a t v a r i o u s p l a c e s i n I n d i a .
W e b s i t e - w w w . r b i . o r g . i n
Directions issued by RBI have statutory force -
D i r e c t i o n s i s s u e d b y R B I h a v e s t a t
-u t o r y f o r c e a n d c a n b e t e r m e d a s l a w i n f o r c e -
Central Bank of India
v .
Ravindra( 2 0 0 1 ) 1 0 7 C o m p C a s 4 1 6 ( S C ) - q u o t e d w i t h a p p r o v a l i n
Sudhir Shantilal Mehta
v .
CBI
( 2 0 0 9 ) 9 6 S C L 4 0 3 ( S C ) .
1.3-3 Information on web
W e b s i t e o f R B I h t t p : / / w w w . r b i . o r g . i n i s r e a l l y o n e o f t h e b e s t w e b s i t e s . A l l f o r m s a r e
a v a i l a b l e o n t h e w e b s i t e .
I n d u s t r i a l P o l i c y i s a v a i l a b l e o n h t t p : / / w w w . d i p p . g o v . i n . T h i s g i v e s p o l i c y i n r e s p e c t
o f (
a
) F o r e i g n D i r e c t I n v e s t m e n t (
b
) F o r e i g n T e c h n i c a l C o l l a b o r a t i o n s (
c
) P a y m e n t
o f r o y a l t y (
d
) P o l i c y / p r o c e d u r e s f o r a p p r o v a l (
e
) P r e s c r i b e d f o r m s .
U p - t o - d a t e i n f o r m a t i o n o n c o r p o r a t e l a w s a n d t a x l a w s i s a v a i l a b l e o n h t t p : / / w w w .
t a x m a n n . c o m .
1.4 Spread of provisions of FEMA
P r o v i s i o n s o f F E M A c a n n o t b e f o u n d a t o n e p l a c e b u t a r e s p r e a d o v e r a t d i f f e r e n t
p l a c e s . T h e F o r e i g n E x c h a n g e M a n a g e m e n t A c t , 1 9 9 9 c o n t a i n s o n l y b a s i c l e g a l f r a m e
-
14.7
S P R E A D O F P R O V I S I O N S O F F E M A
Para 1.4

w o r k . T h e p r a c t i c a l a s p e c t s a r e c o v e r e d i n r u l e s m a d e b y C e n t r a l G o v e r n m e n t a n d
r e g u l a t i o n s m a d e b y R B I .
S e c t i o n 1 1 ( 1 ) o f F E M A a u t h o r i s e s R B I t o g i v e d i r e c t i o n s t o ‘ a u t h o r i s e d p e r s o n ’ t o
e n s u r e c o m p l i a n c e w i t h p r o v i s i o n s o f F E M A . R B I i s s u e s d i r e c t i o n s t o A u t h o r i s e d
P e r s o n s t h r o u g h A P ( D I R ) c i r c u l a r s . [ A P s t a n d s f o r ‘ A u t h o r i s e d P e r s o n ’ a n d D I R
s t a n d s f o r ‘ D i r e c t i o n s ’ ] . M a n y c i r c u l a r s h a v e b e e n i s s u e d b y R B I u n d e r t h i s s e r i e s .
Rules under FEMA -
V a r i o u s r u l e s h a v e b e e n i s s u e d u n d e r F E M A b y C e n t r a l G o v
-e r n m e n t . T h e s e a r e a m e n d e d f r o m t i m e t o t i m e .
Regulations under FEMA -
R B I h a s i s s u e d v a r i o u s r e g u l a t i o n s . T h e s e a r e a m e n d e d
f r o m t i m e t o t i m e .
1.4.1 Master Directions by RBI
P r o v i s i o n s o f R B I a r e s p r e a d i n A c t , R u l e s , R e g u l a t i o n s , N o t i fi c a t i o n s a n d A P ( D I R )
c i r c u l a r s . I t i s v e r y d i f fi c u l t t o k e e p t r a c k o f a l l o f t h e m . H e n c e , R B I h a s i s s u e d M a s t e r
D i r e c t i o n s o n v a r i o u s i s s u e s o n 1 - 1 - 2 0 1 6 .
T h e s e a r e u p d a t e d r e g u l a r l y o n w e b s i t e o f R B I a s a n d w h e n t h e r e a r e c h a n g e s i n
s t a t u t o r y p r o v i s i o n s a n d R B I i n s t r u c t i o n s .
T h e M a s t e r D i r e c t i o n s a r e a s f o l l o w s -
Master Direction Subject
N o . 1 / 2 0 1 6 - 1 7 R i s k M a n a g e m e n t a n d I n t e r - B a n k D e a l i n g s i s s u e d o n 5 - 7 - 2 0 1 6
N o . 1 / 2 0 1 6 - 1 7 M o n e y T r a n s f e r S e r v i c e S c h e m e ( M T S S ) ( i s s u e d o n 2 2 - 2 - 2 0 1 7 ) - d u p l i
-c a t e n u m b e r i n g
N o . 2 / 2 0 1 5 - 1 6 O p e n i n g a n d M a i n t e n a n c e o f R u p e e / F o r e i g n C u r r e n c y V o s t r o A c c o u n t s
o f N o n - r e s i d e n t E x c h a n g e H o u s e s
N o . 3 / 2 0 1 5 - 1 6 M o n e y C h a n g i n g A c t i v i t i e s
N o . 4 / 2 0 1 5 - 1 6 C o m p o u n d i n g o f C o n t r a v e n t i o n s u n d e r F E M A
N o . 5 / 2 0 1 5 - 1 6 E x t e r n a l C o m m e r c i a l B o r r o w i n g s , T r a d e C r e d i t , B o r r o w i n g a n d L e n d
-i n g i n F o r e i g n C u r r e n c y b y A u t h o r i s e d D e a l e r s a n d P e r s o n s o t h e r t h a n
A u t h o r i s e d D e a l e r s
N o . 6 / 2 0 1 5 - 1 6 B o r r o w i n g a n d L e n d i n g t r a n s a c t i o n s i n I n d i a n R u p e e b e t w e e n P e r s o n s
R e s i d e n t i n I n d i a a n d N R I / P I O
N o . 7 / 2 0 1 5 - 1 6 L i b e r a l i s e d R e m i t t a n c e S c h e m e ( L R S )
N o . 8 / 2 0 1 5 - 1 6 O t h e r R e m i t t a n c e F a c i l i t i e s
N o . 9 / 2 0 1 5 - 1 6 I n s u r a n c e
N o . 1 0 / 2 0 1 5 - 1 6 E s t a b l i s h m e n t o f B r a n c h O f fi c e ( B O ) / L i a i s o n O f fi c e ( L O ) / P r o j e c t O f fi c e
( P O ) o r a n y o t h e r p l a c e o f b u s i n e s s i n I n d i a b y f o r e i g n e n t i t i e s
N o . 1 1 / 2 0 1 7 - 1 8 F o r e i g n I n v e s t m e n t i n I n d i a ( N o w i t h a s b e c o m e r e d u n d a n t w . e . f . 1 7 -
1 0 - 2 0 1 9 , a s C e n t r a l G o v e r n m e n t h a s i s s u e d R u l e s ) .
Para 1.4
14.8

Master Direction Subject
N o . 1 2 / 2 0 1 5 - 1 6 A c q u i s i t i o n a n d T r a n s f e r o f I m m o v a b l e P r o p e r t y u n d e r F E M A ( N o w
i t h a s b e c o m e r e d u n d a n t w . e . f . 1 7 - 1 0 - 2 0 1 9 , i n r e s p e c t o f i m m o v a b l e
p r o p e r t y i n I n d i a , a s C e n t r a l G o v e r n m e n t h a s i s s u e d R u l e s . H o w e v e r ,
d i r e c t i o n s r e l a t i n g t o i m m o v a b l e p r o p e r t y o u t o f I n d i a a r e s t i l l r e l e v a n t ) .
N o . 1 3 / 2 0 1 5 - 1 6 R e m i t t a n c e o f A s s e t s
N o . 1 4 / 2 0 1 5 - 1 6 D e p o s i t s a n d A c c o u n t s
N o . 1 5 / 2 0 1 5 - 1 6 D i r e c t I n v e s t m e n t b y R e s i d e n t s i n J o i n t V e n t u r e ( J V ) / W h o l l y O w n e d
S u b s i d i a r y ( W O S ) A b r o a d
N o . 1 6 / 2 0 1 5 - 1 6 E x p o r t o f G o o d s a n d S e r v i c e s
N o . 1 7 / 2 0 1 5 - 1 6 I m p o r t o f G o o d s a n d S e r v i c e s
N o . 1 8 / 2 0 1 5 - 1 6 R e p o r t i n g u n d e r F E M A
N o . 1 9 / 2 0 1 5 - 1 6 M i s c e l l a n e o u s D i r e c t i o n s
14.9
S P R E A D O F P R O V I S I O N S O F F E M A
Para 1.4

12
LIBERALISED REMITTANCE
SCHEME (LRS)
12.1 Background
I n v i e w o f c o m f o r t a b l e p o s i t i o n o f f o r e i g n e x c h a n g e r e s e r v e s o f I n d i a , L i b e r a l i s e d
R e m i t t a n c e S c h e m e ( L R S ) w a s i n t r o d u c e d o n 4 - 2 - 2 0 0 4 ,
vide
R B I A . P . ( D I R S e r i e s )
C i r c u l a r N o . 6 4 d a t e d F e b r u a r y 4 , 2 0 0 4 r e a d w i t h G o I N o t i fi c a t i o n G . S . R . N o . 2 0 7 ( E )
d a t e d M a r c h 2 3 , 2 0 0 4 . I n t e r e s t i n g l y , t h i s s c h e m e i s n o t p a r t o f a n y R u l e s o r R e g u l a t i o n s .
T h e s c h e m e w a s i n t r o d u c e d a s a l i b e r a l i z a t i o n m e a s u r e t o f a c i l i t a t e r e s i d e n t i n d i v i d
-u a l s t o r e m i t f u n d s a b r o a d f o r p e r m i t t e d c u r r e n t o r c a p i t a l a c c o u n t t r a n s a c t i o n s o r
c o m b i n a t i o n o f b o t h . R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 o n
‘ L i b e r a l i s e d R e m i t t a n c e S c h e m e ( L R S ) ’ c o n t a i n s c o n s o l i d a t e d i n s t r u c t i o n s o n t h i s i s s u e .
R e p o r t i n g i n s t r u c t i o n s c a n b e f o u n d i n R B I F E D M a s t e r D i r e c t i o n N o . 1 8 d a t e d 1 - 1 -
2 0 1 6 o n ‘ R e p o r t i n g ’ .
Limit of USD 2,50,000 per financial year for current account transactions for
individuals and others
- T h e o v e r a l l l i m i t i s U S D 2 , 5 0 , 0 0 0 p e r fi n a n c i a l y e a r . T h i s
l i m i t a p p l i e s t o i n d i v i d u a l s a s w e l l a s o t h e r - S c h e d u l e I I I i t e m 1 (
ix
) o f F E M ( C u r r e n t
A c c o u n t T r a n s a c t i o n s ) R u l e s , 2 0 0 0 .
T h u s , i n d i r e c t l y , L R S a p p l i e s t o a l l c u r r e n t a c c o u n t t r a n s a c t i o n s .
12.2 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident
individuals
P a r a A o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 g i v e s d e t a i l s o f
t h e L R S s c h e m e a s f o l l o w s .
U n d e r t h e L i b e r a l i s e d R e m i t t a n c e S c h e m e , A u t h o r i s e d D e a l e r s m a y f r e e l y a l l o w
r e m i t t a n c e s b y r e s i d e n t i n d i v i d u a l s u p t o U S D 2 , 5 0 , 0 0 0 p e r F i n a n c i a l Y e a r ( A p r i l -
M a r c h ) f o r a n y p e r m i t t e d c u r r e n t o r c a p i t a l a c c o u n t t r a n s a c t i o n o r a c o m b i n a t i o n o f
b o t h . T h e S c h e m e i s n o t a v a i l a b l e t o c o r p o r a t e s , p a r t n e r s h i p fi r m s , H U F , T r u s t s , e t c .
T h e L R S l i m i t h a s b e e n r e v i s e d i n s t a g e s c o n s i s t e n t w i t h p r e v a i l i n g m a c r o a n d m i c r o
e c o n o m i c c o n d i t i o n s . T h e s c h e m e s t a r t e d w i t h L R S l i m i t o f U S D 2 5 , 0 0 0 o n 4 - 2 - 2 0 0 4 .
T h e L R S l i m i t h a s b e e n r e v i s e d f r o m t i m e t o t i m e , a n d p r e s e n t l i m i t w . e . f . 2 6 - 5 - 2 0 1 5
i s U S D 2 , 5 0 , 0 0 0 p e r fi n a n c i a l y e a r p e r r e s i d e n t i n d i v i d u a l .
14.86

Scheme available to minors also
- T h e S c h e m e i s a v a i l a b l e t o a l l r e s i d e n t i n d i v i d u a l s
i n c l u d i n g m i n o r s . I n c a s e o f r e m i t t e r b e i n g a m i n o r , t h e F o r m A 2 m u s t b e c o u n t e r
-s i g n e d b y t h e m i n o r ’ s n a t u r a l g u a r d i a n .
Consolidation of remittance of family members
- R e m i t t a n c e s u n d e r t h e S c h e m e
c a n b e c o n s o l i d a t e d i n r e s p e c t o f f a m i l y m e m b e r s s u b j e c t t o i n d i v i d u a l f a m i l y m e m
-b e r s c o m p l y i n g w i t h i t s t e r m s a n d c o n d i t i o n s . H o w e v e r , c l u b b i n g i s n o t p e r m i t t e d
b y o t h e r f a m i l y m e m b e r s f o r c a p i t a l a c c o u n t t r a n s a c t i o n s s u c h a s o p e n i n g a b a n k
a c c o u n t / i n v e s t m e n t / p u r c h a s e o f p r o p e r t y , i f t h e y a r e n o t t h e c o - o w n e r s / c o - p a r t n e r s
o f t h e o v e r s e a s b a n k a c c o u n t / i n v e s t m e n t / p r o p e r t y . F u r t h e r , a r e s i d e n t c a n n o t g i f t
t o a n o t h e r r e s i d e n t , i n f o r e i g n c u r r e n c y , f o r t h e c r e d i t o f t h e l a t t e r ’ s f o r e i g n c u r r e n c y
a c c o u n t h e l d a b r o a d u n d e r L R S .
TransactionsnotpermissibleunderLRS
- A l l o t h e r t r a n s a c t i o n s w h i c h a r e o t h e r w i s e
n o t p e r m i s s i b l e u n d e r F E M A a n d t h o s e i n t h e n a t u r e o f r e m i t t a n c e f o r m a r g i n s o r
m a r g i n c a l l s t o o v e r s e a s e x c h a n g e s / o v e r s e a s c o u n t e r p a r t y a r e n o t a l l o w e d u n d e r
t h e S c h e m e .
12.2-1 Capital Account transactions permissible under LRS
T h e p e r m i s s i b l e c a p i t a l a c c o u n t t r a n s a c t i o n s b y a n i n d i v i d u a l u n d e r L R S , a s e n u
-m e r a t e d i n p a r a A . 6 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 a r e
a s f o l l o w s .

(
i
)

o p e n i n g o f f o r e i g n c u r r e n c y a c c o u n t a b r o a d w i t h a b a n k ,

(
ii
)

p u r c h a s e o f p r o p e r t y a b r o a d ,

(
iii
)

m a k i n g i n v e s t m e n t s a b r o a d - a c q u i s i t i o n a n d h o l d i n g s h a r e s o f b o t h l i s t e d a n d
u n l i s t e d o v e r s e a s c o m p a n y o r d e b t i n s t r u m e n t s ; a c q u i s i t i o n o f q u a l i fi c a t i o n
s h a r e s o f a n o v e r s e a s c o m p a n y f o r h o l d i n g t h e p o s t o f D i r e c t o r ; a c q u i s i t i o n
o f s h a r e s o f a f o r e i g n c o m p a n y t o w a r d s p r o f e s s i o n a l s e r v i c e s r e n d e r e d o r i n
l i e u o f D i r e c t o r ’ s r e m u n e r a t i o n ; i n v e s t m e n t i n u n i t s o f M u t u a l F u n d s , V e n t u r e
C a p i t a l F u n d s , u n r a t e d d e b t s e c u r i t i e s , p r o m i s s o r y n o t e s ,

(
iv
)

s e t t i n g u p W h o l l y O w n e d S u b s i d i a r i e s a n d J o i n t V e n t u r e s ( w i t h e f f e c t f r o m
A u g u s t 0 5 , 2 0 1 3 ) o u t s i d e I n d i a f o r
bona fide
b u s i n e s s ,

(
v
)

e x t e n d i n g l o a n s i n c l u d i n g l o a n s i n I n d i a n R u p e e s t o N o n - r e s i d e n t I n d i a n s ( N R I s )
w h o a r e r e l a t i v e s a s d e fi n e d i n C o m p a n i e s A c t , 2 0 1 3 .
Banks should not finance to facilitate capital account remittances
- B a n k s s h o u l d
n o t e x t e n d a n y k i n d o f c r e d i t f a c i l i t i e s t o r e s i d e n t i n d i v i d u a l s t o f a c i l i t a t e c a p i t a l
a c c o u n t r e m i t t a n c e s u n d e r t h e S c h e m e - P a r a A . 1 1 o f R B I D E D M a s t e r D i r e c t i o n
N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
12.2-2 LRS for current account transactions
T h e L R S l i m i t o f U S D 2 , 5 0 , 0 0 0 p e r F i n a n c i a l Y e a r ( F Y ) u n d e r t h e S c h e m e a l s o i n
-c l u d e s / s u b s u m e s r e m i t t a n c e s f o r c u r r e n t a c c o u n t t r a n s a c t i o n s ( v i z . p r i v a t e v i s i t ;
g i f t / d o n a t i o n ; g o i n g a b r o a d o n e m p l o y m e n t ; e m i g r a t i o n ; m a i n t e n a n c e o f c l o s e r e l
-a t i v e s a b r o a d ; b u s i n e s s t r i p ; m e d i c a l t r e a t m e n t a b r o a d ; s t u d i e s a b r o a d ) a v a i l a b l e t o
14.87
L R S O F U S D 2 , 5 0 , 0 0 0 F O R R E S I D E N T I N D I V I D U A L S
Para 12.2

r e s i d e n t i n d i v i d u a l s u n d e r P a r a 1 o f S c h e d u l e I I I t o F o r e i g n E x c h a n g e M a n a g e m e n t
( C u r r e n t A c c o u n t T r a n s a c t i o n s ) R u l e s , 2 0 0 0 . R e l e a s e o f f o r e i g n e x c h a n g e e x c e e d i n g
U S D 2 , 5 0 , 0 0 0 r e q u i r e s p r i o r p e r m i s s i o n f r o m t h e R B I - P a r a A . 7 o f R B I D E D M a s t e r
D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
P r o v i s i o n s i n r e s p e c t o f e a c h t y p e o f c u r r e n t a c c o u n t t r a n s a c t i o n s a r e a s f o l l o w s .
Private visits abroad -
F o r p r i v a t e v i s i t s a b r o a d , o t h e r t h a n t o N e p a l a n d B h u t a n , a n y
r e s i d e n t i n d i v i d u a l c a n o b t a i n f o r e i g n e x c h a n g e u p t o a n a g g r e g a t e a m o u n t o f U S D
2 , 5 0 , 0 0 0 f r o m a n A u t h o r i s e d D e a l e r o r F F M C , i n a n y o n e fi n a n c i a l y e a r , i r r e s p e c t i v e
o f t h e n u m b e r o f v i s i t s u n d e r t a k e n d u r i n g t h e y e a r .
Tour related expenses
- A l l t o u r r e l a t e d e x p e n s e s i n c l u d i n g c o s t o f r a i l / r o a d / w a t e r
t r a n s p o r t a t i o n ; c o s t o f E u r o R a i l ; p a s s e s / t i c k e t s , e t c . o u t s i d e I n d i a ; a n d o v e r s e a s h o
-t e l / l o d g i n g e x p e n s e s s h a l l b e s u b s u m e d u n d e r t h e L R S l i m i t . T h e t o u r o p e r a t o r c a n
c o l l e c t t h i s a m o u n t e i t h e r i n I n d i a n r u p e e s o r i n f o r e i g n c u r r e n c y f r o m t h e r e s i d e n t
t r a v e l l e r .
Gift/donation to person resident out of India -
A n y r e s i d e n t i n d i v i d u a l m a y r e m i t
u p - t o U S D 2 , 5 0 , 0 0 0 i n o n e F Y a s g i f t t o a p e r s o n r e s i d i n g o u t s i d e I n d i a o r a s d o n a t i o n
t o a n o r g a n i z a t i o n o u t s i d e I n d i a .
Going abroad on employment -
A p e r s o n g o i n g a b r o a d f o r e m p l o y m e n t c a n d r a w
f o r e i g n e x c h a n g e u p t o U S D 2 , 5 0 , 0 0 0 p e r F Y f r o m a n y A u t h o r i s e d D e a l e r i n I n d i a .
Emigration
- A p e r s o n w a n t i n g t o e m i g r a t e c a n d r a w f o r e i g n e x c h a n g e f r o m A D
C a t e g o r y I b a n k a n d A D C a t e g o r y I I u p t o t h e a m o u n t p r e s c r i b e d b y t h e c o u n t r y o f
e m i g r a t i o n o r U S D 2 , 5 0 , 0 0 0 . R e m i t t a n c e o f a n y a m o u n t o f f o r e i g n e x c h a n g e o u t s i d e
I n d i a i n e x c e s s o f t h i s l i m i t m a y b e a l l o w e d o n l y t o w a r d s m e e t i n g i n c i d e n t a l e x p e n s
-e s i n t h e c o u n t r y o f i m m i g r a t i o n a n d n o t f o r e a r n i n g p o i n t s o r c r e d i t s t o b e c o m e
e l i g i b l e f o r i m m i g r a t i o n b y w a y o f o v e r s e a s i n v e s t m e n t s i n g o v e r n m e n t b o n d s ; l a n d ;
c o m m e r c i a l e n t e r p r i s e ; e t c .
Maintenance of close relatives abroad
- A r e s i d e n t i n d i v i d u a l c a n r e m i t u p - t o U S D
2 , 5 0 , 0 0 0 p e r F Y t o w a r d s m a i n t e n a n c e o f c l o s e r e l a t i v e s [ ‘ r e l a t i v e ’ a s d e fi n e d i n S e c t i o n
2 ( 7 7 ) o f t h e C o m p a n i e s A c t , 2 0 1 3 ] a b r o a d .
Business trips abroad -
V i s i t s b y i n d i v i d u a l s i n c o n n e c t i o n w i t h a t t e n d i n g o f a n
i n t e r n a t i o n a l c o n f e r e n c e , s e m i n a r , s p e c i a l i s e d t r a i n i n g , a p p r e n t i c e t r a i n i n g , e t c . , a r e
t r e a t e d a s b u s i n e s s v i s i t s . F o r b u s i n e s s t r i p s t o f o r e i g n c o u n t r i e s , r e s i d e n t i n d i v i d u a l s
c a n a v a i l o f f o r e i g n e x c h a n g e u p t o U S D 2 , 5 0 , 0 0 0 i n a F Y i r r e s p e c t i v e o f t h e n u m b e r
o f v i s i t s u n d e r t a k e n d u r i n g t h e y e a r .
LRS not permissible if employee deputed out of India
- I f a n e m p l o y e e i s b e i n g
d e p u t e d b y a n e n t i t y f o r a n y o f t h e a b o v e a n d t h e e x p e n s e s a r e b o r n e b y t h e l a t t e r ,
s u c h e x p e n s e s s h a l l b e t r e a t e d a s r e s i d u a l c u r r e n t a c c o u n t t r a n s a c t i o n s o u t s i d e L R S
a n d m a y b e p e r m i t t e d b y t h e A D w i t h o u t a n y l i m i t , s u b j e c t t o v e r i f y i n g t h e
bona
fides
o f t h e t r a n s a c t i o n .
Medical treatment abroad
- A u t h o r i s e d D e a l e r s m a y r e l e a s e f o r e i g n e x c h a n g e u p t o
a n a m o u n t o f U S D 2 , 5 0 , 0 0 0 o r i t s e q u i v a l e n t p e r F Y w i t h o u t i n s i s t i n g o n a n y e s t i m a t e
f r o m a h o s p i t a l / d o c t o r . F o r a m o u n t e x c e e d i n g t h e a b o v e l i m i t , A u t h o r i s e d D e a l e r s
Para 12.2
L I B E R A L I S E D R E M I T T A N C E S C H E M E ( L R S )
14.88

m a y r e l e a s e f o r e i g n e x c h a n g e u n d e r g e n e r a l p e r m i s s i o n b a s e d o n t h e e s t i m a t e f r o m
t h e d o c t o r i n I n d i a o r h o s p i t a l / d o c t o r a b r o a d . A p e r s o n w h o h a s f a l l e n s i c k a f t e r
p r o c e e d i n g a b r o a d m a y a l s o b e r e l e a s e d f o r e i g n e x c h a n g e b y a n A u t h o r i s e d D e a l e r
( w i t h o u t s e e k i n g p r i o r a p p r o v a l o f t h e R e s e r v e B a n k o f I n d i a ) f o r m e d i c a l t r e a t m e n t
o u t s i d e I n d i a .
I n a d d i t i o n t o t h e a b o v e , a n a m o u n t u p t o U S D 2 , 5 0 , 0 0 0 p e r fi n a n c i a l y e a r i s a l l o w e d
t o a p e r s o n f o r a c c o m p a n y i n g a s a t t e n d a n t t o a p a t i e n t g o i n g a b r o a d f o r m e d i c a l
t r e a t m e n t / c h e c k - u p .
Facilities available to students for pursuing their studies abroad -
A D C a t e g o r y I
b a n k s a n d A D C a t e g o r y I I , m a y r e l e a s e f o r e i g n e x c h a n g e u p t o U S D 2 , 5 0 , 0 0 0 o r i t s
e q u i v a l e n t t o r e s i d e n t i n d i v i d u a l s f o r s t u d i e s a b r o a d w i t h o u t i n s i s t i n g o n a n y e s t i
-m a t e f r o m t h e f o r e i g n U n i v e r s i t y . H o w e v e r , A D C a t e g o r y I b a n k a n d A D C a t e g o r y
I I m a y a l l o w r e m i t t a n c e s ( w i t h o u t s e e k i n g p r i o r a p p r o v a l o f t h e R e s e r v e B a n k o f
I n d i a ) e x c e e d i n g U S D 2 , 5 0 , 0 0 0 b a s e d o n t h e e s t i m a t e r e c e i v e d f r o m t h e i n s t i t u t i o n
a b r o a d - P a r a A . 7 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
12.2-3 Other remittance and expenses permissible under LRS
B e s i d e s p e r s o n a l e x p e n s e s a s a b o v e , L R S c a n b e u s e d f o r f o l l o w i n g p u r p o s e s .
Purchase of objects or art
- R e m i t t a n c e s u n d e r t h e S c h e m e c a n b e u s e d f o r p u r
-c h a s i n g o b j e c t s o f a r t s u b j e c t t o t h e p r o v i s i o n s o f o t h e r a p p l i c a b l e l a w s s u c h a s t h e
e x t a n t F o r e i g n T r a d e P o l i c y o f t h e G o v e r n m e n t o f I n d i a - P a r a A . 8 o f R B I D E D M a s t e r
D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
Remittances by DD for permissible transactions
- T h e S c h e m e c a n b e u s e d f o r
o u t w a r d r e m i t t a n c e i n t h e f o r m o f a D D e i t h e r i n t h e r e s i d e n t i n d i v i d u a l ’ s o w n n a m e
o r i n t h e n a m e o f b e n e fi c i a r y w i t h w h o m h e i n t e n d s p u t t i n g t h r o u g h t h e p e r m i s s i b l e
t r a n s a c t i o n s a t t h e t i m e o f p r i v a t e v i s i t a b r o a d , a g a i n s t s e l f - d e c l a r a t i o n o f t h e r e m i t
-t e r i n t h e f o r m a t p r e s c r i b e d - P a r a A . 9 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6
d a t e d 1 - 1 - 2 0 1 6 .
Opening and maintaining foreign currency account for LRS expenses
- I n d i v i d u a l s
c a n a l s o o p e n , m a i n t a i n a n d h o l d f o r e i g n c u r r e n c y a c c o u n t s w i t h a b a n k o u t s i d e I n d i a
f o r m a k i n g r e m i t t a n c e s u n d e r t h e S c h e m e w i t h o u t p r i o r a p p r o v a l o f t h e R e s e r v e
B a n k . T h e f o r e i g n c u r r e n c y a c c o u n t s m a y b e u s e d f o r p u t t i n g t h r o u g h a l l t r a n s a c
-t i o n s c o n n e c t e d w i t h o r a r i s i n g f r o m r e m i t t a n c e s e l i g i b l e u n d e r t h i s S c h e m e - P a r a
A . 1 0 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
12.2-4 Prohibited transactions under LRS
F o l l o w i n g t r a n s a c t i o n s a r e p r o h i b i t e d .
Purposes prohibited under Current Account transaction rules
- T h e S c h e m e i s n o t
a v a i l a b l e f o r r e m i t t a n c e s f o r a n y p u r p o s e s p e c i fi c a l l y p r o h i b i t e d u n d e r S c h e d u l e I o r
a n y i t e m r e s t r i c t e d u n d e r S c h e d u l e I I o f F o r e i g n E x c h a n g e M a n a g e m e n t ( C u r r e n t
A c c o u n t T r a n s a c t i o n ) R u l e s , 2 0 0 0 , d a t e d M a y 3 , 2 0 0 0 , a s a m e n d e d f r o m t i m e t o t i m e
- P a r a A . 1 2 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
14.89
L R S O F U S D 2 , 5 0 , 0 0 0 F O R R E S I D E N T I N D I V I D U A L S
Para 12.2

Capital account remittances to FATF countries
- T h e S c h e m e i s n o t a v a i l a b l e f o r
c a p i t a l a c c o u n t r e m i t t a n c e s t o c o u n t r i e s i d e n t i fi e d b y F i n a n c i a l A c t i o n T a s k F o r c e
( F A T F ) a s n o n - c o - o p e r a t i v e c o u n t r i e s a n d t e r r i t o r i e s a s a v a i l a b l e o n F A T F w e b s i t e
w w w . f a t f - g a fi . o r g o r a s n o t i fi e d b y t h e R e s e r v e B a n k . R e m i t t a n c e s d i r e c t l y o r i n d i r e c t l y
t o t h o s e i n d i v i d u a l s a n d e n t i t i e s i d e n t i fi e d a s p o s i n g s i g n i fi c a n t r i s k o f c o m m i t t i n g
a c t s o f t e r r o r i s m a s a d v i s e d s e p a r a t e l y b y t h e R e s e r v e B a n k t o t h e b a n k s i s a l s o n o t
p e r m i t t e d - P a r a A . 1 3 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
12.3 Documentation by the remitter for availment of LRS
T h e i n d i v i d u a l w i l l h a v e t o d e s i g n a t e a b r a n c h o f a n A D t h r o u g h w h i c h a l l t h e r e
-m i t t a n c e s u n d e r t h e S c h e m e w i l l b e m a d e . T h e r e s i d e n t i n d i v i d u a l s e e k i n g t o m a k e
t h e r e m i t t a n c e s h o u l d f u r n i s h F o r m A 2 f o r p u r c h a s e o f f o r e i g n e x c h a n g e u n d e r
L R S [ f o r m A 2 g i v e n a s a n n e x i n R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d
1 - 1 - 2 0 1 6 ] . - P a r a A . 1 4 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
I t i s m a n d a t o r y f o r t h e r e s i d e n t i n d i v i d u a l t o p r o v i d e h i s / h e r P e r m a n e n t A c c o u n t
N u m b e r ( P A N ) t o m a k e r e m i t t a n c e u n d e r t h e S c h e m e .
Funds can be retained and invest abroad
- I n v e s t o r , w h o h a s r e m i t t e d f u n d s u n d e r
L R S c a n r e t a i n , r e i n v e s t t h e i n c o m e e a r n e d o n t h e i n v e s t m e n t s . A t p r e s e n t , t h e r e s
-i d e n t i n d i v i d u a l i s n o t r e q u i r e d t o r e p a t r i a t e t h e f u n d s o r i n c o m e g e n e r a t e d o u t o f
i n v e s t m e n t s m a d e u n d e r t h e S c h e m e . H o w e v e r , a r e s i d e n t i n d i v i d u a l w h o h a s m a d e
o v e r s e a s d i r e c t i n v e s t m e n t i n t h e e q u i t y s h a r e s ; c o m p u l s o r i l y c o n v e r t i b l e p r e f e r e n c e
s h a r e s o f a J V / W o S o u t s i d e I n d i a , w i t h i n t h e L R S l i m i t , s h a l l h a v e t o c o m p l y w i t h t h e
t e r m s a n d c o n d i t i o n s p r e s c r i b e d b y t h e o v e r s e a s i n v e s t m e n t g u i d e l i n e s u n d e r F E M
( T r a n s f e r o r i s s u e o f a n y F o r e i g n S e c u r i t y ) R e g u l a t i o n s , 2 0 0 4 a s a m e n d e d - P a r a A . 1 6
o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 .
Investor can retain and reinvest income under LRS -
A n i n v e s t o r c a n r e t a i n a n d
r e i n v e s t t h e i n c o m e e a r n e d o n i n v e s t m e n t s m a d e u n d e r t h e L i b e r a l i s e d R e m i t t a n c e
S c h e m e - P a r a 2 (
b
) o f R B I F E D M a s t e r D i r e c t i o n N o . 1 9 / 2 0 1 5 - 1 6 o n ‘ M i s c e l l a n e o u s ’
12.4 Facility to grant loan in rupees to NRI/OCI close relative under the
Scheme
R e s i d e n t i n d i v i d u a l i s p e r m i t t e d t o l e n d t o a N o n - r e s i d e n t I n d i a n ( N R I ) / O v e r s e a s
C i t i z e n o f I n d i a ( O C I ) c l o s e r e l a t i v e [ ‘ r e l a t i v e ’ a s d e fi n e d i n S e c t i o n 2 ( 7 7 ) o f t h e
C o m p a n i e s A c t , 2 0 1 3 ] b y w a y o f c r o s s e d c h e q u e / e l e c t r o n i c t r a n s f e r s u b j e c t t o t h e
f o l l o w i n g c o n d i t i o n s , a s s p e c i fi e d i n p a r a 1 7 o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 -
1 6 d a t e d 1 - 1 - 2 0 1 6 .

(
i
)

t h e l o a n i s f r e e o f i n t e r e s t a n d t h e m i n i m u m m a t u r i t y o f t h e l o a n i s o n e y e a r .

(
ii
)

t h e l o a n a m o u n t s h o u l d b e w i t h i n t h e o v e r a l l l i m i t u n d e r t h e L i b e r a l i s e d R e
-m i t t a n c e S c h e m e o f U S D 2 , 5 0 , 0 0 0 p e r fi n a n c i a l y e a r a v a i l a b l e f o r a r e s i d e n t
i n d i v i d u a l . I t w o u l d b e t h e r e s p o n s i b i l i t y o f t h e r e s i d e n t i n d i v i d u a l t o e n s u r e
t h a t t h e a m o u n t o f l o a n g r a n t e d b y h i m i s w i t h i n t h e L R S l i m i t a n d a l l t h e
r e m i t t a n c e s m a d e b y t h e r e s i d e n t i n d i v i d u a l d u r i n g a g i v e n fi n a n c i a l y e a r i n
-c l u d i n g t h e l o a n t o g e t h e r h a v e n o t e x c e e d e d t h e l i m i t p r e s c r i b e d u n d e r L R S ;
Para 12.4
14.90

(
iii
)

t h e l o a n s h a l l b e u t i l i z e d f o r m e e t i n g t h e b o r r o w e r ’ s p e r s o n a l r e q u i r e m e n t s o r
f o r h i s o w n b u s i n e s s p u r p o s e s i n I n d i a .

(
iv
)

t h e l o a n s h a l l n o t b e u t i l i z e d , e i t h e r s i n g l y o r i n a s s o c i a t i o n w i t h o t h e r p e r s o n
f o r a n y o f t h e a c t i v i t i e s i n w h i c h i n v e s t m e n t b y p e r s o n s r e s i d e n t o u t s i d e I n d i a
i s p r o h i b i t e d , n a m e l y - (
a
) T h e b u s i n e s s o f c h i t f u n d , o r (
b
) N i d h i C o m p a n y , o r
(
c
) A g r i c u l t u r a l o r p l a n t a t i o n a c t i v i t i e s o r i n r e a l e s t a t e b u s i n e s s , o r c o n s t r u c t i o n
o f f a r m h o u s e s [ r e a l e s t a t e b u s i n e s s s h a l l n o t i n c l u d e d e v e l o p m e n t o f t o w n
-s h i p s , c o n s t r u c t i o n o f r e s i d e n t i a l / c o m m e r c i a l p r e m i s e s , r o a d s o r b r i d g e s ] o r
(
d
) T r a d i n g i n T r a n s f e r a b l e D e v e l o p m e n t R i g h t s ( T D R s ) .

(
v
)

t h e l o a n a m o u n t s h o u l d b e c r e d i t e d t o t h e N R O a / c o f t h e N R I / O C I . C r e d i t o f
s u c h l o a n a m o u n t m a y b e t r e a t e d a s a n e l i g i b l e c r e d i t t o N R O a / c .

(
vi
)

t h e l o a n a m o u n t s h a l l n o t b e r e m i t t e d o u t s i d e I n d i a ; a n d

(
vii
)

r e p a y m e n t o f l o a n s h a l l b e m a d e b y w a y o f i n w a r d r e m i t t a n c e s t h r o u g h n o r m a l
b a n k i n g c h a n n e l s o r b y d e b i t t o t h e N o n - r e s i d e n t O r d i n a r y ( N R O ) / N o n - r e s i
-d e n t E x t e r n a l ( N R E ) / F o r e i g n C u r r e n c y N o n - r e s i d e n t ( F C N R ) a c c o u n t o f t h e
b o r r o w e r o r o u t o f t h e s a l e p r o c e e d s o f t h e s h a r e s o r s e c u r i t i e s o r i m m o v a b l e
p r o p e r t y a g a i n s t w h i c h s u c h l o a n w a s g r a n t e d .
12.4-1 Rupee Gift to NRI/OCI who is relative of remitter
A r e s i d e n t i n d i v i d u a l c a n m a k e a r u p e e g i f t t o a N R I / O C I w h o i s a r e l a t i v e o f t h e
r e s i d e n t i n d i v i d u a l [ ‘ r e l a t i v e ’ a s d e fi n e d i n S e c t i o n 2 ( 7 7 ) o f t h e C o m p a n i e s A c t , 2 0 1 3 ]
b y w a y o f c r o s s e d c h e q u e / e l e c t r o n i c t r a n s f e r . T h e a m o u n t s h o u l d b e c r e d i t e d t o
t h e N o n - R e s i d e n t ( O r d i n a r y ) R u p e e A c c o u n t ( N R O ) a / c o f t h e N R I / O C I a n d c r e d i t
o f s u c h g i f t a m o u n t m a y b e t r e a t e d a s a n e l i g i b l e c r e d i t t o N R O a / c .
T h e g i f t a m o u n t w o u l d b e w i t h i n t h e o v e r a l l l i m i t o f U S D 2 5 0 , 0 0 0 p e r F Y a s p e r m i t t e d
u n d e r t h e L R S f o r a r e s i d e n t i n d i v i d u a l . I t w o u l d b e t h e r e s p o n s i b i l i t y o f t h e r e s i d e n t
d o n o r t o e n s u r e t h a t t h e g i f t a m o u n t i s w i t h i n t h e L R S l i m i t a n d a l l t h e r e m i t t a n c e s
m a d e b y t h e d o n o r d u r i n g t h e fi n a n c i a l y e a r i n c l u d i n g t h e g i f t a m o u n t h a v e n o t
e x c e e d e d t h e l i m i t p r e s c r i b e d u n d e r t h e L R S - R B I N o t i fi c a t i o n F E M A 1 6 / 2 0 0 0 - R B
d a t e d 3 - 5 - 2 0 0 0 [ G S R 4 0 3 ( E ) d a t e d 3 - 5 - 2 0 0 0 ] .
12.5 Operational instructions to Authorised Persons
T h e i n s t r u c t i o n s a r e c o n t a i n e d i n p a r a B o f R B I D E D M a s t e r D i r e c t i o n N o . 7 / 2 0 1 5 -
1 6 d a t e d 1 - 1 - 2 0 1 6 .
A u t h o r i z e d P e r s o n s m a y c a r e f u l l y s t u d y t h e p r o v i s i o n s o f t h e A c t / R e g u l a t i o n s / N o
-t i fi c a t i o n s i s s u e d u n d e r F o r e i g n E x c h a n g e M a n a g e m e n t A c t , 1 9 9 9 .
No document specified by RBI
- T h e R B I w i l l n o t , g e n e r a l l y , p r e s c r i b e t h e d o c u m e n t s
w h i c h s h o u l d b e v e r i fi e d b y t h e A u t h o r i s e d P e r s o n s w h i l e r e l e a s i n g f o r e i g n e x c h a n g e
f o r c u r r e n t a c c o u n t t r a n s a c t i o n s . A t t e n t i o n o f a u t h o r i z e d p e r s o n s i s d r a w n t o S e c
-t i o n 1 0 ( 5 ) o f t h e F E M A , 1 9 9 9 w h i c h p r o v i d e s t h a t a n a u t h o r i s e d p e r s o n s h a l l r e q u i r e
a n y p e r s o n d e s i r i n g t o t r a n s a c t i n f o r e i g n e x c h a n g e t o m a k e s u c h a d e c l a r a t i o n a n d
t o g i v e s u c h i n f o r m a t i o n a s w i l l r e a s o n a b l y s a t i s f y h i m t h a t t h e t r a n s a c t i o n w i l l n o t
i n v o l v e a n d i s n o t d e s i g n e d f o r t h e p u r p o s e o f a n y c o n t r a v e n t i o n o r e v a s i o n o f t h e
14.91
O P E R A T I O N A L I N S T R U C T I O N S T O A U T H O R I S E D P E R S O N S
Para 12.5

p r o v i s i o n s o f t h e F E M A o r a n y r u l e , r e g u l a t i o n , n o t i fi c a t i o n , d i r e c t i o n o r o r d e r i s s u e d
t h e r e u n d e r .
AD Bank can prescribe documents to be obtained by branches
- W i t h a v i e w t o
m a i n t a i n i n g u n i f o r m p r a c t i c e s , A u t h o r i z e d D e a l e r s m a y c o n s i d e r r e q u i r e m e n t s o r
d o c u m e n t s t o b e o b t a i n e d b y t h e i r b r a n c h e s t o e n s u r e c o m p l i a n c e w i t h p r o v i s i o n s
o f s e c t i o n 1 0 ( 5 ) o f t h e A c t .
AD Bank to keep records and report suspicious transactions to RBI
- A u t h o r i s e d
D e a l e r s a r e a l s o r e q u i r e d t o k e e p o n r e c o r d a n y i n f o r m a t i o n / d o c u m e n t a t i o n , o n
t h e b a s i s o f w h i c h t h e t r a n s a c t i o n w a s u n d e r t a k e n f o r v e r i fi c a t i o n b y t h e R e s e r v e
B a n k . I n c a s e t h e a p p l i c a n t r e f u s e s t o c o m p l y w i t h a n y s u c h r e q u i r e m e n t o r m a k e s
u n s a t i s f a c t o r y c o m p l i a n c e t h e r e w i t h , t h e A u t h o r i s e d D e a l e r s h a l l r e f u s e , i n w r i t i n g ,
t o u n d e r t a k e t h e t r a n s a c t i o n a n d s h a l l , i f h e h a s r e a s o n s t o b e l i e v e t h a t a n y c o n t r a
-v e n t i o n / e v a s i o n i s c o n t e m p l a t e d b y t h e p e r s o n , r e p o r t t h e m a t t e r t o R B I .
AD Bank to ensure compliance of income tax TDS provisions
- R B I w i l l n o t i s s u e
a n y i n s t r u c t i o n s u n d e r t h e F E M A , r e g a r d i n g t h e p r o c e d u r e t o b e f o l l o w e d i n r e s p e c t
o f d e d u c t i o n o f t a x a t s o u r c e w h i l e a l l o w i n g r e m i t t a n c e s t o t h e n o n - r e s i d e n t s . I t s h a l l
b e m a n d a t o r y o n t h e p a r t o f A u t h o r i s e d D e a l e r s t o c o m p l y w i t h t h e r e q u i r e m e n t o f
t h e t a x l a w s , a s a p p l i c a b l e .
AD Bank to follow KYC norms and Anti-Money Laundering Rules
- W h i l e a l l o w
-i n g t h e f a c i l i t y t o r e s i d e n t i n d i v i d u a l s , A u t h o r i s e d D e a l e r s a r e r e q u i r e d t o e n s u r e
t h a t “ K n o w Y o u r C u s t o m e r ” g u i d e l i n e s h a v e b e e n i m p l e m e n t e d i n r e s p e c t o f b a n k
a c c o u n t s . T h e y s h o u l d a l s o c o m p l y w i t h t h e A n t i - M o n e y L a u n d e r i n g R u l e s i n f o r c e
w h i l e a l l o w i n g t h e f a c i l i t y .
Applicant should be customer of AD Bank for remittance of capital account
transactions
- T h e a p p l i c a n t s s h o u l d h a v e m a i n t a i n e d t h e b a n k a c c o u n t w i t h t h e
b a n k f o r a m i n i m u m p e r i o d o f o n e y e a r p r i o r t o t h e r e m i t t a n c e s f o r c a p i t a l a c c o u n t
t r a n s a c t i o n s .
Due diligence in case of new customer
- I f t h e a p p l i c a n t s e e k i n g t o m a k e t h e r e
-m i t t a n c e s i s a n e w c u s t o m e r o f t h e b a n k , A u t h o r i s e d D e a l e r s s h o u l d c a r r y o u t d u e
d i l i g e n c e o n t h e o p e n i n g , o p e r a t i o n a n d m a i n t e n a n c e o f t h e a c c o u n t . T h e A u t h o r i s e d
D e a l e r s s h o u l d o b t a i n b a n k s t a t e m e n t f o r t h e p r e v i o u s y e a r f r o m t h e a p p l i c a n t t o
s a t i s f y t h e m s e l v e s r e g a r d i n g t h e s o u r c e o f f u n d s . I f s u c h a b a n k s t a t e m e n t i s n o t
a v a i l a b l e , c o p i e s o f t h e l a t e s t I n c o m e T a x A s s e s s m e n t O r d e r o r R e t u r n fi l e d b y t h e
a p p l i c a n t m a y b e o b t a i n e d .
Remittancesshouldbeoutofownfundsofapplicant
- T h e A u t h o r i s e d D e a l e r s h o u l d
e n s u r e t h a t t h e p a y m e n t i s r e c e i v e d o u t o f f u n d s b e l o n g i n g t o t h e p e r s o n s e e k i n g
t o m a k e t h e r e m i t t a n c e s , b y a c h e q u e d r a w n o n t h e a p p l i c a n t ’ s b a n k a c c o u n t o r b y
d e b i t t o h i s a c c o u n t o r b y D e m a n d D r a f t / P a y O r d e r . A u t h o r i s e d D e a l e r m a y a l s o
a c c e p t t h e p a y m e n t t h r o u g h c r e d i t / d e b i t / p r e p a i d c a r d o f t h e c a r d h o l d e r .
No remittance to ineligible entities
- T h e A u t h o r i s e d D e a l e r s h o u l d c e r t i f y t h a t t h e
r e m i t t a n c e i s n o t b e i n g m a d e d i r e c t l y o r i n d i r e c t l y b y / o r t o i n e l i g i b l e e n t i t i e s a n d
t h a t t h e r e m i t t a n c e s a r e m a d e i n a c c o r d a n c e w i t h t h e i n s t r u c t i o n s c o n t a i n e d h e r e i n .
Para 12.5
14.92

No credit facilities to applicant for capital account transactions
- A D b a n k s h o u l d
n o t e x t e n d a n y k i n d o f c r e d i t f a c i l i t i e s t o r e s i d e n t i n d i v i d u a l s t o f a c i l i t a t e r e m i t t a n c e s
f o r c a p i t a l a c c o u n t t r a n s a c t i o n s u n d e r t h e S c h e m e .
NoremittanceofcapitalaccounttransactionstoFATFcountries
- A u t h o r i s e d D e a l e r
m a y k e e p a r e c o r d o f t h e c o u n t r i e s i d e n t i fi e d b y F A T F a s n o n - c o - o p e r a t i v e c o u n t r i e s
a n d t e r r i t o r i e s a n d a c c o r d i n g l y u p d a t e t h e l i s t f r o m t i m e t o t i m e f o r n e c e s s a r y a c
-t i o n b y t h e i r b r a n c h e s h a n d l i n g t h e t r a n s a c t i o n s u n d e r t h e L i b e r a l i s e d R e m i t t a n c e
S c h e m e . F o r t h i s p u r p o s e , t h e y m a y a c c e s s t h e w e b s i t e w w w . f a t f - g a fi . o r g t o o b t a i n
t h e l a t e s t l i s t o f n o n - c o - o p e r a t i v e c o u n t r i e s n o t i fi e d b y F A T F .
Reporting by AD Bank of transactions in LRS
- T h e r e m i t t a n c e s m a d e u n d e r t h i s
S c h e m e w i l l b e r e p o r t e d i n F E T E R S i n t h e n o r m a l c o u r s e . T h e A u t h o r i s e d D e a l e r s
m a y a l s o p r e p a r e a n d k e e p o n r e c o r d d u m m y F o r m A 2 , i n r e s p e c t o f r e m i t t a n c e s
l e s s t h a n U S D 2 5 , 0 0 0 .
Foreign Banks and Indian Banks should not advertise LRS scheme without
approval of RBI
- A n u m b e r o f f o r e i g n b a n k s o p e r a t i n g i n I n d i a a s w e l l a s I n d i a n
b a n k s h a v e b e e n s o l i c i t i n g ( t h r o u g h a d v e r t i s e m e n t s ) f o r e i g n c u r r e n c y d e p o s i t s ( f r o m
r e s i d e n t s u n d e r L R S ) [ o n b e h a l f o f o v e r s e a s m u t u a l f u n d s ] o r f o r p l a c i n g a t t h e i r
o v e r s e a s b r a n c h e s . T h e s e a d v e r t i s e m e n t s m a y n o t a l w a y s c o n t a i n a p p r o p r i a t e d i s
-c l o s u r e s t o g u i d e p o t e n t i a l d e p o s i t o r s g i v i n g r i s e t o c o n c e r n s f r o m t h e p o i n t o f v i e w
o f p r o t e c t i n g t h e i n t e r e s t o f t h e r e s i d e n t i n d i v i d u a l s . F u r t h e r , m a r k e t i n g i n I n d i a o f
s c h e m e s s o l i c i t i n g f o r e i g n c u r r e n c y d e p o s i t s b y f o r e i g n e n t i t i e s , n o t h a v i n g o p e r a
-t i o n a l p r e s e n c e i n I n d i a , a l s o r a i s e s s u p e r v i s o r y c o n c e r n s .
A l l b a n k s , b o t h I n d i a n a n d f o r e i g n , i n c l u d i n g t h o s e n o t h a v i n g a n o p e r a t i o n a l p r e s
-e n c e i n I n d i a , s h o u l d s e e k p r i o r a p p r o v a l f r o m R B I f o r t h e s c h e m e s b e i n g m a r k e t e d
b y t h e m i n I n d i a t o r e s i d e n t s e i t h e r f o r s o l i c i t i n g f o r e i g n c u r r e n c y d e p o s i t s f o r t h e i r
f o r e i g n / o v e r s e a s b r a n c h e s o r f o r a c t i n g a s a g e n t s f o r o v e r s e a s m u t u a l f u n d s o r a n y
o t h e r f o r e i g n fi n a n c i a l s e r v i c e s c o m p a n y . T h e a p p l i c a t i o n s i n t h i s r e g a r d m a y b e a d
-d r e s s e d t o t h e C h i e f G e n e r a l M a n a g e r - i n - C h a r g e , D e p a r t m e n t o f B a n k i n g R e g u l a t i o n s ,
R e s e r v e B a n k o f I n d i a , C e n t r a l O f fi c e , 1 2 t h F l o o r , F o r t , M u m b a i - 4 0 0 0 0 1 .
12.6 Reporting to RBI
A D C a t e g o r y - I b a n k s a r e r e q u i r e d t o f u r n i s h t h e i n f o r m a t i o n o n r e m i t t a n c e s m a d e
u n d e r t h e L i b e r a l i s e d R e m i t t a n c e S c h e m e ( L R S ) o n a m o n t h l y b a s i s , o n o r b e f o r e
t h e fi f t h o f t h e f o l l o w i n g m o n t h t o w h i c h i t r e l a t e s t h r o u g h O n l i n e R e t u r n s F i l i n g
S y s t e m ( O R F S ) f o r w h i c h p u r p o s e t h e y h a v e b e e n g i v e n u s e r I D a n d p a s s w o r d b y
t h e R e s e r v e B a n k . W h e r e t h e r e i s n o d a t a t o f u r n i s h , A D b a n k s a r e a d v i s e d t o u p l o a d
‘ n i l ’ fi g u r e s i n t h e O R F S s y s t e m .
I n a d d i t i o n , A D C a t e g o r y - I b a n k s a r e r e q u i r e d t o f u r n i s h t h e t r a n s a c t i o n w i s e i n
-f o r m a t i o n u n d e r L R S o n a d a i l y ( T + 1 ) b a s i s
i.e.
b y t h e c l o s e o f b u s i n e s s o f t h e n e x t
w o r k i n g d a y . I n c a s e n o d a t a i s t o b e f u r n i s h e d , A D b a n k s s h o u l d u p l o a d ‘ N i l ’ r e p o r t .
F o r m s a n d d e t a i l s i n s t r u c t i o n s a r e g i v e n i n P a r t I I o f R B I F E D M a s t e r D i r e c t i o n N o .
1 8 / 2 0 1 5 - 1 6 d a t e d 1 - 1 - 2 0 1 6 o n ‘ R e p o r t i n g ’ .
14.93
R E P O R T I N G T O R B I
Para 12.6

Foreign Exchange
Management Manual
(Set of 2 Volumes)
Author : Taxmann
Edition : 37th Edition 2021
ISBN No : 9788194939733
Date of Publication : December 2020
Weight (Kgs) : 3.48
No. of papers : 3072
Rs. 5995 USD 160
This book is a duly updated, amended & annotated compendium of the following
Laws, along with Rules, Circulars, Clarifications, Master Circulars, Master Directions,
Notifications, and Judicial precedents:
u Foreign Exchange Management Act, 1999
u Foreign Contributions
The book covers FEMA Case Laws digest, Ready Reckoner (Subject-wise practical
guide to the Law) on FEMA and FDI provisions. The Present Publication is the 37th
Edition, incorporating all amendments made up to 01st December, 2020.
Key contents of the book, volume-wise are as follows:
Volume 1
u List of the following:
n Basic Notifications
n Amending Notifications
u Annotated text of Foreign Exchange Management Act ('FEMA')
u Annotated text of Rules & Regulations framed under FEMA
Volume 2
u FEMA & FDI Ready Reckoner
n Current Account Transactions
n Bank Accounts in Foreign Exchange
n Dealings in Foreign Exchange
u FEMA Case Laws Digest
n Covering Section-wise Digest of Judgement of Supreme Court/High Court/ATFF
u RBI's Circulars & Clarifications
Description :
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Taxmann's Foreign Exchange Management Manual (Set of 2 Volumes)

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Taxmann's Foreign Exchange Management Manual (Set of 2 Volumes)