Final - FEMA presentation-Harshal Bhuta_Deposit and Accounts FEMA
FDI & FEMA
-
Upload
poonam-singh -
Category
Documents
-
view
87 -
download
7
Transcript of FDI & FEMA
Capital A/c TransactionsCapital A/c Transactions
External commercial borrowings External commercial borrowings
Foreign investments in IndiaForeign investments in India
Overseas Direct InvestmentOverseas Direct Investment
External Commercial BorrowingsExternal Commercial Borrowings
Commercial loans availed from non-Commercial loans availed from non-resident lendersresident lenders
Can be accessed under Can be accessed under automatic/approval routeautomatic/approval route
External Commercial BorrowingsExternal Commercial Borrowings
Automatic RouteAutomatic Route
Eligible Borrowers– corporates (except financial Eligible Borrowers– corporates (except financial intermediaries like banks/NBFCs)intermediaries like banks/NBFCs)
Individuals/trusts not eligibleIndividuals/trusts not eligible
Recognized lenders – international Recognized lenders – international banks/financial institutions/suppliers of banks/financial institutions/suppliers of equipments/foreign equity holders with minimum equipments/foreign equity holders with minimum 25 % holding. 25 % holding.
External Commercial BorrowingsExternal Commercial Borrowings
Amount– maximum USD500 million per financial year.Amount– maximum USD500 million per financial year.
Minimum maturityMinimum maturity ECB upto USD20 million-- 3 yearsECB upto USD20 million-- 3 years ECB above USD 20 million -- 5 yearsECB above USD 20 million -- 5 years
All in cost ceiling All in cost ceiling ( rate of interest, other fees/expenses in foreign ( rate of interest, other fees/expenses in foreign
currency excluding fees/taxes payable in INR )currency excluding fees/taxes payable in INR )
ECB upto 5 years– 6 months LIBOR + 300 bpsECB upto 5 years– 6 months LIBOR + 300 bps ECB above 5 years– 6 months LIBOR + 500 bpsECB above 5 years– 6 months LIBOR + 500 bps
External Commercial BorrowingsExternal Commercial Borrowings
End use – import of capital goods – foreign End use – import of capital goods – foreign currency expenditurecurrency expenditure
Expansion/modernization/new project –Rupee Expansion/modernization/new project –Rupee expenditureexpenditure
ODI in JV/WOS abroadODI in JV/WOS abroad
ECBs not permitted for on lending/investment in ECBs not permitted for on lending/investment in real estate/working capital purposes/repayment real estate/working capital purposes/repayment of existing Rupee loansof existing Rupee loans
External Commercial BorrowingsExternal Commercial Borrowings
Security– left to the borrower.Security– left to the borrower. creation of charge over immovable creation of charge over immovable
property/shares etc subject to compliance with property/shares etc subject to compliance with notification FEMA 21,FEMA 20. notification FEMA 21,FEMA 20.
Issue of guarantees/SBLCs etc by banks not Issue of guarantees/SBLCs etc by banks not permitted. permitted.
Issue of personal/corporate guarantees Issue of personal/corporate guarantees permitted. permitted.
External Commercial BorrowingsExternal Commercial Borrowings
ProcedureProcedure
Loan agreement in compliance with ECB Loan agreement in compliance with ECB guidelinesguidelinesForm 83 in duplicate to be submitted to ADForm 83 in duplicate to be submitted to ADOne copy to be sent to DSIM (RBI) by ADOne copy to be sent to DSIM (RBI) by ADLRN to be allotted by DSIMLRN to be allotted by DSIMDraw down only after obtaining LRNDraw down only after obtaining LRNECB-2 return to be submitted to DSIM through ECB-2 return to be submitted to DSIM through AD on monthly basis AD on monthly basis
External Commercial BorrowingsExternal Commercial Borrowings
Approval RouteApproval Route
ECBs by Banks/Financial institutions/NBFCs ECBs by Banks/Financial institutions/NBFCs and cases falling outside automatic route and cases falling outside automatic route limits/maturity etclimits/maturity etc
Additional amount of USD 250 mio can be Additional amount of USD 250 mio can be availed with average maturity > 10 yearsavailed with average maturity > 10 years
Form ECB to be submitted to RBI CO through Form ECB to be submitted to RBI CO through ADAD
Foreign Investments in IndiaForeign Investments in India
Notification FEMA-20 dated 03-05-2000 as amendedNotification FEMA-20 dated 03-05-2000 as amended
Eligibility for investment- Any person resident outside Eligibility for investment- Any person resident outside India (other than citizen of Pakistan) or any entity India (other than citizen of Pakistan) or any entity incorporated outside India (except Pakistan)incorporated outside India (except Pakistan)
Type of Instruments- Equity/Preference Type of Instruments- Equity/Preference shares/Convertible debenturesshares/Convertible debentures
Entry Routes- Approval/AutomaticEntry Routes- Approval/Automatic
Foreign Investments in IndiaForeign Investments in India
Approval Route (Investment in sectors like Approval Route (Investment in sectors like petroleum refining, defence, postal, courier, petroleum refining, defence, postal, courier, broadcasting etc)broadcasting etc)
Investments exceeding sectoral caps under Investments exceeding sectoral caps under automatic routeautomatic route
Automatic route- Investments not falling under Automatic route- Investments not falling under approval route subject to sectoral capsapproval route subject to sectoral caps
Foreign Investments in IndiaForeign Investments in India
Reporting of FDIReporting of FDI
Inflow- Funds to be received by way of foreign Inflow- Funds to be received by way of foreign inward remittance/debit to FCNR/NRE a/cinward remittance/debit to FCNR/NRE a/c
Conversion of ECB/technical know how/lump Conversion of ECB/technical know how/lump sum fees/royaltysum fees/royalty
Reporting to RBI within 30 days through AD with Reporting to RBI within 30 days through AD with copies of FIRC and KYC reportcopies of FIRC and KYC report
Foreign Investments in IndiaForeign Investments in India
Issue of SharesIssue of Shares
Form FCGPR Part A to be submitted to Form FCGPR Part A to be submitted to RBI within 30 days through AD with RBI within 30 days through AD with certificates by chartered accountant and certificates by chartered accountant and company secretarycompany secretary
FCGPR Part B to be submitted to DSIM on FCGPR Part B to be submitted to DSIM on annual basis (31annual basis (31stst July) July)
Foreign Investments in IndiaForeign Investments in India
Time limit for issue of shares (APDIR 20 Time limit for issue of shares (APDIR 20 dtd 14-12-07)dtd 14-12-07)
Shares to be issued/money refunded Shares to be issued/money refunded within 180 days from the date of receiptwithin 180 days from the date of receipt
After 180 days share application money After 180 days share application money can be refunded with RBI permissioncan be refunded with RBI permission
Foreign Investments in IndiaForeign Investments in India
Transfer of sharesTransfer of shares
Non Resident to Non Resident- general Non Resident to Non Resident- general permission (NRI to other than NRI requires RBI permission (NRI to other than NRI requires RBI approval)approval)
Non Resident to Resident- gift- general Non Resident to Resident- gift- general permissionpermission
Resident to Non Resident- gift- with RBI Resident to Non Resident- gift- with RBI approvalapproval
Foreign Investments in IndiaForeign Investments in India
Transfer of Shares from Non Resident to Transfer of Shares from Non Resident to Resident and vice versa by saleResident and vice versa by sale
General permission subject to compliance General permission subject to compliance with AP Dir 16 (04-10-04)with AP Dir 16 (04-10-04)Pricing guidelinesPricing guidelinesReporting in FCTRS to ADReporting in FCTRS to ADGeneral permission covers buy back of General permission covers buy back of shares by companiesshares by companies
Foreign Investments in IndiaForeign Investments in India
Transfer of shares of companies in Transfer of shares of companies in financial service sector and transfer of financial service sector and transfer of shares attracting SAST regulations require shares attracting SAST regulations require RBI approvalRBI approval
Transfer of shares of companies coming Transfer of shares of companies coming under approval route and transfer of under approval route and transfer of shares resulting in breach of sectoral caps shares resulting in breach of sectoral caps require govt and RBI approvalrequire govt and RBI approval
Foreign Exchange Management Foreign Exchange Management Act-1999Act-1999
Contravention and penaltiesContravention and penalties
Sec-13 Penalty upto 3 times the amount involved.Sec-13 Penalty upto 3 times the amount involved.Sec-15 Compounding of contravention by Sec-15 Compounding of contravention by DoE/RBIDoE/RBISec-16 Adjudication and appealSec-16 Adjudication and appealSec-17 Appeal to special directorSec-17 Appeal to special directorSec-18 Appellate tribunalSec-18 Appellate tribunalSec-35 Appeal to High CourtSec-35 Appeal to High Court
Investment by Residents in Investment by Residents in JV/WOS abroadJV/WOS abroad
Avenues for promoting global business by Avenues for promoting global business by Indian entrepreneursIndian entrepreneurs
Access to wider global marketAccess to wider global market
Notification FEMA 120 (07-07-04)Notification FEMA 120 (07-07-04)
Investments permitted up to 400% of the Investments permitted up to 400% of the net worth of Indian partynet worth of Indian party
Ceiling not applicable for investments out Ceiling not applicable for investments out of EEFC balances/ADR/GDR proceedsof EEFC balances/ADR/GDR proceeds
Investment by Residents in Investment by Residents in JV/WOS abroadJV/WOS abroad
Investments can be made by way of:Investments can be made by way of:
Contribution to capital of JV/WOSContribution to capital of JV/WOS
Loans granted to JV/WOSLoans granted to JV/WOS
Guarantees on behalf of JV/WOSGuarantees on behalf of JV/WOS
Loans/Guarantees can be extended only Loans/Guarantees can be extended only after equity participationafter equity participation
All transactions with JV/WOS to be routed All transactions with JV/WOS to be routed through a designated ADthrough a designated AD
Investment by Residents in Investment by Residents in JV/WOS abroadJV/WOS abroad
Partial/Full acquisition of an existing foreign Partial/Full acquisition of an existing foreign companycompany
Valuation of shares by Cat-1 merchant Valuation of shares by Cat-1 merchant banker registered with SEBI or a CAbanker registered with SEBI or a CA
Acquisition by way of swap of shares Acquisition by way of swap of shares requires FIPB approval in addition to requires FIPB approval in addition to valuation by Cat-1 merchant banker valuation by Cat-1 merchant banker registered with SEBIregistered with SEBI
Investment by Residents in Investment by Residents in JV/WOS abroadJV/WOS abroad
Reporting RequirementsReporting Requirements
ODI Part-1 (by the company) Part-2 by ADODI Part-1 (by the company) Part-2 by ADUIN number to be allotted by RBIUIN number to be allotted by RBIAll investments to be made through the All investments to be made through the same ADsame ADODI Part-3 (Apr) to be submitted annuallyODI Part-3 (Apr) to be submitted annuallyODI Part-4 – Reporting disinvestmentsODI Part-4 – Reporting disinvestments
THANK YOUTHANK YOU
S.M.HiremathS.M.HiremathManager-FED, RBI, Bangalore.Manager-FED, RBI, Bangalore.
Tel : 080-22217775Tel : 080-22217775 Email: [email protected]: [email protected]