RBI/2015-16/373
A.P. (DIR Series) Circular No. 61
April 13, 2016
To
All Category - I Authorised Dealer Banks
Madam/Sir,
Overseas Direct Investment - Submission of Annual Performance Report
Attention of the Authorised Dealer (AD - Category I) banks is invited to the
Notification No. FEMA 120/RB-2004 dated July 7, 2004 [Foreign Exchange
Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations,
2004] (the Notification), as amended from time to time. Attention of AD Category
– I banks is also invited to
A. P. (DIR Series) Circular No. 68 dated June 01,
2007 on Rationalisation of Forms,
A. P. (DIR Series) Circular No. 29 dated
September 12, 2012 on rationalisation of guidelines relating to submission of
the Annual Performance Report (APR),
A. P. (DIR Series) Circular No. 24 dated
August 14, 2013 on Liberalised Remittance Scheme (LRS) by Resident Individuals
under which they were allowed to set up JV / WOS outside India and para B.14 of
FED Master Direction No. 15 /2015-16 dated January 1, 2016.
- At present, an Indian Party (IP) / Resident Individual (RI) which has
made an Overseas Direct Investment (ODI) has to comply with certain
obligations prescribed under the
Notification No. FEMA 120/RB-2004 dated
July 07, 2004 as amended from time to time. One of these includes obligation
for submission of an Annual Performance Report (APR) in Form ODI Part III to
the Reserve Bank by 30th of June every year in respect of each Joint Venture
(JV) / Wholly Owned Subsidiary (WOS) outside India set up or acquired by the
IP / RI (as prescribed under Regulation 15 of FEMA Notification, ibid).
- It has been observed that:
- IP / RI are either not regular in submitting the APR or are submitting it
with delay. This is not in line with Regulation 15 of the Notification,
ibid.
- Remittance/s and other forms of financial commitment are often facilitated
by the designated Authorised Dealer bank (AD bank) under automatic route
even though APR in respect of all overseas JV / WOS of the IP / RI effecting
such remittance/s have not been submitted. This is in contravention of
Regulation 6(2)(iv) of the Notification, ibid.
- In order to provide AD banks greater capability to track submission of
APRs and also improve compliance level in the matter of submission of APRs
by the IPs / RIs, it is now advised as under:
- The online OID application has been suitably modified to enable the nodal
office of the AD bank to view the outstanding position of all the APRs
pertaining to an applicant including for those JV / WOS for which it is not
the designated AD bank. Accordingly, the AD bank, before undertaking /
facilitating any ODI related transaction on behalf of the eligible
applicant, should necessarily check with its nodal office to confirm that
all APRs in respect of all the JV / WOS of the applicant have been
submitted;
- Certification of APRs by the Statutory Auditor or Chartered Accountant need
not be insisted upon in the case of Resident Individuals. Self-certification
may be accepted;
- In case multiple IPs / RIs have invested in the same overseas JV / WOS, the
obligation to submit APR shall lie with the IP / RI having maximum stake in
the JV / WOS. Alternatively, the IPs / RIs holding stake in the overseas JV
/ WOS may mutually agree to assign the responsibility for APR submission to
a designated entity which may acknowledge its obligation to submit the APR
in terms of Regulation 15 (iii) of Notification, ibid, by furnishing an
appropriate undertaking to the AD bank;
- An IP / RI, which has set up / acquired a JV / WOS overseas in terms of the
Regulations of the Notification, ibid, shall submit, to the AD bank every
year, an APR in Form ODI Part II in respect of each JV / WOS outside India
and other reports or documents by 31st of December each year or as may be
specified by the Reserve Bank from time to time. The APR, so required to be
submitted, shall be based on the latest audited annual accounts of the JV /
WOS unless specifically exempted by the Reserve Bank.
- AD banks may issue necessary instructions to all the dealing officials at
the bank / branch level and put in place proper processes and systems to
ensure compliance with the extant FEMA guidelines. Any non-compliance with
the instruction relating to submission of APR shall be treated as
contravention of Regulation 15 of the
Notification No. FEMA 120/RB-2004
dated July 07, 2004 as amended and viewed seriously.
- AD Category – I banks may bring the contents of this circular to the
notice of their constituents and customers concerned.
- Master Direction No. 15/2015-16 dated January 1, 2016 and Master
Direction No. 18/ 2015-16 dated January 1, 2016 are being updated to reflect
the changes.
- The directions contained in this circular have been issued under section
10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(A. K. Pandey)
Chief General Manager
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