RBI/2013-14/427
A.P. (DIR Series) Circular No.83
January 3, 2014
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Overseas Direct Investments – Rollover of Guarantees
Attention of the Authorised Dealer (AD - Category I) banks is invited the
provisions of
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.
- It has been decided not to treat / reckon the renewal / rollover of an
existing / original guarantee, which is part of the total financial commitment
of the Indian party in terms of Regulation 6 of the Notification ibid, as a
fresh financial commitment, provided that :
- the existing / original guarantee was issued in terms of the then extant /
prevailing FEMA guidelines.
- there is no change in the end use of the guarantee, i.e. the facilities availed
by the JV / WOS / Step Down Subsidiary;
- there is no change in any of the terms & conditions, including the amount of the
guarantee except the validity period;
- the reporting of the rolled over guarantee would be done as a fresh financial
commitment in Part II of Form ODI, as hitherto; and
- if the Indian party is under investigation by any investigation / enforcement
agency or regulatory body, the concerned agency / body shall be kept informed
about the same.
- In case, however, the above conditions are not met, the Indian party shall
obtain prior approval of the Reserve Bank for rollover / renewal of the existing
guarantee through the designated AD bank.
- AD - Category I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999)
and are without prejudice to permissions/approvals, if any, required under any
other law.
Yours faithfully,
(C D Srinivasan)
Chief General Manager