RBI/2013-14/454
A.P. (DIR Series) Circular No.96
January 20, 2014
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Facilities for Persons Resident outside India – Clarification
Attention of Authorized Dealers Category – I (AD Category- I) banks is invited
to the Foreign Exchange Management (Foreign Exchange Derivative Contracts)
Regulations, 2000 dated May 3, 2000 [Notification No. FEMA/25/RB-2000] and
A.P.
(DIR Series) Circular No.45 dated October 22, 2012 in terms of which Foreign
Institutional Investors (FIIs) are allowed to approach any AD Category I bank
for hedging their currency risk on the market value of entire investment in
equity and/or debt in India as on a particular date subject to conditions
specified therein.
- We have been receiving references from market participants as to whether,
along similar lines, it is possible for FIIs and other foreign investors to
effect remittances on cash /TOM /spot basis to a bank other than the designated
AD Category -I custodian bank. In this connection it is clarified that a foreign
investor is free to remit funds through any bank of its choice for any
transaction permitted under FEMA, 1999 or the Regulations / Directions framed
thereunder. The funds thus remitted can be transferred to the designated AD
Category -I custodian bank through the banking channel. Note should, however, be
taken that KYC in respect of the remitter, wherever required, is a joint
responsibility of the bank that has received the remittance as well as the bank
that ultimately receives the proceeds of the remittance. While the first bank
will be privy to the details of the remitter and the purpose of the remittance,
the second bank, will have access to complete information from the recipient's
perspective. Besides, the remittance receiving bank is required to issue FIRC to
the bank receiving the proceeds to establish the fact the funds had been
remitted in foreign currency.
- All other conditions in our
A.P. (DIR Series) circular No.45 dated October
22, 2012 apply mutatis mutandis.
- AD Category – I bank may bring the contents of this circular to the notice of
their constituents and customers.
- The directions contained in this circular have been issued under sections
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,
(Rudra Narayan Kar)
Chief General Manager in Charge