Date: |
16-08-2019
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Notification No: |
A.P. (DIR Series) Circular No. 06
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Issuing Authority: |
RBI
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Type: |
Circular
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File No: |
RBI/2019-20/44 |
Subject: |
Foreign Exchange Management (Deposit) (Amendment) Regulations, 2019 – Acceptance of Deposits by issue of Commercial Papers
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RBI/2019-20/44 A.P. (DIR Series) Circular No. 06
August 16, 2019
To
All Category - I Authorised Dealers and Authorised Banks
Dear
Sir / Madam
Foreign Exchange Management (Deposit) (Amendment)
Regulations, 2019 – Acceptance of Deposits by issue of Commercial Papers
Attention of Authorised Dealers (ADs) is invited to the Foreign Exchange
Management (Deposit) Regulations, 2016 notified vide
Notification No. FEMA 5(R)/2016-RB dated April 1, 2016,
as amended from time to time and the relevant directions issued thereunder.
2. We advise that Sub-regulation (3) of Regulation 6 of the above
Regulations, in terms of which a Company may accept deposits through issue of
Commercial Paper (CP), has been reviewed vis-à-vis other Statutes/Regulations –
notably Section 45 U(b) of RBI Act, 1934 describing CP as one of the Money
Market Instruments and Section 2(c) of Companies (Acceptance of Deposits), Rules
2014 which excludes any amount received against issue of, inter alia, CPs from
definition of deposits. It has also been considered that Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India)
Regulations, 2017 – FEMA 20(R), already allow investments in CPs issued by the
Indian Companies.
3. Therefore, with a view to bring in consistency in
statutory provisions/regulations relating to Commercial Papers (CPs), we advise
that sub-regulation (3) of Regulation 6 of FEMA 5(R)/2016-RB has been deleted
vide GOI Notification No. FEMA 5(R)(2)/2019-RB dated July 16, 2019.
4. AD
Category – I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
5. 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
(R. K. Moolchandani) Chief General Manager
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