| Date: |
22-01-2015
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| Notification No: |
RBI/2014-2015/419 A.P. (DIR Series) Circular No.59
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2014-2015/419 |
| Subject: |
Overseas Direct Investments by proprietorship concern / unregistered partnership firm in India - Review
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RBI/2014-2015/419
A.P. (DIR Series) Circular No. 59
January 22, 2015
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Overseas Direct Investments by proprietorship concern / unregistered partnership
firm in India - Review
Attention of the Authorised Dealer (AD - Category I) banks is invited to the
provisions of 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.
- Keeping in view the changes in the definition / classification of the
exporters as per the Foreign Trade Policy of the Ministry of Commerce and
Industry issued from time to time, it has been decided to review the policy
framework for Overseas Direct Investments (ODI) by a proprietorship concern
/ unregistered partnership firm in India. Accordingly, henceforth, the
following revised terms and conditions are required to be complied with for
considering the proposal of ODI, by a proprietorship concern / unregistered
partnership firm in India, by the Reserve Bank under the approval route:
- The proprietorship concern / unregistered partnership firm in India is
classified as ‘Status Holder’ as per the Foreign Trade Policy issued by the
Ministry of Commerce and Industry, Govt. of India from time to time;
- The proprietorship concern / unregistered partnership firm in India has a
proven track record, i.e., the export outstanding does not exceed 10% of the
average export realisation of the preceding three years and a consistently
high export performance;
- The Authorised Dealer bank is satisfied that the proprietorship concern /
unregistered partnership firm in India is KYC (Know Your Customer)
compliant, engaged in the proposed business and has turnover as indicated;
- The proprietorship concern / unregistered partnership firm in India has not
come under the adverse notice of any Government agency like the Directorate
of Enforcement, Central Bureau of Investigation, Income Tax Department, etc.
and does not appear in the exporters' caution list of the Reserve Bank or in
the list of defaulters to the banking system in India; and
- The amount of proposed investment outside India does not exceed 10 per cent
of the average of last three years’ export realisation or 200 per cent of
the net owned funds of the proprietorship concern / unregistered partnership
firm in India, whichever is lower.
- Necessary amendments to the Notification ibid has been issued vide
Notification No. FEMA.325/RB-2014 dated November 12, 2014 (copy enclosed),
which is effective from the date of publication in the Gazette i.e. January
05, 2015.
- 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
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