Reserve Bank Of India
A.P. (DIR Series) Circular No. 100
April 25, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Overseas Direct Investments – Clarification
Attention of the Authorised Dealers (AD) is invited to Foreign Exchange
Management (Transfer or Issue of any Foreign Security) Regulations, 2004
notified by the Reserve Bank vide Notification No. FEMA 120/RB-2004 dated July
07, 2004 and as amended from time to time.
- It has been observed that eligible Indian parties are using overseas direct
investments (ODI) automatic route to set up certain structures facilitating
trading in currencies, securities and commodities. It has come to the notice of
the Reserve Bank that such structures having equity participation of Indian
parties have also started offering financial products linked to Indian Rupee
(e.g. non-deliverable trades involving foreign currency, rupee exchange rates,
stock indices linked to Indian market, etc.). It is clarified that any overseas
entity having equity participation directly / indirectly shall not offer such
products without the specific approval of the Reserve Bank of India given that
currently Indian Rupee is not fully convertible and such products could have
implications for the exchange rate management of the country. Any incidence of
such product facilitation would be treated as a contravention of the extant FEMA
regulations and would consequently attract action under the relevant provisions
of FEMA, 1999.
- 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,
(Rashmi Fauzdar)
Chief General Manager
RBI/2012-13/481