Borrowing and lending of Indian Rupees between two persons resident in India does not attract the provisions of the Foreign Exchange Management Act, 1999. In case where a Rupee loan is granted against the guarantee provided by a person resident outside India, there is no transaction involving foreign exchange until the guarantee is invoked and the non-resident guarantor is required to meet the liability under the guarantee.

. It has now been decided to allow a limited two way fungibility for IDRs (similar to the limited two way fungibility facility available for ADRs/GDRs) subject to the following terms and conditions:

A person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1 of the Notification, ibid, provided further that notwithstanding anything contained in Schedule I of the Notification, ibid, the Indian company, receiving such foreign direct investment, is not engaged or shall not engage in sectors / activities pertaining to defence,spaceandatomicenergyand sectors/ activities prohibited for foreign investment.

A. P. (DIR Series) Circular No. 15 In terms of Regulation 15(iii) of the Notification ibid,an Indian Party is required to submit to the Reserve Bank through the Authorised Dealer every year within 60 days from the date of expiry of the statutory period as specified by the respective laws of the host country for finalization of the audited accounts of the Joint Venture (JV) /Wholly Owned Subsidiary (WOS) outside India or such further period as may be allowed by the Reserve Bank, an Annual Performance Report (APR) in Form ODI Part III in respect of each JV or WOS outside India set up or acquired by the Indian Party. Further, an Indian party is allowed to undertake overseas direct investments under the General Permission (Automatic Route) subject to compliance to the provisions under Regulation 6 (and Regulation 7, if applicable) of the Notification.Regulation 6(2)(iv) of the Notification requires that the Indian Party has submitted the APR in respect of all its overseas investments in the format given in Part III of the Form ODI.

It has now been decided to restore the erstwhile stipulation of allowing credit of 100% foreign exchange earnings to the EEFC account subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. Accordingly, balances outstanding in an EEFC account as on July 31, 2012 and those balances that would accrue in the account with effect from August 1, 2012 shall get converted to Rupee balances on or before close of business on September 30, 2012. Similar procedure may be followed for accruals during the subsequent months.

Contravention is a breach of the provisions of the Foreign Exchange Management Act (FEMA), 1999 and rules/ regulations/ notification/ orders/ directions/ circulars issued there under. Compounding refers to the process of voluntarily admitting the con

It has now been decided to allow QFIs [hereinafter defined as per the revised definition in terms of para 2 (v) below] to purchase on repatriation basis debt securities subject to the following terms and conditions : (i) Eligible instruments and eligible transactions – QFIs shall be permitted to invest through SEBI registered Qualified Depository Participants (QDPs) (defined as per the extant SEBI regulations) in eligible corporate debt instruments, viz. listed Non-Convertible Debentures(NCDs), listed bonds of Indian companies, listed units of Mutual Fund debt Schemes and “to be listed” corporate bonds (hereinafter referred to as ‘eligible debt securities’) directly from the issuer or through a registered stock broker on a recognized stock exchange in India.

Master Circular No. 15/2012-13, dated 2-7-2012 -Foreign investment in India is governed by sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. The regulatory framework and instructions issued by the Reserve Bank have been compiled in this Master Circular. The list of underlying circulars/notifications is furnished in Appendix. In addition to the above, this Master Circular also covers the area of Investment in capital of partnership firms or proprietary concern’ which is regulated in terms of Section 2(h) of Section 47 of Foreign Exchange Management Act, 1999, read with Notification No. FEMA 24/2000-RB dated May 3, 2000.

Master Circular No. 14 /2012-13 , dateD 2-7-2012 Export of Goods and Services from India is allowed in terms of clause (a) of sub-section (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000, as amended from time to time.

Attention of Authorised Dealers (ADs) is invited to A.P. (DIR Series) Circular No.77 dated March 13, 2004, in terms of which guidelines for compilation of various R-Returns were issued to the Authorised Dealers. The purpose codes for foreign exchange purchase/ sale transactions, used for filling up of the cover page of R-Return have since been revised, vide A.P.(DIR Series) Circular No. 84 dated February 29, 2012.; It has therefore become necessary to revise the list of purpose codes appended to Form A-2 also. The revised list of purpose codes along with Form A-2 are thus annexed for use by the applicants for remittance of funds abroad.