Background – Reserve Bank of India (RBI) has, on 15 March 2011, notified a revised procedure for reporting of all Foreign Direct Investment (FDI), both inward and outward.  RBI has replaced Part B of Form FC-GPR (annual filing by Indian companies with regard to foreign investment) by “Annual Return on Foreign Liabilities and Assets” (the Return). On a go forward basis, Indian companies will have to furnish the Return in the specified format to the Department of Statistics and Information Management (DSIM), RBI, Mumbai. The information provided in the Return will be considered confidential and only consolidated aggregates will be used by RBI for compilation and publication of India’s Balance of Payments (BoP), International Investment Position (IIP), Coordinated Direct Investment and Coordinated Portfolio Investment.

The first Return will be due by 15 July 2011 and then annually by 15 July each year. The Return should be submitted by all Indian companies which have received FDI and / or made FDI abroad (i.e. overseas investment) in the previous year including the current year. Indian companies have to furnish audited balance sheet for the reporting year along with the Return.

For the purposes of the Return, RBI has provided methodology for valuation of foreign liabilities and foreign assets as under:

• Debt securities should be valued at market price, while all other types of debt, viz., loan, trade credit, deposits, and other accounts payable / receivable should be valued at nominal value.

•           For the valuation of the outstanding investment, use the corresponding end-March! End-December market price/exchange rate.

•           For listed companies, the share price on the closing date of reporting period should be used for valuation of Equity.

•           For unlisted companies, use the concept of “Own Funds at Book Value (OFBV)” for valuation of Equity, to have consistency in valuation. OFBV reflects the value of enterprise recorded in the book of Direct Investment Enterprise, which is the sum of (i) paid-up capital (excluding any shares on issue that the enterprise holds in itself and including share premium accounts); (ii) all types of reserves identified as equity in the enterprise’s balance sheet (including investment grants when accounting guidelines considered them company reserves); and (iii) cumulated reinvested earnings (which may be negative), which would take into account charges for consumption of fixed capital.


Suppose company’s paid up capital = Rs. 250 million, with FDI 50% (i.e. Rs. 125 million)

Accumulated reinvested earnings = Rs. 75 million

Revaluation of land & shares = Rs.159 million

Total = Rs. 484 million

Therefore, Equity investment by foreign direct investor based on OFBV method is Rs. 242 million (50 % of Rs. 484 million).

RBI will issue separate notifications amending the relevant Foreign Exchange Management Act Regulations.


Conclusion – RBI notification is issued under the relevant provisions of the Foreign Exchange Management Act, 2000 and will require compliance.

Source :  A.P. (DIR Series) Circular No. 45 dated 15 March 2011 issued by RBI.

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September 2021