Foreign Investment in India – Reporting in Single Master Form (SMF)

As announced in the First Bi-monthly Monetary Policy Review dated April 5, 2018, Reserve Bank, with the objective of integrating the extant reporting structures of various types of foreign investment in India, will introduce a Single Master Form (SMF). The SMF would be filed online.

Prior to the implementation of the SMF, Reserve Bank would provide an interface to the Indian entities, to input the data on total foreign investment in a specified format. The interface will be available on RBI website from June 28, 2018 to July 12, 2018. Indian entities not complying with this pre-requisite will not be able to receive foreign investment (including indirect foreign investment) and will be non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.

Now the question here is “Why RBI introducing such form?”

Present Scenario: FDI in India by NRI’s is made through various modes or instruments on a repatriable basis, such as investment in equity shares, share warrants, compulsory convertible debentures, compulsory convertible preference shares, or by contributing to the capital of a Limited Liability Partnership (LLP) etc.

For the purpose of reporting these investments “Regulation 13 of the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2017 (“TISPRO Regulations”) currently prescribes twelve (12) different types of forms for FDI reporting including Advance Remittance Form, Form FC-GPR, Form FC-TRS, Annual Return on Foreign Liabilities’ and Assets, Form ESOP, Form DRR, Form LLP (I), Form LLP (II), Form Convertible Notes, Downstream Investment Form, Form LEC (FII) and Form LEC (NRI)”.

Proposed Scenario: To integrate the extant of reporting RBI proposed to introduce SMF. SMF subsume eight (8) of the above twelve (12) reporting requirements, along with an additional obligation of reporting in case of investment by person resident outside India in an Investment Vehicle including AIF, REIT and InVIT.

Four (4) forms that may remain outside the framework of SMF, and may likely continue to be filed in the manner they are currently filed with the RBI, are Advance Remittance Form, Annual Return on Foreign Liabilities and Assets, Form LEC (FII) and Form LEC (NRI).

RBI proposes to go live with the SMF framework sometime during the month of July, 2018. However, in meantime an indicative format of the proposed form has been prescribed by the RBI as  Annex 2  to the SMF Circular.

Enclosure: RBI notification link 


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