FEMA RBI Filing

An Indian Company either Private Limited or Public Limited or registered as Limited Liability Partnerships can avail investments from foreign individuals, body corporates, NRIs and FPI’s (Foreign Institutional Investors). The routes through which an Indian Company can receive Foreign Direct Investments either through the Automatic Route (Permitted Sectors) or Government Route (Mandated by RBI).

Equity, Preference and Convertible Debentures. The Equity Shares are issued under the Companies Act, 2013. The Debentures can be fully, compulsorily and mandatorily convertible debentures. Likewise, Preference shares can be also be Fully, Compulsorily and Mandatorily Convertible Preference Shares.

Non-convertible or optionally or partially convertible will be treated as Debt and they have adhere to the ECB (External Commercial Borrowings Guidelines).

Foreign Nationals, NRI or OCI or Body Corporate 

1. What are the Prohibited Sectors?

Investment by a person resident outside India is prohibited in the Lottery Business including Government/ private lottery, online lotteries, Gambling and betting including casinos, Chit funds (except for investment made by NRIs and OCIs on a non-repatriation basis), Nidhi company, Trading in Transferable Development Rights (TDRs), Real Estate Business or Construction of Farm Houses, Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes. The prohibition is on manufacturing of the products mentioned and foreign investment in other activities relating to these products including wholesale cash and carry, retail trading etc. will be governed by the sectoral restrictions laid down in Regulation 16 of FEMA 20(R), Activities/ sectors not open to private sector investment viz., (i) Atomic energy and (ii) Railway operations, Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities

2. Through whom does the reporting happen?

The Authorised Dealer Bank (i.e.) the Bank in which the Investee Company has the Current Account will be the one through whom the reporting happens. 

3. The responsibility of the reporting falls on which person?

The responsibility of the reporting lies with the Investee Company (i.e. the Indian Company receiving the funds).

4. Whether there are any penalties for late reporting?

If the timeframes within which the reportings are not completed then the Reserve Bank of India, will penalize the Investee with late fees and may have to go for Compounding of the Contravention of the said regulation.

5. What sort of professionals handle the reporting and liaising with the Banks?

The Company has to hire a Consulting Company/Individual, who are experienced with FEMA, Banking procedures and Companies Act, 2013 and the procedure of reporting. They will be act as bridge between the Authorised Dealer Bank, the Company, and the RBI for making sure that the Company, is FEMA Compliant. The documentation and liaising with Authorised Dealer Bank is crucial.

6. What is KYC or Know your Customer?

The KYC is the document which is confirmed through a swift message (which is Bank to Bank communication Channel) which confirms the remitter details on a 6 pointer KYC format.

7. What is FIRC or Foreign Inward Remittance Certificate?

The Foreign Inward Remittance Certificate is issued by the Authorised Dealer Bank of the Investee Company or the Intermediary Bank where the conversion of the foreign currency happens to INR. It’s is issued after the KYC is received and funds are credited.

8. What is RBI FCGPR reporting?

Which means   Foreign Currency Gross Provisional Return (FC-GPR).   

If a Company receives Foreign Investment by investing in the form of Equity, Preference, Debentures including Convertible Preference or Convertible Preference Shares) through the automatic route in the permitted sectors, then this would require a reporting to the RBI in the FC-GPR which has to be filed post allotment of the capital instruments under Companies Act, 2013.

9. What are the situations there is no reporting required when there is transfer of shares?

When a transfer happens from NRI holding shares on non-repatriable basis to a resident or vice-versa, further when a transfer of shares happens from NRI holding shares in an Indian Company on a repatriable basis to a person resident outside India holding capital instruments on a repartiable basis, When transfer of shares happens as a gift.

10. The responsibility of reporting lies with whom?

The responsibility of the reporting falls on the resident (Transferor or Transferee) or Person resident outside India holding capital instruments on a non-repatriable basis.

11. The reporting has to be done on what platform?

The reporting has to be done through the FIRMS RBI through a Single Master File (SMF). Based on the master direction of the RBI an entity has to create an Entity Master File and every subsequent reportings have to be done through SMF.

12. Consequences of late filing?

Any delay in the reporting will attract a late submission fees (LSF) that is for transactions after November 07, 2017. Compounding option is also available to the applicant to compound the contravention 

13. What is ECB?

External Commercial Borrowings (ECB),    

ECB is a commercial loan availed received by eligible corporate entities from Eligible lenders from abroad. The loan can be availed based on ECB guidelines, such as minimum maturity, permitted end-usage and restrictions, maximum all-cost ceiling.  Loan availed from foreign sources i.e. eligible lenders in Track I, Track II, Track III and  Form -83  to be filed. Documents   Request letter, MOA, Loan Agreement Signed by the parties, Board Resolution, Undertakings, Average Maturity and all in cost calculation 

Note:

1. Micro finance Companies can raise ECB, but they should have a satisfactory borrowing relationship for atleast 3 years, with their AD Bank.

2. Certificate of Due Diligence should be given by the AD Bank.

14. What is the classification of loans under ECB framework?

Track I – As detailed in the RBI website, the medium term foreign currency denominated ECB with minimum average maturity of 3 – 5 years, Track II – Long term foreign denominated ECB with minimum average maturity of 3/5 years, Track III- INR denominated ECB with minimum average maturity of 3/5 years

15. Who are the eligible borrowers?

Companies in Manufacturing and Software development, Shipping and Airline Companies, Small Industries Development Bank of India, Units in SEZs, Companies in Infrastructure Sector, NBFCs, Holding Companies, Core Investment Companies, Also housing finance Companies, Real-estate Investment Trust, and Infrastructure Investment Trusts, coming under regulatory framework of SEBI, NBFC, Micro finance Companies, Not for profit Companies incorporated under 1956/2013, Societies, Trusts, and Co-operatives, Indian Trust Acts, NGOs, Companies providing logistics services, supporting infrastructure, Companies engaged in research and development, All Companies in maintenance, repair, an freight forwarding. Developers of Special economic zones, NBFCs under the control of RBI

16. Who are the eligible Lenders?

International Banks, Multi-lateral financial institutions, whether government owned partially or fully, Export Credit Agencies, Foreign Equity Holders, Overseas long-term investors like Prudentially regulated financial entities Insurance Companies, Financial institutions in International financial services centres, Overseas Branches/subsidiaries of Indian Banks.

17. Is an Individual Lender allowed to give a loan under ECB?

Yes. Individual lender should produce a certificate from the overseas Banker that he holds the account for 2 years minimum, and the audited account statement along with the Income tax return has to be certificate by overseas Banker. Note that, fi the AML and FAFT guidelines are not fulfilled then such Individual cannot extend ECB.

18. What are the restrictions on end-use under ECB?

Cannot invest in Capital Markets, Investment in real estate or purchase of Land except used for affordable housing and infrastructure sub-sectors under the government, Equity Investment, Following additional end uses will apply provided they are raised from Direct and indirect equity holders or from a Group company and the maturity period is minimum 5 years: Working Capital Purposes, General Corporate Purposes, Repayment of Rupee Loans.

rbi filing of fla return

rbi filing date

rbi filings for private companies

due date for RBI return

FCGPR and FCTRS

RBI FLAIR

RBI FIRMS 

External Commercial Borrowing (ECB)