OVERSEAS
DIRECT INVESTMENTS – CLARIFICATION
Circular:-RBI/2012-13/481
Dated:-
25/04/2013
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.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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