Page 60 - Banking Finance December 2024

RBI CIRCULAR

RBI

CIRCULAR

Operational framework for reclassifica- Reporting of Foreign Exchange Transac-
tion of Foreign Portfolio Investment to tions to Trade Repository
Foreign Direct Investment (FDI) November 08, 2024

November 11, 2024 1. Please refer to the Master Direction – Risk Manage-
ment and Inter-Bank Dealings dated July 5, 2016, as
1. Attention of Authorised Dealer (AD) Category - I banks amended from time to time, which requires, inter-alia,
is invited to the Foreign Exchange Management (Non- Authorised Dealers to report all over-the-counter (OTC)
debt Instruments) Rules, 2019, (hereinafter referred to foreign exchange derivative contracts and foreign cur-
as ‘Rules’) notified by the Central Government on Oc- rency interest rate derivative contracts, undertaken by
tober 17, 2019. them directly or through their overseas entities (includ-
ing overseas branches, IFSC Banking Units, wholly
2. We draw your attention to Schedule II to the Rules
which prescribes that investment made by foreign port- owned subsidiaries and joint ventures of Authorised
folio investor along with its investor group (hereinafter Dealers), to the Trade Repository (TR) of Clearing Cor-
referred to as ‘FPI’) shall be less than 10 percent of the poration of India Ltd. (CCIL).
total paid-up equity capital on a fully diluted basis. Fur- 2. To ensure completeness of transaction data in TR for
ther, FPI investing in breach of the prescribed limit shall all foreign exchange instruments, it has been decided
have the option of divesting their holdings or reclassi- to expand the reporting requirement to include foreign
fying such holdings as FDI. In this regard, an operational exchange spot (including value cash and value tom)
deals in a phased manner. Accordingly, transactions in
framework for such reclassification of foreign portfolio
investment by FPI to FDI is provided in the Annex. The the following foreign exchange contracts, involving INR
AD Category-I banks may accordingly facilitate the re- or otherwise, (hereinafter referred to as “FX con-
tracts”) shall now be reported to the TR:
porting of such transactions as per this framework.
a. foreign exchange cash;
3. These directions will become operative with immedi-
b. foreign exchange tom; and
ate effect. AD Category-I banks may bring the contents
of this circular to the notice of their customers / con- c. foreign exchange spot.
stituents concerned. Note: Money changing transactions are not in the
scope of these Directions and shall be governed by the
4. The directions contained in this circular have been is-
sued under sections 10(4) and 11(1) of the Foreign Ex- Master Direction – Money Changing Activities dated
change Management Act, 1999 (42 of 1999) and are January 01, 2016, as amended from time to time, or
without prejudice to permissions / approvals, if any, any other rule, regulation or Direction issued in this re-
required under any other law. gard.
3. Authorised Dealers shall report all inter-bank FX con-

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