Page 60 - Banking Finance July 2024
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RBI CIRCULAR
08, 2024. Under the LoC, the last date for disbursement 2. In this regard, in view of the diverse regulatory frame-
will be 48 months after scheduled completion date of work governing investment funds across various juris-
the project. dictions and to provide clarity, the following amend-
ments are carried out in the Foreign Exchange Man-
3. Shipments under the LoC shall be declared in Export
agement (Overseas Investment) Directions, 2022:
Declaration Form/Shipping Bill as per instructions issued
(a) Existing Paragraph 1(ix)(e) of FEM (OI) Directions,
by the Reserve Bank from time to time.
2022 is replaced with the following:
4. No agency commission is payable for export under the
above LoC. However, if required, the exporter may use The investment (including sponsor contribution)
in units or any other instrument (by whatever
his own resources or utilize balances in his Exchange
name called) issued by an investment fund over-
Earners Foreign Currency Account for payment of com- seas, duly regulated by the regulator for the finan-
mission in free foreign exchange. Authorised Dealer
cial sector in the host jurisdiction, shall be treated
(AD) Category- I banks may allow such remittance af-
as OPI. Accordingly, in jurisdictions other than
ter realization of full eligible value of export subject to
IFSCs, listed Indian companies and resident individu-
compliance with the extant instructions for payment
als may make such investment. Whereas in IFSCs,
of agency commission. an unlisted Indian entity also may make such OPI
5. AD Category I banks may bring the contents of this in units or any other instrument (by whatever
circular to the notice of their exporter constituents and name called) issued by an investment fund or ve-
advise them to obtain complete details of the LoC from hicle, in terms of schedule V of the OI Rules sub-
the Exim Banks office at Centre One, Floor 21, World ject to limits, as applicable.
Trade Centre Complex, Cuffe Parade, Mumbai 400 005 Explanation: investment fund overseas, duly regu-
or from their website www.eximbankindia.in lated for the purpose of this para shall also include
funds whose activities are regulated by financial
6. The directions contained in this circular have been is-
sued under section 10(4) and 11(1) of the Foreign Ex- sector regulator of host country or jurisdiction
through a fund manager.
change Management Act (FEMA), 1999 (42 of 1999)
and are without prejudice to permissions/ approvals, if (b) Existing Paragraph 24(1) of FEM (OI) Directions,
any, required under any other law. 2022 is replaced with the following:
A person resident in India, being an Indian entity
Foreign Exchange Management (Over- or a resident individual, may make investment (in-
cluding sponsor contribution) in units or any other
seas Investment) Directions, 2022 - In- instrument (by whatever name called) issued by an
vestments in Overseas Funds investment fund or vehicle set up in an IFSC, as OPI.
Accordingly, in addition to listed Indian companies
June 07, 2024
and resident individuals, unlisted Indian entities
also may make such investment in IFSC.
1. Attention of Category-I Authorised Dealer Banks is in-
vited to Paragraph 1(ix)(e) of Foreign Exchange Man- 3. Foreign Exchange Management (Overseas Investments)
agement (Overseas Investment) Directions, 2022, is- Directions, 2022 issued vide A.P. (DIR Series) Circular
sued vide A.P. (DIR Series) Circular No.12 dated August No.12 dated August 22, 2022, shall accordingly be up-
22, 2022, in terms of which, investment (including spon- dated to reflect the above changes. AD Category-I
sor contribution) in units of any investment fund over- Banks may bring the contents of this circular to the
seas, duly regulated by the regulator for the financial notice of their constituents.
sector in the host jurisdiction, shall be considered as 4. The directions in this circular have been issued under
Overseas Portfolio Investment. Further, as per the pro- Section 10(4) and 11(1) of the Foreign Exchange Man-
visions of Paragraph 1(ix)(e) and Paragraph 24(1) of agement Act, 1999 (42 of 1999) and are without preju-
FEM (OI) Directions, 2022, investments can be made dice to permissions/approvals, if any, required under any
in units of investment funds. other law.
54 | 2024 | JULY | BANKING FINANCE
