Wednesday, 16 July 2014

RBI June 2014

Notification/Circular no. Date Subject Amendment
RBI/2013-14/624 A.P. (DIR Series) Circular No.138 03-Jun-14 Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000  The existing limit of USD 75,000 per financial year (April-March) under the LRS has been incxresed to USD 125,000
RBI/2013-14/629 A.P. (DIR Series) Circular No.139 05-Jun-14 Foreign investment in the Insurance Sector – Amendment to the Foreign Direct Investment Scheme Effective from February 4, 2014, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26% under automatic route shall be permitted in insurance sector subject to the conditions specified in the Press Note 2 (2014 Series) dated February 4, 2014.
RBI/2013-14/632 A.P. (DIR Series) Circular No.140  06-Jun-14 Foreign investment in India – participation by registered FPIs, SEBI registered long term investors and NRIs in non-convertible/redeemable preference shares or debentures of Indian companies Registered Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) deemed as registered Foreign Portfolio investors, registered Foreign Portfolio Investors (FPIs), long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, foreign Central Banks are permitted to invest on repatriation basis, in non-convertible/redeemable preference shares or debentures issued by an Indian company and listed on recognized stock exchanges in India, within the overall limit of USD 51 billion earmarked for corporate debt. Further, NRIs may also invest, both on repatriation and non-repatriation basis, in non-convertible/redeemable preference shares or debentures as above.
RBI/2013-14/633 A.P. (DIR Series) Circular No.141 06-Jun-14 Pledge of shares for business purposes in favour of NBFCs  RBI has delegated its powers to the AD Category – I banks to allow pledge of equity shares of an Indian company held by non-resident investor/s in accordance with the FDI policy, in favour of the Non - Banking Financial Companies (NBFCs) – whether listed or not, to secure the credit facilities extended to the resident investee company for bona-fide business purposes / operations, subject to compliance with certain prescribed conditions 
RBI/2013-14/634 BOD.AML.BC. No. 119/14.01.001/2013-14 09-Jun-14 Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT) /Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Clarification on Proof of Address Customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proof of address may be submitted to the branch within a period of six months.

In case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer. No proof is required to be submitted for such address for correspondence/local address. This address may be verified by the bank through ‘positive confirmation’ such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc. In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the bank within two weeks of such a change.
RBI/2013-14/640 A.P. (DIR Series) Circular No.142 12-Jun-14 Transfer of assets of Liaison Office (LO) / Branch Office (BO) / Project Office (PO) of a foreign entity either to its Wholly Owned Subsidiary (WOS) / Joint Venture (JV) / Others in India– Delegation of powers to AD Banks. Presently Authorised Dealers are delegated with powers to allow closure of the accounts of LO/BO and repatriate the surplus balances subject to submission of prescribed closure documents. With a view to smoothen the entire process of closure of LO/BO/PO, RNI has delgated the powers relating to transfer of assets of LO/BO/PO to AD Category-I banks subject to compliance with certain prescribed conditions.
RBI/2013-14/653 DBOD.No.BAPD.BC.122/22.01.009/2013-14 24-Jun-14 Financial Inclusion by Extension of Banking Services – Use of Business Correspondents As per extant instructions, Non-banking Finance Companies (NBFCs) are not allowed to be appointed as Business Correspondents (BCs) by banks. RBI has now permitted Banks to engage non-deposit taking NBFCs (NBFCs-ND) as BCs, subject to prescribed conditions.
RBI/2013-14/669
A.P. (DIR Series) Circular No.151
30-Jun-14 Remittances to non-residents – Deduction of Tax at Source Reserve Bank of India has reviewed the policy relating to issue of instructions under Foreign Exchange Management Act, 1999 (FEMA), clarifying tax issues. It has now been decided that Reserve Bank of India will not issue any instructions under the FEMA, in this regard. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.

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