Discontinuation of Reports under Foreign Exchange Management Act

10 Sep, 2022

The Reserve Bank of India (RBI) brought out a notification related to Discontinuation of Reports and Discontinuation of Returns under the Foreign Exchange Management Act, 1999 (FEMA)^[1]. This notification was brought out on 13 November 2020 through RBI/2020-21/66 A.P. (DIR Series) Circular No. 05.

To improve the amount of foreign exchange in the country the RBI carried out this measure. Other reasons would include to increase the ease of doing business in the country and to reduce the amount of compliances related to reporting. Under this notification discontinuation of reports were carried out for 17 transactions.

What will this change?

The notification on discontinuation of reports under Foreign Exchange Management Act would lead to changes in the Master Direction (MD) on reporting under FEMA which was brought out in January 2016.

Apart from this, it will improve the progress of carrying out businesses in India. Limited number of compliances would be required to be followed due to this notification. Such directions for discontinuation of reports are provided under Section 10(4) and 11(2) of the Foreign Exchange Management Act, 1999. This notification is issued with immediate effect to all authorised banks and authorised dealers.

Discontinuation of Reports List

The following list provides reporting which is discontinued:

SL No	Reporting Requirement	Entity for Reporting	Time and Frequency of Reporting
1.	Any Transaction of value more than USD 5000. The above transaction would happen as per the category.	Authorised dealer Category-II	On a monthly basis
2.	Any Transaction of value more than USD 25,000. The above transaction would happen as per the category.	Authorised dealer Category-II	Every month
3.	Purchases of Transactions of More than USD 10,000	Fully Fledged Money Changers and Authorised dealer Category-II	On a monthly basis
4.	Liaison Office extension	Authorised dealer Category-I	At the time when extension is granted
5.	Project Office extension	Authorised dealer Category-I	At the time when extension is granted
6.	FII and FPI any form of inflow on daily basis	Authorised banks	Daily Compliance
7.	FII and FPI monthly inflow	Authorised dealer Category-I	Monthly Compliance
8.	Foreign Venture Capitalists Reporting (FVCI) and Market Value of these investments	Authorised dealer Category-I (banks) and custodian banks	Monthly
9.	Outflow and Inflow based on mutual fund of AMC (Asset Management Companies)	AMC	Quarterly Compliance
10.	Market Value (MV)of FII on fortnightly basis	Authorised dealer Category-I	Fortnightly Compliance
11	Market Value (MV)of FII every month	Authorised dealer Category-I	Monthly Compliance
12	Percentage of floating stock of FII holdings	Authorised dealer Category-I	Monthly Compliance
13	Form DRR( Issue of Depository Receipts) Sponsored and unsponsored	Custodian Banks	When the Depository Receipts are transferred
14	ADR and GDR movement (American Depository Receipts and Global Depository Receipts)	Authorised dealer Category-I	Monthly Compliance
15	Repatriation of proceeds of sale of ADR/GDR and FCCB	Custodian Banks	Monthly
16	Underlying shares of ADR and GDR- which are re-deposited and released monthly	Custodian Banks	Monthly
17	Divestment of OCB (Overseas Corporate Bodies)	Authorised Dealers	Monthly

With a view to increase the ease of doing business in the country, the RBI took this step of discontinuation of reports under FEMA.

READ All about the Latest Foreign Exchange Management Regulations 2022

Conclusion

To conclude the RBI brought out the notification on discontinuation of reports under FEMA. This was brought out as a result to increase the ease of doing business in the country. Apart from this, in order to reduce compliances, this move was carried out. With this notification, the chances of increase of foreign exchange in the country will increase.

Read our article:FEMA Contravention and Penalties

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