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Discontinuation of Reports under Foreign Exchange Management Act

Varun Hariharan

| Updated: Nov 18, 2020 | Category: Foreign Exchange Management

foreign Exchange Management act

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 NoReporting RequirementEntity for ReportingTime 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-IIOn 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-IIEvery month
3.Purchases of Transactions of More than USD 10,000Fully Fledged Money Changers and Authorised dealer Category-IIOn a monthly basis
4.Liaison Office extensionAuthorised dealer Category-IAt the time when extension is granted
5.Project Office extensionAuthorised dealer Category-IAt the time when extension is granted
6.FII and FPI any form of inflow on daily basisAuthorised banksDaily Compliance
7.FII and FPI monthly inflowAuthorised dealer Category-IMonthly Compliance
8.Foreign Venture Capitalists Reporting (FVCI) and Market Value of these investmentsAuthorised dealer Category-I (banks) and custodian banksMonthly
9.Outflow and Inflow based on mutual fund of AMC (Asset Management Companies)AMCQuarterly Compliance
10.Market Value (MV)of FII on fortnightly basisAuthorised dealer Category-IFortnightly Compliance
11Market Value (MV)of FII every monthAuthorised dealer Category-IMonthly Compliance
12Percentage of floating stock of FII holdingsAuthorised dealer Category-IMonthly Compliance
13Form DRR( Issue of Depository  Receipts) Sponsored and unsponsoredCustodian BanksWhen the Depository Receipts are transferred
14ADR and GDR movement (American Depository Receipts and Global Depository Receipts)Authorised dealer Category-IMonthly Compliance
15Repatriation of proceeds of sale of ADR/GDR and FCCBCustodian BanksMonthly
16Underlying shares of ADR and GDR- which are re-deposited and released monthlyCustodian BanksMonthly
17Divestment of OCB (Overseas Corporate Bodies)Authorised DealersMonthly

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

 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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Varun Hariharan

Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.

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