What changed
This is a consolidation of existing instructions on direct investment by residents in JV/WOS abroad into a single master circular. It replaces earlier circulars and notifications listed in the appendix. The circular has a sunset clause of one year, expiring on July 1, 2009.
What it means for you
Banks must use this master circular as the single reference for processing overseas direct investment proposals by residents. The automatic route and general permissions remain unchanged, but banks need to ensure compliance with updated procedural instructions for designated branches and reporting. The sunset clause means banks should prepare for an updated version within a year.
What you must do
- Update internal FEMA compliance manuals to reference this master circular for all JV/WOS investment processing.
- Train designated branch staff on operational instructions in Part II, including UIN allotment and share swap procedures.
- Monitor the sunset clause expiry and prepare for the replacement circular by July 1, 2009.
- Ensure reporting of remittances as per Annex A and B requirements.
Who it affects
All banks authorised to deal in foreign exchange, Designated branches handling overseas investment remittances, Indian residents investing in JV/WOS abroad
Does this master circular introduce new restrictions on overseas investments?
No, it consolidates existing instructions without changing substantive rules. The automatic route and general permissions remain as previously notified.
What happens after the sunset clause on July 1, 2009?
The circular will stand withdrawn and be replaced by an updated master circular. Banks should stay alert for the new version to ensure continued compliance.