What changed
RBI issued Master Circular No. 02/2008-09 on July 1, 2008, compiling all existing instructions on foreign investment in India under FEMA. It covers acquisition of immovable property, establishment of branch/liaison offices, and investment in partnership firms or proprietary concerns. This circular consolidates prior AP (DIR Series) circulars and FEMA notifications, and will be withdrawn on July 1, 2009, replaced by an updated version.
What it means for you
Banks get a single reference document for foreign investment compliance, reducing the need to track multiple circulars. It clarifies that foreign investment rules are governed by FEMA Section 6 and related notifications. The annual replacement cycle ensures instructions stay current, but banks must monitor updates to avoid using outdated guidelines.
What you must do
- Review the Master Circular to ensure your bank's foreign investment processing aligns with consolidated FEMA rules.
- Update internal compliance checklists for immovable property acquisitions, branch/liaison office setups, and partnership investments by foreign entities.
- Prepare to replace this circular with the 2009 update by July 1, 2009, and track subsequent annual revisions.
Who it affects
Category-I Authorised Dealer banks, Compliance departments handling FEMA transactions, Branches processing foreign investment or immovable property deals
What areas does this Master Circular cover?
It covers foreign investment in India, acquisition of immovable property, establishment of branch/liaison offices, and investment in partnership firms or proprietary concerns, all under FEMA.
How long is this circular valid?
It is valid until July 1, 2009, after which it will be replaced by an updated Master Circular on the same subject.
Does this circular replace all previous instructions?
Yes, it consolidates existing instructions from AP (DIR Series) circulars and FEMA notifications, serving as the single reference until the next update.