What changed
RBI issued Master Circular No.2/2009-10 on July 1, 2009, consolidating all existing instructions on foreign investment in India under FEMA. It covered FDI, portfolio investments, venture capital, and acquisition of immovable property, with a sunset clause of one year.
What it means for you
This circular provided a single reference for banks handling foreign investment transactions, reducing confusion from multiple circulars. Banks had to ensure compliance with the consolidated rules until the circular was withdrawn on July 1, 2010.
What you must do
- Review the master circular for all foreign investment compliance requirements.
- Ensure all Category-I AD bank staff are trained on the consolidated rules.
- Monitor the sunset date and prepare for the updated circular by July 1, 2010.
- Maintain records of transactions under FDI, portfolio, and immovable property rules.
Who it affects
All Category-I Authorised Dealer banks, Indian companies receiving foreign investment, Foreign investors (FIIs, NRIs, VCFs), Entities acquiring immovable property in India
What is the legal basis for this master circular?
It is issued under Section 6 of FEMA, 1999, read with notifications FEMA 20, 21, 22, and 24 of 2000.
Does this circular cover investments from Nepal and Bhutan?
Yes, Section I includes specific provisions for investments from Nepal and Bhutan.
When did this circular expire?
It had a sunset clause and stood withdrawn on July 1, 2010, replaced by an updated master circular.