What changed
RBI has added a new reporting requirement for all foreign entities setting up Liaison Offices (LO), Branch Offices (BO), or Project Offices (PO) in India. In addition to existing annual activity reports, these entities must now submit a report (as per Annex) to the Director General of Police (DGP) of the concerned state within five working days of becoming functional. Existing LO/BO/PO must also file this Annex report annually along with their activity certificate/report to the DGP and AD bank.
What it means for you
Banks acting as Authorised Dealers must ensure their foreign entity customers comply with this new police reporting requirement. This adds a layer of security and regulatory oversight, requiring banks to track and verify that the Annex report is filed with the DGP and a copy is submitted to them. Non-compliance could lead to regulatory action against the foreign entity and the AD bank.
What you must do
- Inform all existing and new LO/BO/PO customers about the new DGP reporting requirement immediately.
- Update your internal compliance checklists to include verification of the Annex report submission to the DGP within five working days of the entity becoming functional.
- Ensure that copies of the DGP-filed Annex report are collected from customers and maintained in your records.
- Train your relationship managers and compliance teams on the new reporting timeline and documentation requirements.
Who it affects
Authorised Dealer Category – I banks, Foreign entities with LO/BO/PO in India, State Director General of Police offices
What is the new reporting requirement for LO/BO/PO?
New entities must submit a report (as per Annex) to the state DGP within five working days of becoming functional. Existing entities must file this report annually along with their activity certificate/report.
Do existing LO/BO/PO need to comply immediately?
Yes, the circular is effective immediately. Existing LO/BO/PO must start filing the Annex report annually with the DGP and provide a copy to the AD bank.
What is the bank's role in this new requirement?
AD banks must bring this circular to the notice of their customers and ensure that copies of the DGP-filed reports are submitted to them for compliance monitoring.