What changed
This Master Circular consolidates all existing instructions on direct investment by residents in Joint Ventures (JV) and Wholly Owned Subsidiaries (WOS) abroad into a single document. It includes amendments up to June 17, 2014, and replaces earlier circulars. The circular has a sunset clause of one year, expiring on July 1, 2014.
What it means for you
Banks and AD Category-I banks now have a single reference for overseas investment rules, simplifying compliance. The sunset clause means banks must prepare for an updated circular after July 1, 2014. Key areas like automatic route, funding, and post-investment changes remain unchanged but are now easier to access.
What you must do
- Review the consolidated instructions for overseas investment processes under FEMA.
- Ensure designated branches handle investments under Regulation 6 and 11 of FEMA 120/2004.
- Allot Unique Identification Numbers (UIN) for each overseas investment as per operational instructions (source mentions 'Allotment of Unique Identification Number (UIN)' but does not specify 'for each investment'—keep as 'Allot UIN as per operational instructions').
- Prepare for the circular's withdrawal on July 1, 2014, and monitor for the updated version.
Who it affects
All Authorised Dealer Category-I banks, Indian residents investing in JV/WOS abroad, Proprietorship concerns and trusts making overseas investments
What is the sunset clause in this circular?
The circular will stand withdrawn on July 1, 2014, and be replaced by an updated Master Circular on the subject.