What changed
RBI issued Master Circular No.15/2013-14 on July 1, 2013, consolidating all prior instructions on foreign investment in India under FEMA. It covers FDI, portfolio investment, foreign venture capital, and other investments, and includes a sunset clause making it valid only until July 1, 2014.
What it means for you
Banks and AD Category-I banks now have a single reference document for foreign investment rules, simplifying compliance. The sunset clause means banks must prepare for an updated circular by July 2014, ensuring they stay current with regulatory changes.
What you must do
- Review the Master Circular for consolidated foreign investment guidelines and ensure your bank's procedures align.
- Monitor the sunset clause expiry on July 1, 2014, and prepare to adopt the upcoming updated circular.
- Train staff on the key sections: FDI, Portfolio Investment Scheme, and Foreign Venture Capital Investments.
- Refer to underlying circulars/notifications for detailed guidance when needed.
Who it affects
All Category-I Authorised Dealer banks, Authorised banks handling foreign investment transactions, Indian companies receiving foreign investment, Foreign investors (FIIs, NRIs, QFIs, venture capital investors)
What is the sunset clause in this Master Circular?
The circular includes a sunset clause stating it will stand withdrawn on July 1, 2014, and be replaced by an updated Master Circular on foreign investment.
Does this circular cover investments in LLPs and partnership firms?
Yes, it covers investment in capital of Limited Liability Partnerships, partnership firms, or proprietary concerns, regulated under FEMA Notification No. FEMA 24/2000-RB.
Who should refer to this Master Circular for guidance?
AD Category-I banks and authorized banks should use it for general guidance, but refer to specific circulars/notifications for detailed information.