HEDGE-SQUARE

Vide this Circular RBI has modified Form ODI – Part I, by making certain additions in to the said Form, which is to be submitted by every Indian Party at the time remitting money outside India as an

Overseas Direct Investment (ODI ).

14.09.2012

Overseas Direct Investment – Rationalisation of Form ODI Circular No: 15 Date: 21.08.2012

I N S I D E T H I S

FEMA – SNAPS (From 21st August, 2012 to 10th September, 2012)

FDI by citizen / entity incorporated in Pakistan Circular No: 16 Date: 22.08.2012

This Circular henceforth permits purchase/ acquisition of shares and convertible debentures of an Indian Company under Foreign Direct Investment Scheme (FDI Scheme), by a citizen of the Pakistan or by an entity registered in to the Pakistan. Said investment shall be effected only after obtaining prior approval of the Foreign Investment Promotion Board (FIPB) and subject to fulfillment of conditions prescribed in Schedule - I. Schedule – I contain various conditions and procedure for Foreign Direct Investment (FDI) in to the India. Prior to this Circular any person, who is citizen of the Pakistan or an entity registered in the Pakistan were not allowed to hold any shares or convertible debentures of an Indian Company under FDI Scheme.

Rationalisation - Form ODI FDI by citizen and entity of the Pakistan General Permission as to Guarantees Investment by Indian Parties in Pakistan

“Path opened up for an investment by the Pakistan in India”

Non-resident guarantee for non-fund based facilities entered between two resident entities Circular No: 20 Date: 29.08.2012

Overseas Investment by Indian Parties in Pakistan Circular No: 25 Date: 07.09.2012

“Path opened up for investment from the India to the Pakistan”

FEMA SNAPS – 21.08.2012 to 10.08.2012 Page 2

Borrowing and lending of Indian Rupees between two persons resident in India does not attract the provisions of the Foreign Exchange Management Act, 1999. RBI had extended this rule and granted general permission as to the cases, where the guarantee for Rupee Loan is granted by the Person Resident Outside India, until and unless said guarantee invoke and non-resident guarantor needs to meet the liability of the loan. Apart from general permission to the above said guarantee, vide this circular RBI has extended it for non-fund based facilities also, including of Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC), entered between two resident persons in to the India. RBI has also decided to introduce the reporting format to keep trace of the guarantees issues and invoked.

By reversing the past and present situation, RBI vide this Circular has permitted Indian Parties to make Investments in to the Pakistan after obtaining prior approval.

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