Foreign Exchange Management [Withdrawal of
General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003
FEMA 101/2003-RB, dated
3-10-2003 [G.S.R. 836(E), dated
3-10-2003] - In exercise of the
powers conferred by clauses (b), (d), (e) and (f) of sub-section (3) of section
6 read with section 47 of the FEMA, 1999 (42 of 1999) and all other powers
available to it in this behalf, the Reserve Bank of India makes the following
Regulations :—
(1) These
Regulations may be called Foreign Exchange Management [Withdrawal of General
Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003.
(2) They
shall come into force from the date of their publication in the Official
Gazette.
2. For the purpose of these Regulations—
(i) “Act” means the Foreign Exchange
Management Act, 1999;
(ii) “Account” means Savings, Current, Recurring, Fixed Deposit
opened and maintained under Non-Resident (External) Account Scheme (NRE
Account), Foreign Currency (Non-Resident) Account Banks Scheme (FCNR-B Account)
or Non-Resident (Ordinary) Account Scheme (NRO Account);
(iii) “Deposit” includes deposit of money with a bank, company,
proprietary concern, partnership firm, corporate body, trust or any other
person;
(iv) “Existing account” means an account maintained on the date of
commencement of these Regulations;
(v) “Existing investment” means an investment made pursuant to
the general permission granted under the Foreign Exchange Management (Transfer
and Issue of Security by a Person Resident outside India) Regulations, 2000
provided that—
(a) in case of Portfolio Investment Scheme, the investment was
held as on November 29, 2001, and
(b) in other cases, held on the date of
commencement of these Regulations;
(vi) “Overseas Corporate Body (OCB)” means and includes an entity defined in clause (xi) of
Regulation 2 of the Foreign Exchange Management (Deposit) Regulations, 2000 and
which was in existence on the date of commencement of these Regulations and
immediately prior to such commencement was eligible to undertake transactions
pursuant to the general permission granted under the Regulations;
(vii) “Regulations” means the Regulations made
under the Act;
(viii) “Schedule” means Schedule to these
Regulations.
Object and construction of these
Regulations.
These Regulations seek to withdraw the general
permission to Overseas Corporate Bodies (OCBs) to undertake transactions in
terms of such permission granted under the Regulations and shall be construed
accordingly.
Notwithstanding anything contained in any other
Regulations, these Regulations shall prevail.
Withdrawal of general permission and unwinding of investments and transactions.
On the commencement of these Regulations —
(1)(a) no fresh account by whatever name called shall be opened or
maintained in the name of an OCB.
(b) the Regulations specified in column 1 of the Schedule shall be
amended as mentioned in Column 2;
(c) an existing NRE (Saving and Current) Account held or maintained
in the name of an OCB shall be closed and balances repatriated forthwith;
(d) an existing NRO (Saving) Account held or maintained in the name
of an OCB shall be closed and balances transferred to non-interest bearing NRO
(Current) Account. The disposal of balances in such NRO (Current) Account shall
require specific approval of the Reserve Bank except in the following cases :
(i) all local payments in rupees;
(ii) remittance outside India of current income in India of the
account holder net of applicable taxes;
(e) an existing NRE (Recurring/Fixed Deposit) Account or FCNR (B)
Account held in the name of an OCB, may be continued till original maturity and
on maturity the proceeds shall be repatriated forthwith;
(f) an existing NRO (Recurring/Fixed) Account held or maintained
in the name of an OCB may be continued till original maturity and on maturity
the proceeds shall be credited to NRO (Current) Account;
(g) no facility of any nature whatsoever shall be granted on the
security of an account held in the name of an OCB;
(h) any loan or other facility granted against the security of a
Recurring/Fixed Deposit Account held in the name of an OCB, shall not be
renewed and shall be closed by adjustment of the proceeds on maturity of the
deposit;
(2)(a) no
investment in any security shall be made by an OCB;
(b) an
OCB may —
(i) transfer an existing investment in the form of shares or
convertible debentures held by it, by sale or gift to any Non-resident Indian
(NRI);
(ii) dispose of the existing investment in the form of shares held
by it, by sale at a rate not exceeding the prevailing market rate through a
registered stock-broker on a recognised stock exchange in India;
(c) an OCB shall not be eligible to purchase equity or preference
shares or convertible debentures offered on right basis by an Indian company,
and no Indian company shall offer equity or preference shares or convertible
debentures on right basis to an OCB;
(d) where any offer on right basis made to an OCB before the date
of commencement of these Regulations, is existing on that date, the OCB may
renounce it in favour of any person resident in India or a person resident
outside India who is eligible to invest in a security of an Indian company
under the Regulations;
(3)(a) No person resident in India shall borrow from, or lend to, an OCB
either in foreign exchange or in Rupees;
(b) where any borrowing from or loan to an OCB, whether in foreign
exchange or in Rupees made in accordance with the Regulations as applicable,
is outstanding on the date of commencement of these Regulations, such borrowing
or loan shall not be renewed on becoming due, and no interest thereon shall
accrue after it falls due for repayment.
Permission to hedge certain transactions.
An OCB may enter into a forward contract with rupee
as one of the currencies with an Authorised Dealer (AD) in India to hedge —
(i) the amount of dividend due to it on an existing investment
in the form of shares of an Indian company;
(ii) the balances held in an existing Foreign Currency
Non-Resident (FCNR) account or Non-resident External Rupee (NRE-Rupee) Term
Deposit account;
(iii) the amount of existing investment made under Portfolio
Investment Scheme in accordance with the provisions of the Foreign Exchange
Regulation Act, 1973 or under the notifications issued thereunder or made in
accordance with the provisions of the Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident outside India) Regulations, 2000, and in
both cases subject to the terms and conditions specified in the proviso to
paragraph 1 of Schedule II to the Foreign Exchange Management (Foreign Exchange
Derivative Contracts) Regulations, 2000, as amended from time to time.
Amendments to the existing provisions of
the FEMA Regulations
|
1 |
2 |
|
Foreign
Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations,
2000 |
In
the Schedule, in paragraph 3, the word ‘OCB’ shall be deleted. |
|
Foreign
Exchange Management (Borrowing or Lending in Rupees) Regulations, 2000 |
In
Regulation 5, the words ‘or an Overseas Corporate Body (OCB),’ ‘/Overseas
Corporate Bodies (OCBs)’ shall be deleted. |
|
Foreign
Exchange Management (Deposit) Regulations, 2000 |
In
Regulation 5(1)(i) and (ii), in
Regulation 8(2), in
Schedule 1, in
Schedule 2, in
Schedule 7, the
words ‘or an overseas corporate body’,
‘and Overseas Corporate Bodies
(OCBs)’, ‘and OCBs’, ‘/OCBs’ shall
be deleted. |
|
Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) Regulations, 2000 |
In
Regulation 5(3)(ii) and (4), in Regulation 9(2)(ii), in item
Nos. 2 and 6 of Annexure ‘B’ to Schedule
1, in
Schedule 3 (paragraph 3), in
Schedule 4, in
Schedule 5, the
words ‘/OCBs’, ‘or an Overseas Corporate Body’, ‘and Overseas Corporate
Body’, ‘or OCB’ shall be deleted |
|
Foreign
Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 |
In
Schedule II, the words ‘or Overseas Corporate Body’ shall be deleted. |