Description
The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market,”although a few insurance companies and other kinds of financial firms are involved.
635
C MYK
May
Reserve Bank of India Bulletin
2006
Foreign Exchange Developments
MARCH 2006
(I ) AUTHORISED PERSONS – CATEGORISATION
An internal group was constituted to study the issues related to the scope of activities of the Authorised Persons and for providing adequate foreign exchange facilities to common persons. The Report of the Group viz. “Licensing Policy for Authorised Persons – Liberalisation” was placed on the Bank’s website, inviting feedback from the public. Based on the feedback received on the Report, the Bank has notified a scheme for categorisation/ recategorisation and issue of authorisation to select entities to undertake release/remittance of foreign exchange for certain non-trade related current account transactions. Such entities will be called as Authorised Dealers – Category II. Accordingly, RBI would consider granting licence to Full Fledged Money Changers (FFMCs), Urban Co-operative Banks and Regional Rural Banks categorised as Authorised Dealers – Category II, to undertake release/remittance of foreign exchange for certain non-trade related current account transactions. The eligibility criteria would essentially focus on strong financials, good governance, regulatory/prudential comfort, adequate internal control mechanism and an overall assessment that the entity is fit and proper. These entities are required to adhere to reporting requirements. [A.P. (DIR Series) Circular No. 25 dated March 6, 2006] exports from India under the Foreign Trade Policy of Government of India, of goods and services for rural electrification project (USD 30 million) and construction of Presidential Office (USD 30 million) in Ghana. [A.P. (DIR Series) Circular No. 27 dated March 24, 2006]
(IV) EXIM B ANK’S LINE OF CREDIT OF USD 33.5 MILLION TO THE GOVERNMENT OF DEMOCRATIC REPUBLIC OF CONGO (DR CONGO)
Exim Bank of India has extended a line of credit upto USD 33.5 million to the Government of Democratic Republic of Congo for financing export from India, under the Foreign Trade Policy of Government of India, 228 Buses (USD 12.5 mn), equipments for MIBA (USD 2 mn) and other equipment, goods and services including consultancy services for setting up a cement factory (USD 13 mn) and rehabilitation of mine in Idsenge Manganse (USD 6mn) in Congo. [A.P. (DIR Series) Circular No. 28 dated March 24, 2006]
(V) OVERSEAS INVESTMENT – LIBERALISATION
(a) Guarantees – As per the existing guidelines under FEMA, only promoter corporates are permitted to offer guarantees on behalf of their WOS/JVs abroad, under the Automatic Route and issue of personal, collateral and third party guarantees require prior approval of RBI. The scope of guarantees under the Automatic Route has now been enlarged and Indian entities are now allowed to offer other forms of guarantee – corporate or personal/primary or collateral/guarantee by the promoter company/guarantee by group company, sister concern or associate company in India, subject to certain conditions. (b) At present, all investments involving write-off need prior approval of RBI. In order to enable companies to have operational flexibility, the automatic route of disinvestments has been further liberalised. Accordingly, JV/WOS listed in the overseas stock exchanges, cases where the Indian promoter company is listed on a stock exchange in India and has a net worth of not less than Rupees 100 crore, and where
(II ) E XIM B ANK ’ S LINE O F CREDIT O F USD 5 MILLION TO EASTERN AND S OUTHERN AFRICAN TRADE & DEVELOPMENT BANK (PTA BANK)
Exim Bank of India has extended a line of credit upto USD 5 million to the Eastern and Southern African Trade & Development Bank (PTA Bank) for financing export of eligible goods and services from India under the Foreign Trade Policy of Government of India, to 17 member countries of PTA Bank. [A.P. (DIR Series) Circular No. 26 dated March 24, 2006]
(III ) EXIM BANK ’S LINE OF CREDIT OF USD 60 MILLION TO THE GOVERNMENT OF GHANA
Exim Bank of India has extended a line of credit upto USD 60 million to the Government of Ghana for financing
635
C MYK
636
C MYK
May
Reserve Bank of India Bulletin
2006
the Indian promoter is an unlisted company and the investment in overseas venture does not exceed USD 10 million can now divest without prior approval of Reserve Bank, subject to reporting requirement. (c) With a view to enabling recognised star exporters with a proven track record and consistently high export
performance to reap the benefits of globalization and liberalisation, proprietary/unregistered partnership firms, satisfying certain eligibility criteria, can now set up a JV / WOS outside India with prior approval of RBI. [A.P. (DIR Series) Circular No. 29 dated March 27, 2006]
636
C MYK
doc_284458050.pdf
The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market,”although a few insurance companies and other kinds of financial firms are involved.
635
C MYK
May
Reserve Bank of India Bulletin
2006
Foreign Exchange Developments
MARCH 2006
(I ) AUTHORISED PERSONS – CATEGORISATION
An internal group was constituted to study the issues related to the scope of activities of the Authorised Persons and for providing adequate foreign exchange facilities to common persons. The Report of the Group viz. “Licensing Policy for Authorised Persons – Liberalisation” was placed on the Bank’s website, inviting feedback from the public. Based on the feedback received on the Report, the Bank has notified a scheme for categorisation/ recategorisation and issue of authorisation to select entities to undertake release/remittance of foreign exchange for certain non-trade related current account transactions. Such entities will be called as Authorised Dealers – Category II. Accordingly, RBI would consider granting licence to Full Fledged Money Changers (FFMCs), Urban Co-operative Banks and Regional Rural Banks categorised as Authorised Dealers – Category II, to undertake release/remittance of foreign exchange for certain non-trade related current account transactions. The eligibility criteria would essentially focus on strong financials, good governance, regulatory/prudential comfort, adequate internal control mechanism and an overall assessment that the entity is fit and proper. These entities are required to adhere to reporting requirements. [A.P. (DIR Series) Circular No. 25 dated March 6, 2006] exports from India under the Foreign Trade Policy of Government of India, of goods and services for rural electrification project (USD 30 million) and construction of Presidential Office (USD 30 million) in Ghana. [A.P. (DIR Series) Circular No. 27 dated March 24, 2006]
(IV) EXIM B ANK’S LINE OF CREDIT OF USD 33.5 MILLION TO THE GOVERNMENT OF DEMOCRATIC REPUBLIC OF CONGO (DR CONGO)
Exim Bank of India has extended a line of credit upto USD 33.5 million to the Government of Democratic Republic of Congo for financing export from India, under the Foreign Trade Policy of Government of India, 228 Buses (USD 12.5 mn), equipments for MIBA (USD 2 mn) and other equipment, goods and services including consultancy services for setting up a cement factory (USD 13 mn) and rehabilitation of mine in Idsenge Manganse (USD 6mn) in Congo. [A.P. (DIR Series) Circular No. 28 dated March 24, 2006]
(V) OVERSEAS INVESTMENT – LIBERALISATION
(a) Guarantees – As per the existing guidelines under FEMA, only promoter corporates are permitted to offer guarantees on behalf of their WOS/JVs abroad, under the Automatic Route and issue of personal, collateral and third party guarantees require prior approval of RBI. The scope of guarantees under the Automatic Route has now been enlarged and Indian entities are now allowed to offer other forms of guarantee – corporate or personal/primary or collateral/guarantee by the promoter company/guarantee by group company, sister concern or associate company in India, subject to certain conditions. (b) At present, all investments involving write-off need prior approval of RBI. In order to enable companies to have operational flexibility, the automatic route of disinvestments has been further liberalised. Accordingly, JV/WOS listed in the overseas stock exchanges, cases where the Indian promoter company is listed on a stock exchange in India and has a net worth of not less than Rupees 100 crore, and where
(II ) E XIM B ANK ’ S LINE O F CREDIT O F USD 5 MILLION TO EASTERN AND S OUTHERN AFRICAN TRADE & DEVELOPMENT BANK (PTA BANK)
Exim Bank of India has extended a line of credit upto USD 5 million to the Eastern and Southern African Trade & Development Bank (PTA Bank) for financing export of eligible goods and services from India under the Foreign Trade Policy of Government of India, to 17 member countries of PTA Bank. [A.P. (DIR Series) Circular No. 26 dated March 24, 2006]
(III ) EXIM BANK ’S LINE OF CREDIT OF USD 60 MILLION TO THE GOVERNMENT OF GHANA
Exim Bank of India has extended a line of credit upto USD 60 million to the Government of Ghana for financing
635
C MYK
636
C MYK
May
Reserve Bank of India Bulletin
2006
the Indian promoter is an unlisted company and the investment in overseas venture does not exceed USD 10 million can now divest without prior approval of Reserve Bank, subject to reporting requirement. (c) With a view to enabling recognised star exporters with a proven track record and consistently high export
performance to reap the benefits of globalization and liberalisation, proprietary/unregistered partnership firms, satisfying certain eligibility criteria, can now set up a JV / WOS outside India with prior approval of RBI. [A.P. (DIR Series) Circular No. 29 dated March 27, 2006]
636
C MYK
doc_284458050.pdf