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Foreign
Exchange Management [Withdrawal of General Permission to
Overseas Corporate Bodies (OCBs)] Regulations, 2003
Notification
No. FEMA 101 /2003-RB Dated October 3rd , 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:-
Short title
and commencement
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(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.
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For the
purpose of these Regulations -
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"Act"
means the Foreign Exchange Management Act 1999;
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"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);
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"Deposit"
includes deposit of money with a bank, company, proprietary
concern, partnership firm, corporate body, trust or any other
person;
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"Existing
account" means an account maintained on the date of
commencement of these Regulations;
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"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
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in
case of Portfolio Investment Scheme, the investment was held
as on November 29, 2001 and
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in
other cases, held on the date of commencement of these
Regulations;
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"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;
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"
Regulations" means the Regulations made under the Act;
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"Schedule"
means Schedule to these Regulations.
Object and
construction of these Regulations
3. 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.
Overriding
effect
4.
Notwithstanding anything contained in any other Regulations, these
Regulations shall prevail.
Withdrawal of
general permission and unwinding of investments and transactions
5. On the
commencement of these Regulations -
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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:
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all
local payments in rupees;
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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;
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a) no
investment in any security shall be made by an OCB;
b) an OCB
may -
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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);
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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;
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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:-
6. An OCB
may enter into a forward contract with rupee as one of the currencies
with an Authorised Dealer (AD) in India to hedge -
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the
amount of dividend due to it on an existing investment in the form
of shares of an Indian company;
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the
balances held in an existing Foreign Currency Non-Resident (FCNR)
account or Non-resident External Rupee (NRE- Rupee) Term Deposit
account;
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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 there under 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 paparagraph 1 of Schedule II
to The Foreign Exchange Management (Foreign Exchange Derivative
Contracts) Regulations, 2000, as amended from time to time. -
(Usha Thorat)
Executive Director
Schedule
Amendments to
the existing provisions of the FEMA Regulations ;
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1
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2
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Foreign
Exchange Management (Borrowing or Lending in Foreign Exchange )
Regulations, 2000
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In
the Schedule, in paragraph 3, the word ‘OCB’ shall be
deleted.
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Foreign
Exchange Management (Borrowing or Lending in Rupees)
Regulations, 2000
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In
Regulation 5, the words ‘or an overseas corporate body
(OCB),’ ’/Overseas Corporate Bodies(OCBs)’ shall be
deleted.
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Foreign
Exchange Management (Deposit) Regulations, 2000
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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
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Foreign
Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) Regulations, 2000
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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.
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Foreign
Exchange Management (Foreign Exchange Derivative Contracts)
Regulations, 2000
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In
Schedule II, the words ‘or Overseas Corporate Body’ shall be
deleted.
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