RBI Circular on ‘Overseas Direct Investments – Rollover of Guarantees’
1. The Reserve Bank of India issued a Circular on ‘Overseas Direct Investments – Rollover of Guarantees’ on January 03, 2014. The web-link of the said Circular is as below for ready reference:
2. Highlights of said Circular are as below:
A.P. (DIR Series) Circular No. 83 dated January 03, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Overseas Direct Investments – Rollover of Guarantees’
It has been decided not to treat/reckon the renewal/rollover of an existing/original guarantee, which is part of the total financial commitment of the Indian party in terms of Regulation 6 of Notification No. FEMA.120/RB-2004 dated July 7, 2004 (the ‘Notification’), as a fresh financial commitment, provided that:
the existing/original guarantee was issued in terms of the then extant/prevailing FEMA guidelines;
there is no change in the end use of the guarantee, i.e., the facilities availed by the JV/WOS/Step Down Subsidiary;
there is no change in any of the terms and conditions, including the amount of the guarantee except the validity period;
the reporting of the rolled over guarantee would be done as a fresh financial commitment in Part II of Form ODI, as hitherto; and
if the Indian party is under investigation by any investigation/enforcement agency or regulatory body, the concerned agency/body shall be kept informed about the same.
In case, however, the above conditions are not met, the Indian party shall obtain prior approval of the Reserve Bank for rollover/renewal of the existing guarantee through the designated AD bank.