A. Discontinuance of certain filings and reportings
Recently, on November 13, 2020, the Reserve Bank of India has passed a Circular A.P. (DIR Series) Circular No. 05 discontinuing the filing of various forms and reporting, which were until November 13, 2020 required to be done under the Foreign Exchange Management Act, 1999.
The move has been taken to improve the ease of doing business and to reduce the cost of compliance. Accordingly, it has been decided to discontinue the 17 returns/reports as listed in the Annexure with immediate effect.
While some of these reportings were one time, the others varied between daily, fortnightly, monthly and quarterly. One of the notable features of the RBI Circular is that Form DRR for Issue/transfer of sponsored/unsponsored Depository Receipts has been discontinued only in hard copy, while it is still required to be reported on the FIRMS Application in terms of Regulation 4 (5) of FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019
The move is expected to reduce substantial paperwork and compliances.
B. Online filing of Application for investments requiring Government Approval
The Department for Promotion of Industry & Internal Trade (“DPIIT”) on November 09, 2020 has issued Standard Operating Procedure (SOP) for Processing FDI Proposals. As per the SOP, proposals for foreign investment in sectors/activities requiring Government approval as per the Consolidated FDI Policy dated October 15, 2020, as amended from time to time (“FDI Policy”) and Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 dated October 17, 2019, as amended from time to time (“NDI Rules”) would be filed online through the Foreign Investment Facilitation Portal (“FIFP”).
The applicant is required to make the application as per format and requirements under the FIFP and upload documents as per the list at Annexure-1 to the SOP.
The procedure has been simplified as against the erstwhile procedure. Now, once the application is made, the DPIIT will identify the concerned ministry/ department and e-transfer the proposal to the relevant ministry/ department for processing.
The SOP lists down the sector/ activity and the corresponding ministry/ department which shall process the application.
C. Delegation of powers for compounding of contraventions
Recently, on November 17, 2020, the Reserve Bank of India has passed a Circular A.P. (DIR Series) Circular No. 06, according to which the compounding powers stand delegated to the Regional Offices/ Sub Offices of the Reserve Bank to compound certain contraventions.
On review of previous circulars in this regard, it has been decided by the RBI to discontinue the classification of a contravention as ‘technical’ that was dealt with by way of an administrative/ cautionary advice and regularize such contraventions by imposing minimal compounding amount as per the compounding matrix as contained in the ‘Master Direction – Compounding of Contraventions under FEMA, 1999’ dated January 01, 2016, as amended from time to time.
Further, with respect to public disclosure of compounding order, it has been decided that in respect of the compounding orders passed on or after March 01, 2020 a summary information, instead of the compounding orders, shall be published on the Bank’s website setting out the following details: Name of Applicant, Details of Contraventions, Date of compounding order, Amount imposed for compounding of contraventions.