All Banks Authorised to Deal in Foreign Exchange
Overseas Direct Investment in Bhutan
Attention of Authorised Dealer
(AD) Banks is invited to 'Explanation' to sub clause (i) of clause (2) of Regulation
6 of Notification No.FEMA.120/RB-2004 dated 7th July 2004 (Transfer or Issue
of any Foreign Security), as amended from time to time, in terms of which overseas
direct investment in Bhutan and Nepal is permitted in Indian Rupees only.
2. It has now been decided by
the Reserve Bank, in consultation with Government of India, to allow direct
investments in Bhutan in freely convertible currencies. This facility
will be in addition to the existing facility of making investments in Indian
Rupees. It is clarified that all dues receivable on such investments as well
as their sale / winding up proceeds are required to be repatriated to India
in freely convertible currencies only. As hitherto, direct investments in Nepal
can only be made in Indian Rupees.
3. Accordingly, Foreign Exchange
Management (Transfer or issue of any Foreign Security) notified vide Reserve
Bank Notification No. FEMA 120/RB-2004 dated July 7, 2004, has been amended
vide Notification No. FEMA 135/2005-RB dated May 17, 2005 [Foreign
Exchange Management (Transfer or issue of any Foreign Security) (Second Amendment)
Regulations, 2005]. A copy of the Government Notification G.S.R. No. 337(E)
dated May 27, 2005 incorporating the amendment is annexed.
4. Authorised Dealer Banks may
bring the contents of this circular to the notice of their constituents/customers
5. The directions contained
in this circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions/approvals,
if any, required under any other law.
Chief General Manager
[A. P. (DIR Series) Circular No.
09 dated August 29, 2005]
NOTIFICATION No. FEMA 135/2005-RB dated May 17,
Foreign Exchange Management (Transfer
or Issue of any Foreign Security (Second Amendment) Regulations, 2005
In exercise of the powers conferred
by clause (a) of Sub-section (3) of Section 6, and Sub-section (2) of Section
47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in partial
modification of its Notification No. FEMA 120/RB-2004 dated 7th July, 2004,
the Reserve Bank of India makes the following amendments in the Foreign Exchange
Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, namely
1. Short title and Commencement:
(i) These Regulations may be
called the Foreign Exchange Management (Transfer or Issue of any Foreign
Security)(Second Amendment) Regulations, 2005.
(ii) They shall come into force
on the date of their publication in the Official Gazette.
2. Amendment to the Regulations:
In the Foreign Exchange
Management (Transfer or Issue of any Foreign Security) Regulations, 2004 :-
(i) In Regulation 6, in sub-regulation
2, in the Explanation to clause (i) the following shall be substituted :-
(a) 'Explanation: For the purpose
of determining 'total financial commitment' within the limit of 100% of the
net worth, the following shall be reckoned, namely :-'
(b) For sub clause (a), the
following shall be substituted :
'(a) remittance by market purchases,
namely in freely convertible currencies; in case of Bhutan, investment made
in freely convertible currencies or equivalent Indian Rupees; in case of Nepal
investment made only in Indian Rupees.'
(ii) In Regulation 15, after
clause (ii) the following proviso may be added.
'Provided that in the case
of investment in securities in Bhutan made in freely convertible currency, all
dues receivable thereon as are repatriable, including those on account of disinvestment/dissolution/winding
up, shall be realised and repatriated in freely convertible currency only.'
Chief General Manager
FOOT NOTE :-
The Principal Regulations were
published in the Official Gazette vide G.S.R.No.456(E) dated May 8, 2000 in
Part II, Section 3, Sub-section (i) which has been superseded vide G.S.R.No.757(E)
published in the Official Gazette dated November 19, 2004 and subsequently amended
vide G.S.R. No. 220(E) dated 7 April, 2005.