Foreign Exchange Management Act (FEMA): Notifications, Circulars (A.P. DIR), & Master Circulars - Issued by Reserve Bank of India (Foreign Exchange Department) and Deptt. of Economic Affairs. + Related Acts & Rules

Notifications, circulars, and master circulars related to the Foreign Exchange Management Act (FEMA) are issued by the Reserve Bank of India (RBI) through its Foreign Exchange Department and the Department of Economic Affairs under the Ministry of Finance. These documents cover various aspects of foreign exchange regulation, management, and policy to facilitate external trade and payments, as well as to promote the orderly development and maintenance of the foreign exchange market in India.

Here's an overview of the key documents issued by these authorities:

1. Foreign Exchange Management Act (FEMA), 1999

• FEMA Act and Rules: FEMA, enacted in 1999, regulates all transactions involving foreign exchange in India. It aims to facilitate external trade and payments and to promote the orderly development of the foreign exchange market in India.
• Notifications under FEMA: Notifications provide specific guidelines and amendments to the Act and its regulations. These could pertain to foreign investment, external commercial borrowings (ECB), foreign currency accounts, and more.

2. Reserve Bank of India (RBI) - Foreign Exchange Department

• A.P. (DIR Series) Circulars: Authorised Dealer (A.P. DIR) circulars are issued to banks and other authorized dealers in foreign exchange. These circulars provide operational guidelines, compliance requirements, and clarifications on foreign exchange transactions.
  • Foreign Direct Investment (FDI): Circulars detailing policies, permissible sectors, caps, and procedural requirements for foreign direct investments.
  • External Commercial Borrowings (ECB): Circulars outlining norms, caps, and procedural requirements for companies raising funds from foreign sources.
  • Liberalized Remittance Scheme (LRS): Circulars providing guidelines on remittances by individuals under the LRS, including permissible uses and limits.
• Master Circulars: Comprehensive circulars consolidating all relevant notifications, circulars, and operational guidelines issued during a specific period. They cover various topics such as FDI, ECB, LRS, and other foreign exchange management issues.
• Regulations on Trade: Circulars and guidelines for trade transactions, including import and export regulations, advance payments, and deferred payment arrangements.

3. Department of Economic Affairs - Ministry of Finance

• Policy Notifications: Notifications concerning macroeconomic policies affecting foreign exchange, such as bilateral agreements, international financial cooperation, and amendments to FEMA.
• Investment Guidelines: Policies and procedural guidelines for foreign investments, including approvals, compliance, and reporting requirements.

Key Aspects Covered

• Investment in India: Policies and regulations for foreign direct investment (FDI) and foreign portfolio investment (FPI) in India.
• External Commercial Borrowings (ECB): Norms and guidelines for Indian entities borrowing from foreign sources.
• Foreign Exchange Transactions: Regulations for current account transactions, capital account transactions, and cross-border remittances.
• Compliance and Reporting: Requirements for compliance, reporting, and documentation for transactions involving foreign exchange.