This Whitepaper highlights important circulars issued by the Reserve Bank of India (RBI) from 21st Aug to 10th Sept, 2012.

1. 14.09.2012
HEDGE-SQUARE
FEMA – SNAPS (From 21st August, 2012 to 10th September, 2012)
INSIDE THIS Overseas Direct Investment – Rationalisation of Form ODI
Circular No: 15
Date: 21.08.2012
Rationalisation - Form
ODI
Vide this Circular RBI has modified Form
FDI by citizen and ODI – Part I, by making certain additions
entity of the Pakistan in to the said Form, which is to be
submitted by every Indian Party at the
General Permission as time remitting money outside India as an
to Guarantees Overseas Direct Investment (ODI ).
Investment by Indian
Parties in Pakistan
FDI by citizen / entity incorporated in Pakistan
Circular No: 16
Date: 22.08.2012
This Circular henceforth permits purchase/ acquisition of shares and convertible debentures
of an Indian Company under Foreign Direct Investment Scheme (FDI Scheme), by a citizen
of the Pakistan or by an entity registered in to the Pakistan. Said investment shall be effected
only after obtaining prior approval of the Foreign Investment Promotion Board (FIPB) and
subject to fulfillment of conditions prescribed in Schedule - I. Schedule – I contain various
conditions and procedure for Foreign Direct Investment (FDI) in to the India.
Prior to this Circular any person, who is citizen of the Pakistan or an entity registered in the
Pakistan were not allowed to hold any shares or convertible debentures of an Indian
Company under FDI Scheme.
“Path opened up for an investment by the Pakistan in
India”

2. Page 2 FEMA SNAPS – 21.08.2012 to 10.08.2012
Non-resident guarantee for non-fund based facilities entered
between two resident entities
Circular No: 20
Date: 29.08.2012
Borrowing and lending of Indian Rupees between two persons resident in India does
not attract the provisions of the Foreign Exchange Management Act, 1999. RBI had
extended this rule and granted general permission as to the cases, where the
guarantee for Rupee Loan is granted by the Person Resident Outside India, until and
“Path opened up for unless said guarantee invoke and non-resident guarantor needs to meet the liability of
the loan.
investment from the
India to the Apart from general permission to the above said guarantee, vide this circular RBI has
Pakistan” extended it for non-fund based facilities also, including of Letters of
Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC), entered
between two resident persons in to the India. RBI has also decided to introduce the
reporting format to keep trace of the guarantees issues and invoked.
Overseas Investment by Indian Parties in Pakistan
Circular No: 25
Date: 07.09.2012
By reversing the past and present situation, RBI vide
this Circular has permitted Indian Parties to make
Investments in to the Pakistan after obtaining prior
approval.
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