A.D.(M.A. Series) Circular No.38 October 10, 1998 RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
To,
All Authorised dealers in Foreign Exchange
Dear Sir,
Amendments to Exchange Control Manual (ECM)
It has been decided to amend/modify the Exchange Control regulations as set out in the following paragraphs.
1. Rupee Dealings with Overseas Banks
In terms of paragraph 5A.16 of Chapter 5 of ECM, authorised dealers are required to submit to Reserve Bank a monthly statement in form RRD showing details of Rupee Dealings with overseas banks. It has been decided to discontinue submission of the said statement with immediate effect.
2. Advance Payment for imports - bank guarantee
In terms of paragraph 7A.10 of Chapter 7 of ECM authorised dealers have been permitted to make advance remittance for import of goods into India provided, inter alia, that in case the amount of advance remittance exceeds U.S.$ 15,000 or its equivalent, a guarantee from an international bank of repute situated outside India or a guarantee of an authorised dealer in India issued against the counter-guarantee of an international bank of repute situated outside India, is obtained. It is clarified that an unconditional standby letter of credit from an international bank of repute situated outside India may be accepted in lieu of bank guarantee provided it is irrevocable, non-transferable and lists out full particulars of the transactions and there is a clear provision for prompt payment being received in convertible currency in an approved manner. The validity of the guarantee/letter of credit should cover adequately the period for the purpose of enforcing payment. All other conditions mentioned in the paragraph referred to above remain unchanged.
3. External Commercial Borrowings
In terms of paragraph 7B.8A(i) of ECM Reserve Bank considers applications from corporates and institutions for raising external commercial borrowings upto U.S.$ 3 million or its equivalent at a minimum simple maturity of three years. It has been decided to raise the limit of U.S.$ 3 million to U.S.$ 5 million with immediate effect. All other conditions mentioned in the paragraph referred to above remain unchanged.
4. Remittance of charges towards data base costs,
computer connect/time charges, software charges,
hit charges etc. of foreign banks
In terms of instructions contained in item VII of Part B of Annexure I to Chapter 8 of ECM, authorised dealers have been permitted to allow remittance of actual charges payable towards data base costs. It has now been decided to allow foreign banks operating in India and desirous of remitting proportionate expenditure on electronic data base cost incurred by their Head Offices to make remittances to the latter on the basis of a copy of invoice raised by the service provider with details of proportionate bifurcation of such charges to be paid by Indian branches of the bank concerned provided approval from Department of Banking Operations and Development, Reserve Bank of India, Central Office, Mumbai, has been obtained for the arrangement.
5. Remittance on account of information
downloaded from internet
In certain cases applicants are not in a position to produce documentary evidence such as invoice, debit note etc. from the overseas data base company for the amount to be remitted towards the cost of downloading the data, etc. It has been decided to dispense with the requirement of submission of invoice or debit note from the overseas company in cases where the cost of downloading of information from the internet does not exceed U.S.$ 250 or its equivalent. Authorised dealers may, therefore, allow remittance in such cases provided they are satisfied about the bona fides of the applicant/remittance.
6. The following consequential amendments may be carried out in the Exchange Control Manual, Volume I.
(i) Paragraph 5A.16 may be deleted.
(ii) Paragraph 7A.10(d) may be replaced by Slip 1.
(iii) In the caption and in line 2 of paragraph 7B.8A(i) the amount of U.S.$ 3 million may be changed to U.S.$ 5 million.
(iv) Item VII of Part B of Annexure I to Chapter 8 may be replaced by Slip 2.
7. Authorised dealers may bring the contents of this circular to the notice of their constituents concerned.
8. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.
Yours faithfully,
KHIZER AHMED
Chief General Manager
Slip 1
[AD/MA 38/1998] 7A.1 (d) If the amount of advance remittance exceeds U.S.$15,000 or its equivalent , a guarantee from an international bank of repute situated outside India or a guarantee of an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, should be obtained. An unconditional standby L/C from an international bank of reputre situated outside India may be accepted in lieu of bank guarantee provided it is irrevocable , non-transferable and lists out full particulars of the transacations and there is a clear provision for prompt payment being received in convertible currency in an approved manner. The validity of the guarantee /letter of credit should cover adequately the period for the purpose of enforcing payment.
Slip 2
[AD/MA 38/1998] VII. Electronic Data-base costs
Remittance of actual charges payable towards data base costs, computer connect/time charges, software charges, hit charges, downloading of information from internet etc.
Documentation:
a) Form A2
b) Invoice or debit notes from the overseas data-base centres
Special condition:
Certified copy of the documentary evidence in support of the remittance alongwith form A2 should be forwarded to Reserve Bank with R Returns.
Note A) Foreign banks operating in India and desirouls of remitting proportionate expenditure on electronic data base cost incurred by their Head Offices, may make such remittances to the latter, on the basis of a copy of invoice raised by the service provided indicating details of proportionate bifurcation of such charges to be paid by the Indian branches of the bank concerned , provided approval from Department of Banking Operations and Development , Reserve Bank of India, Central Office, Mumbai for the arrangement has been obtained.
B) Remittance upto U.S.$ 250 or its equivalent may be allowed by authorised dealers if the applicant is not in a position to produce documentary evidence such as invoice or debit note from the overseas company provided they are satisfied about bona fides of the applicant/remittance
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