What changed
RBI issued a circular on July 15, 2011, requiring foreign entities that established liaison or branch offices in India before FEMA 1999 came into force (June 1, 2000) and are still operating without RBI approval to apply for regularization within 90 days. Entities with prior Government of India approval must also approach RBI for a Unique Identification Number.
What it means for you
Banks must proactively identify clients operating unapproved pre-FEMA offices and guide them to submit regularization applications. Non-compliance could expose banks to regulatory risk, as they are responsible for ensuring all constituent offices have valid RBI approval on record.
What you must do
- Notify all relevant constituents about the 90-day window for regularization of pre-FEMA liaison/branch offices.
- Route all regularization applications in form FNC to RBI's Foreign Investment Division, Mumbai, after verifying compliance with earlier circulars.
- Ensure your bank holds a copy of RBI approval for every constituent's liaison/branch office operating in India.
- Advise clients with prior Government of India approval to apply for a Unique Identification Number from RBI.
Who it affects
AD Category-I banks, Foreign entities with pre-FEMA liaison/branch offices in India, Foreign NGOs, NPOs, news agencies, and other foreign entities operating in India
What is the deadline for foreign entities to apply for regularization?
The circular gives 90 days from its issue date of July 15, 2011, so applications must reach RBI by October 13, 2011.
Which form should be used for the regularization application?
Applications must be submitted in form FNC, routed through the AD Category-I bank where the liaison/branch office maintains its account.
Do entities with prior Government of India approval still need to approach RBI?
Yes, they must approach RBI with a copy of that approval to obtain a Unique Identification Number (UIN).