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Role of RBI in FDI

Role of RBI in FDI

Foreign Direct Investments(FDI) in India proves to be quite beneficial. Not only is it an important source of funds, but it also provides an outlook and experience of a foreign party. Besides, it has several advantages like promotion of employment, new technologies and increment in capital inflow. FDI in India has high scopes to take the country towards progress.

Reserve Bank of India has a very vital role in managing all the foreign exchange. These foreign exchanges are regulated under Foreign Exchange Management Act (FEMA) that is governed by RBI. They give general or special permissions in every dealing of foreign exchange. Similarly, FDI also comes under FEMA that is managed by RBI and it is mandatory for every foreign investor to get their approval before investing as without it these investments cannot proceed further. RBI though do not have the power to restrict any current foreign transaction that only Central Government can but they have an important role to play in the same as Central Government do consult with them before taking any action. RBI basically acts as an advisor to the Government.

FDI in India has two routes, one is Automatic Route and the other is Government Route. RBI again has important part to play in them. In both the routes, concerned regional offices need to be submitted all the required documents. In Automatic Route, the regional office should be notified and submitted with the basic details of the investment within 30 days of investing and shareholding. In Government Route, based on RBI’s FDI policy, those documents should have the following necessary information on receipt of money for investment and on issue of shares to the investors:

  1. Name and address of foreign investors.
  2. Certificate from the Company Secretary of the company accepting investment from person resident outside India certifying that:
  • All the requirements of the Companies Act, 1956 have been complied with;
  • Terms and conditions of the Government approval, if any, have been complied with;
  • The company is eligible to issue shares under these Regulations; and
  • The company has all original certificates issued by authorized dealers in India evidencing receipt of amount of consideration;
  1. Certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the person resident outside India.

The process need to be followed and all the necessary details should be provided. Without the required documents and necessary information, any FDI could not be proceeded further. Also, it can be stopped in between the proceedings if the Government, in consultation with RBI, decides so.

So, if you are looking for funds in FDI, contact FDI India for a smoother process. We are one of the best FDI agency and are committed to deliver a professional experience to our investors as well as clients. That is why we are in a run to become the top FDI facilitator.

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