Foreign Direct Investment in India - Update on Reporting and Compliances

The RBI has rationalised the FIRMS portal in order auto acknowledge the Forms and to process the same for determining any violation involved therein.

Following are the salient features of the changes made on the FIRMS portal:

- All forms submitted with the requisite documents will be auto-acknowledged on the FIRMS portal with a time stamp and an auto-generated e-mail will be sent to the applicant.

- The forms submitted within prescribed timelines, will be verified by the AD banks based on the uploaded mandatory documents and ensure that the same are in compliance with the extant guidelines.

- The system would identify the delay in reporting, if any.

- For forms filed with a delay less than or equal to three years, the AD banks will approve the same, subject to payment of LSF.

- The LSF will be computed by the system and an e-mail will be sent to the applicant and the concerned Regional Office (RO) of RBI specifying the amount and the timeline within which it is to be paid to the concerned RO of RBI.

- Once the LSF amount is realised, the concerned RO will update the status in the FIRMS portal and the updated status will be communicated to the applicant through a system generated e-mail, which can also be viewed in the FIRMS portal.

- The AD bank will approve the forms filed with a delay greater than three years, subject to compounding of contravention. The applicant may thereafter approach RBI with their application for compounding.

- The remarks of the AD Bank for rejection of forms, if any, will be communicated to the applicant through a system generated e-mail and the same can also be viewed in the FIRMS portal.

Conclusions:

These changes are welcomed steps which are intended to improve transparency and better implementation of the reporting requirements. Earlier, the AD Banks had to process these forms within three working days, however, now they have to process these forms within five working days. It is also important here to state that the relevant date for the compliance is date of reporting to the RBI by the AD Bank and not the date of uploading. So, it is advisable to the user to file the relevant forms much before the due date to avoid any delay which may result in Late Submission Fees or Compounding Fees.