RBI/2010-11/426 March 15, 2011 A.P. (DIR Series) Circular No. 44 Exim Bank's Line of Credit of USD 50 million to the Government of the Republic of Malawi RBI/2010-11/427 March 15, 2011 A.P. (DIR Series) Circular No. 45 Part B of form FC-GPR replaced with annual return on Foreign Liabilities and Assets reporting by Indian Companies In order to capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward in a more comprehensive manner as also to align it with international best practices, the RBI has notified a revised procedure for reporting of all Foreign Direct Investment (FDI), both inward and outward. Accordingly RBI has replaced Part B of the Form FCGPR (annual filing by Indian companies for foreign investment) by a separate 'Annual Return on Foreign Liabilities and Assets'. This return should be submitted by all the Indian companies which have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year by July 15 of every year along with a copy of audited Balance Sheet for the reporting year. In case accounts are not audited, information should be submitted based on unaudited figures. On completion of audit, if there are major differences in the reported figures, revised return may be submitted along with a copy of audited balance sheet. The return needs to be submitted to the Director, External Liabilities and Assets Statistics Division, Department of Statistics and Information Management (DSIM), Reserve Bank of India, C8, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. • For the purposes of this return, RBI has provided methodology for valuation of foreign liabilities and foreign assets as under: – Debt securities should be valued at market price, while all other types of debt, viz., loan, trade credit, deposits, other accounts payable/receivable should be valued at nominal value. – For the valuation of the outstanding investment, use the c o r r e s p o n d i n g e n d - M a r c h / e n d - D e c e m b e r m a r k e t price/exchange rate. – For listed companies, the share price on the closing date of reporting period should be used for valuation of Equity – For unlisted companies, use the concept of "Own Funds at Book Value (OFBV)" for valuation of Equity, to have consistency in valuation. OFBV reflects the value of enterprise recorded in the book of Direct Investment Enterprise, which is the sum of (i) paid-up capital (excluding any shares on issue that the enterprise holds in itself and including share premium accounts); (ii) all types of reserves identified as equity in the enterprise's balance sheet (including investment grants when accounting guidelines considered them company reserves); and (iii) cumulated reinvested earnings (which may be negative), which would take into account charges for consumption of fixed capital. • Details of Foreign Liabilities and Foreign Assets shall be provided separately under separate sections and blocks mentioned therein. The form is broadly divided into three sections viz. Section I: "Identification Particulars", Section II: "Foreign Liabilities" and Section III: "Foreign Asset". – U n d e r S e c t i o n I : " I d e n t i f i c a t i o n P a r t i c u l a r s " g e n e r a l identification details of the Company shall be provided. o Nature of business giving appropriate group of activity to which principal line of business pertains and applicable NIC code shall also be provided. o Henceforth position of Free Reserves & Surplus and Retained Profit shall be provided for the current year and previous year in Block 1B. – Under Section II: "Foreign Liabilities" details of foreign liabilities of the Indian Company shall be provided in the following manner: o Block 2A & 2B: Foreign Direct Investment in India by Nonresident Direct Investor shall be provided in two blocks viz. Block 2A for Non-resident Direct Investor holding 10% or more in the Indian Company and Block 2B for Non-resident Direct Investor holding less than 10%. o Block 3A: Details of outstanding investments by nonresident investors (unrelated parties) under the Portfolio Investment scheme in India shall be provided under this section. o Block 3B: Notional value and Mark to market value of outstanding foreign liabilities on account of Financial Derivatives contracts (with non-resident entities only) shall be provided under this section. o Block 3C: This is a residual category that includes all financial outstanding not considered as direct investment or p o r t f o l i o i n v e s tme n t ( o u t s t a n d i n g l i a b i l i t i e s wi t h Unrelated Parties) viz. Trade Credit, Loans and Other Liabilities. – Under Section III: "Foreign Asset" details of foreign assets of the Indian Company shall be provided in the following manner: o Block 4A & 42B: Direct Investment Abroad in non-resident enterprises (Direct Investment Enterprises [DIE]) under the Overseas Direct Investment Scheme (ODI) by Indian Company shall be provided in two blocks viz. Block 4A for investment in each company for 10% or more and Block 4B for investment in each company for less than 10%. o Block 5A: Details of outstanding investments in nonresident enterprises other than those made under ODI (unrelated parties) under the Portfolio Investment shall be provided under this section. o Block 5B: Notional value and Mark to market value of outstanding foreign claims on non-resident on account of Financial Derivatives contracts (with non-resident entities only) shall be provided under this section. o Block 5C: This is a residual category that includes all financial outstanding not considered as direct investment or portfolio investment (outstanding claims with Unrelated Parties) viz. Trade Credit, Loans and Other Liabilities. o Block 6: Position of equity capital, free reserves and surplus of each DIE in which Indian Company is holding more than 10%. – Block 7: Details of contingent foreign liabilities of Indian Company shall be provided under this section. – Block 8: Information of employee of the reporting Indian Company shall be provided under this section. – Block 9: Details of subsidiary in India of the Indian Company (downstreaminvestment) shall be provided under this section. In case the reporting company is a Group company, a consolidated return covering all the Branches/Offices in India is required to be furnished. RBI has also explained the concepts and definitions useful in filing the Annual Return on Foreign Liabilities and Assets. Notifications amending the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 will be issued separately. The above circular is available on RBIwebsite.