RBI issues Foreign Exchange Management (Permissible Capital Account Transaction) (First Amendment) Regulations, 2019; prohibits capital account transactions with the Democratic People’s Republic of Korea

RBI issues Foreign Exchange Management (Permissible Capital Account Transaction) (First Amendment) Regulations, 2019; prohibits capital account transactions with the Democratic People’s Republic of Korea

March 13, 2019 FOREX, Industries, states 0

The Reserve Bank of India (“RBI”) has, in a Notification dated 7th March, 2019, issued the Foreign Exchange Management (Permissible Capital Account Transaction) (First Amendment) Regulations, 2019 (“Amendment Regulations”) amending the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 (“Principal Regulation”).

The Amendment Regulations have come into force effective 7th March, 2019 i.e. the date of their publication in the Official Gazette.

Amendments Regulations amend the Principal Regulations as follows:

The Amendment Regulations amend the Regulation 4 under the Principal Regulations by inserting two new sub-regulations (c) and (d). The Amendment Regulations restrict the transactions with the Democratic People’s Republic of Korea as follows:

  • The new sub-regulation (c) prohibits the residents of India from undertaking any capital account transaction, which is not permissible under theImplementation of Security Council Resolution on Democratic People’s Republic of Korea Order, 2017 (Order S.O. 1549(E) dated 21st April, 2017)(“Order”), as amended from time to time, with any person who is, a citizen of or a resident of the Democratic People’s Republic of Korea, or an entity incorporated or otherwise, in Democratic People’s Republic of Korea, unless there is specific approval from the Central Government to carry on such transaction; and
  • The new sub-regulation (d) instructs that any such existing investment transactions, not permitted under the  Order, with any person who is, a citizen of or resident of Democratic People’s Republic of Korea, or an entity incorporated or otherwise in Democratic People’s Republic of Korea, or any existing representative office or other assets possessed in Democratic People’s Republic of Korea, by any Indian resident, has to be closed/liquidated/disposed/settled within a period of 180 days from the date of issue of this Notification i.e. by 7th September, 2019, unless there is specific approval from the Central Government to continue beyond such period.

Source: Reserve Bank of India

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