MANU/RPRL/0006/2016

Ministry : Reserve Bank of India

Department/Board : RBI

Press Release No. : 2015-2016/1566

Date : 04.01.2016

RBI simplifies Communication Process: Issues Comprehensive Master Directions, to begin with on Forex

The Reserve Bank of India today issued 17 Master Directions covering foreign exchange transactions. Master Directions on foreign exchange being issued today consolidate relevant A.P (DIR Series) Circulars issued so far within the ambit of the relevant regulations, amended up to date and cover different classes of transactions permitted under the rules and regulations framed under the Foreign Exchange Management Act, 1999 (FEMA).

Master Directions on foreign exchange matters deal with the manner in which an authorised person should conduct cross border/forex transactions. The Reserve Bank frames regulations in respect of capital account and trade transactions in terms of Sections 6, 7, 8, 9, 10 and 47 of FEMA whereas the Government of India frames rules in respect of current account transactions and compounding proceedings. Further, in terms of section 3 of FEMA, all cross border and/or foreign exchange transactions are to be conducted through a person authorised to do so under section 10 of FEMA. The Reserve Bank of India thus issues directions [through A.P. (DIR Series) Circulars] to the Authorised Persons under section 11 of FEMA in regard to the manner of conducting these transactions with their customers/ constituents.

It may be recalled that Governor Dr. Raghuram G. Rajan had, in the Fourth Bimonthly Monetary Policy Statement, 2015-16 announced on September 29, 2015 (Para 29) stated that "the Reserve Bank will update all its master regulations, and streamline the required procedure for compliance with the regulations by January 1, 2016. All master regulations will be fully updated and placed online. The Reserve Bank will also work to improve clarity in regulatory communications."

Accordingly, beginning January 2016, the Reserve Bank will issue Master Directions on all regulatory matters. The........