May 16, 2024

Foreign Direct Investment (FDI) in India is regulated and governed by the Reserve Bank of India (RBI) – Foreign Exchange Management Act (FEMA), 1999. The FDI policy was announced by the Government of India and RBI issued vide notification FEMA 20/2000-RB dated May 3, 2000 which contains the Regulations in this regard. FDI is a source of funding by the foreign companies or individuals to boost and establish start-up business in India. FDI is any overseas investment more than 10% by a foreigner or foreign company in an Indian start-up or venture. The main objective of FEMA was to help facilitate external trade and payments in India. It aims to provide support and help towards foreign exchange market development and maintenance in India. FEMA sets forth the procedures, rules, regulations, compliances with respect to all foreign exchange transactions in India. The Indian government has set up a Foreign Investment Facilitation Portal (FIFP) which replaced Foreign Investment Promotion Board (FIPB) in 2017 to review and approve foreign investment proposals in India. The FIFP is regulated by the Department of Industry and Internal Trade (DPIIT). Why was FEMA introduced? FEMA was founded in India with the main objective of enabling global payments and trade. FEMA was established to support the orderly growth and upkeep of the Indian currency market. All foreign exchange transactions in India must follow the guidelines established by the Foreign Exchange Management Act (FEMA). Foreign exchange transactions have been divided into two categories: capital account transactions and current account transactions. The FEMA Act defines the balance of payment as a record of exchanges of goods, services, and assets between nationals of various nations. The two most common forms of accounts are capital accounts and current accounts. All capital transactions are included in the capital account, whereas goods commerce is included in the current account. The entrance and outflow of funds to and from a nation or country during a year as a consequence of dealing in goods, providing services, and earning income are referred to as current account transactions. A country’s economic health can be assessed by looking at its current account. The capital account accounts for the movement of capital in the economy as a result of capital revenues and expenditures, as was previously said. The balance of payments is composed of both current and capital accounts. The capital account records both domestic investment in overseas assets and foreign investment in domestic assets. Reserve Bank of India (RBI) A country’s payment and settlement system have an impact on both its overall economic performance and its stability. To secure and continue the growth of payment systems at the national level, the different authorities in India, including the central bank, have been constantly and persistently modifying their operational models and rules. These regulators are obligated to take great care to protect the integrity of payment systems from systemic hazards, fraud risk, etc. The maintenance and advancement of national payment system development is the duty of each nation’s central bank. This duty is under the purview of the Reserve Bank of India in India (RBI). The Reserve Bank of India (RBI) was founded in 1935 by the Reserve Bank of India Act, 1934. The RBI, which is headquartered in Mumbai, is completely owned and run by the Indian government. The RBI’s activities are regulated by the Central Board of Directors, which is made up of 21 members selected by the Government of India under the Act. The Central Board of Directors is made up of both Official and Non-Official Directors. The Governors would be selected for a four-year term, with the addition of four Deputy Governors. The Non-Official Directors are made up of ten directors elected from various areas, as well as two government officials. The RBI’s Objectives According to the Preamble, the RBI’s principal purposes are as follows. To control the issuance of banknotes. To ensure the country’s monetary stability. To handle economic problems, the monetary policy framework must be modernized. The RBI’s major mission is to monitor and carry out activities on behalf of the financial sector, which includes financial institutions, commercial banks, and non-banking financial companies. The RBI is making important efforts to reorganize bank inspections and strengthen the role of statutory auditors in the banking sector. FEMA and RBI Compliance Annual Return on Foreign Liabilities and Assets- Every Indian Resident company that has made a Foreign Direct Investment (FDI) in the preceding year, including the current year, must submit the Foreign Liabilities and Assets (FLA) Return. If no such investment is made, then the company is not under any obligation to submit the FLA. Such a return must be submitted every year. Annual Performance Report- This report is to be submitted by a Resident individual who has made an Overseas Direct Investment (ODI). It is to be provided in Form ODI Part II to the AD (Authorised Dealer)  bank regarding Joint Venture or Wholly Owned Subsidiaries outside India on or before 31st December every year. External Commercial Borrowings (ECB)- All borrowers must report all ECB transactions to the RBI through an AD Category – I Bank every month in the Form ‘ECB 2 Return’. Single Master Form -Under the Single Master Form, the following forms are to be filled and submitted. FC- GPR (Foreign Currency-Gross Provisional Return) FC-TRS (Foreign Currency Transfer of Shares) LLP-I (Limited Liability Partnership) CN (Convertible Notes) ESOP (Employee Stock Options Plan) DI (Downstream Investment) DRR (Depository Receipts) InVi (Investment Vehicle that has issued its units to a person resident outside India) The RBI has made efforts to integrate the existing reporting norms and set out a procedure for filing a single master form. Advance Remittance Form- An Indian company that receives investment outside India for the issue of shares or other eligible securities under the FDI scheme must report all the details of the amount of consideration to the concerned Regional Office of the Reserve Bank of India through its AD category I bank within 30 days from the date of issue of shares. Form FC-

A Non–Banking Financial Corporation is a company incorporated under the Companies Act 2013 or 1956. According to section 45-I (c) of the RBI Act, a Non–Banking Company carrying on the business of a financial institution will be an NBFC. It further states that the NBFC must be engaged in the business of Loans and Advances, Acquisition of stocks, equities, debt etc issued by the government or any local authority or other marketable securities. Nonbank financial companies (NBFCs), also known as nonbank financial institutions (NBFIs), are financial institutions that offer various banking services but do not have a banking license. Generally, these institutions are not allowed to take traditional demand deposits—readily available funds, such as those in checking or savings accounts—from the public. This limitation keeps them outside the scope of conventional oversight from federal and state financial regulators. Non-Banking Financial Corporation (NBFC) A non-banking institution that is a company and has principal business of receiving deposits under any scheme or arrangement by any mode is also a non-banking financial company (Residuary non-banking company). Exclusions from the definition: The NBFC business does not include business whose principal business is the following: Agricultural Activity Industrial Activity Purchase or sale of any goods excluding securities Sale/purchase/construction of any immovable property – Providing of any services Meaning of Principal Business: The Reserve Bank of India has defined financial activity as principal business to bring clarity to the entities that will be monitored and regulated as NBFC under the RBI Act. The criteria s is called the 50-50 test and its as follows: The company’s financial assets must constitute 50% of the total assets. The income from financial assets must constitute 50% of the total income. It is governed by the Ministry of Corporate Affairs as well as the Reserve Bank of India. The License for operation is obtained from the RBI and it is incorporated as a company under applicable laws of the land. Banks vs. NBFCs NBFCs are not permitted to accept demand deposits. These entities do not form a part of the payment and settlement system in India. Therefore, they would not be able to issue cheques drawn on itself. Unlike banks, the facility of deposit insurance from the Deposit Insurance and Credit Guarantee Corporation is not accessible to the depositors of NBFCs. 100% FDI is permitted in NBFCs under the automatic route in particularly 18 activities, under minimum capitalisation norms. Different types of NBFCs Asset Finance Company (AFC): Financing of physical assets supporting productive or economic activity that includes automobiles, tractors and generators. Investment Company (IC): Acquiring securities with the purpose of re-selling. Loan Company (LC): Provides finance by extending loans or for any activity than its own. However, this does not include an Asset Finance Company. Infrastructure Finance Company (NBFC-IFC): Provides loans for projects linked to infrastructure. Infrastructure Debt Fund (NBFC-IDF): Facilitates the flow of long-term debt into projects that deal with infrastructure. Systemically Important Core Investment Company (CIC-ND-SI): Acquires shares and securities for the investment in equity shares primarily. Micro Finance Institution (NBFC-MFI): Extends credit to the economically disadvantaged groups. Additionally, they extend their support to Micro, Small and Medium Enterprises (MSMEs). NBFC Non-Operative Financial Holding Company (NOFHC): Permits promoters or promoter groups to set up a new bank. Factor (NBFC-Factor): Engages in the business of acquiring receivable of an assignor or extending loans against the security interest of the receivables at a reduction. Mortgage Guarantee Company (MGC): Undertakes mortgage activities. Account Aggregator (NBFC-AA): Collects and offers information on a customer’s financial assets in a consolidated, organised and retrievable method to the customer or others as required by the customer. NBFC Peer to Peer Lending Platform (NBFC-P2P): Provides an online platform in order to bring lenders and borrowers together onto a single space to help mobilise unsecured finance. Guidelines for NBFC Functioning NBFCs are not permitted to receive deposits that are payable on demand. The interests charged by an NBFC cannot exceed the threshold prescribed by the RBI. The public deposits that they can take must be for a minimum of 12 months and a maximum of 60 months. The RBI would not guarantee the repayment of any amount so taken by the NBFC. The deposits taken by the public would be unsecured. Every information about the company and the changes in the composition of the same has to be furnished to the RBI. It is essential that the company submits its audited balance sheet annually. Quarterly return on the company’s liquid assets has to be furnished. It is necessary that a statutory return on the deposits taken by an NBFC has to be furnished through Form NBS–1 annually. The auditors have to legally state that the NBFC is capable of paying back all the deposits or funds taken from the public. A credit rating of the company has to be taken every six months and submitted to the RBI. A half-yearly Asset Liability Management (ALM) return has to be given by the company which has a Public Deposit of Rs. 20 Crore and above or has assets worth Rs. 100 Crore and above. A company which has a public deposit of INR 20 Crores and more, or has assets worth INR 100 Crores and more, has to submit a half-yearly Asset Liability Management return. An NBFC is required to maintain a minimum level of 15% of the public deposits in terms of liquid assets. NBFCs Which Need Not be Registered With RBI Core Investment Companies – (assets are less than 100 crore or public funds not taken) Merchant Banking Companies Companies that are engaged in the business of stock-broking Housing Finance Companies Companies engaged in the business of Venture Capital. Insurance companies holding a certificate of registration issued by IRDA. Chit Fund Companies as defined in the Sec 2 clause (b) of the Chit Fund Act, 1982 Nidhi Companies as notified under Section 620(A) of the Companies Act 1956 Procedure to Incorporate an NBFC A company should first be registered under the Companies Act 2013 or should already be registered under the Companies Act 1956 as either a Private Limited or a Public Limited Company.

Gujarat property registration procedure is governed by the Registration (Gujarat Amendment) Act, 1908. Any transactions that involve an immovable property should be registered to ensure clear transfer of title to the property owner. Once the property registration procedures has been completed, it becomes a permanent public record. Immovable property registration process involves the preparation of deeds, paying the applicable stamp duty and registration fees for the deed to be legally recorded. The Inspector General of Registration, Government of Gujarat, manages the registration or transfer of property in Gujarat. In this article, we look at the Gujarat Property Registration in detail.Land registration in Gujarat offers several benefits, including legal protection, proof of ownership, and access to government services such as property tax payment and property transfer.  In Gujarat, the stamp duty for land registration varies based on the location and type of land. The stamp duty is generally 5% of the property value for urban areas and 3.5% for rural areas. In addition to stamp duty, there may be other charges, such as registration fees and surcharges, that also apply. Purpose of Gujarat Property Registration According to the Gujarat transfer of property act right, title or interest can be acquired if the deed is registered. The document registration will be a permanent public record once it’s registered with the concerned office Anyone can inspect the property registration public record and get a copy of registered deed Gujarat registration of property providing the information to the general public that the ownership title has transferred to the new owner. Property registration enables any citizen to verify whether the property has been previously encumbered while purchasing the property If a person intends to buy immovable property in Gujarat, he/she can easily verify the record-index available in the concerned office. The citizen can ascertain in whose name the last transfer deed has been registered. Registration (Gujarat Amendment) Act, 2013 Registration (Gujarat Amendment) Act provides details regarding the method of registering documents (deed), information regarding the legal rights and obligation affecting the particulars of immovable property. According to this act, the immovable property includes land, buildings, lights and fisheries. Section 17 Registration (Gujarat Amendment) Act – Compulsory Registration Section 17 of Registration (Gujarat Amendment) Act governs the different categories of the deed for which registration is obligatory. The following type of deed need to be compulsorily registered: Instruments which extinguish or title to a property of a value of above one hundred rupees. Instruments of the gift of immovable property Lease of immovable property of any term exceeding one year or from year to year Section 18 of Registration (Gujarat Amendment) Act – Registration Optional Section 18 of the Registration (Gujarat Amendment) Act governs the deeds of which registration is optional, that is explained here: Instruments other than wills and gifts relating to the transfer of immovable property, the value of which should be less than Rs.100 Lease of immovable property for less than 12 months Instruments are acknowledging payment of any consideration Instruments are transferring any order or order of a court where the subject matter is immovable property, the value of which should be less than one hundred rupees. Prescribed Authority The deed needs to be presented for registration at the office of the Sub-Registrar within whose sub-district the whole portion of the land/property to which such report relates is situated. Stamp Duty for Gujarat Deed Registration S.No Stamp Duty Rate 1 The basic rate of Stamp duty     3.50 percent 2 Surcharge at the rate of forty  percent on basic rate    1.4 percent 3 Total Stamp duty 4.90 percent Rs. 4.90 for every Rs. 100 need to be paid as stamp duty for Gujarat Property Registration. User Registration Fee-For registering property online in Gujarat, the applicant needs to pay a registration fee along with stamp duty to Government. The property registration fee needs to be paid for the maintenance of ownership record. The basic rate of Registration Charge is 1.00 percent. Registration charge is not applicable if the sale is executed in favour of the female buyer For more than one buyer for a single property, all buyers should be female for availing such waiver of registration charge. Additional charges for registration are as follows Advocate fees as per rate from time to time Folio fees of Rs. 10 per page or at the rate as for May revised by the government from time to time Index fees or Rs. 50 per copy Documents Required nput Sheet – It should contain the details of the document with the signature of concerned parties (Owner & Buyer) Application form (No. 1) – If the document is covered under section 32-A of the Gujarat Stamp Act, 1958 to determine the market value of the property Proofs of the identity of executing and claiming parties and witnesses Proofs of ownership right of the property Original and true copy of the Instrument of power of attorney, if the document is signed or presented using it Prepare a Deed- Before applying for Gujarat property registration, the document deed needs to be prepared. Deed preparation for registration can be prepared personally written by the executants or through Deed writers by paying the applicable fee. Fee for deed writers will be based on the value of the property specified in the document. The language of a deed presented for registration should be in an expression commonly used in the district existing in Gujarat. Application Procedure for Gujarat Property Registration Access the GARVI Web Portal Step 1: For registering the property Online in Gujarat, you need to visit the official website of gARVI – Inspector General of Registration (IGR)-GUJARAT, Step 2: From the main page you need to click on the Public Data Entry option. The link will redirect to new page. Step 3: In the new page, after reading the instruction click on I Agree on the option and the Pre Registration of Public Data Entry button will be enabled. Click on that for processing further. Step 4: The application form for Pre Registration of the property will be displayed. You can

The Small Industries Development Bank of India/ SIDBI was formed under the Department of Financial Services in the Ministry of Commerce.SIDBI primarily focusses on the development of the MSME Sector along with the promotion of energy efficiency and cleaner production.The bank plays a vital role in helping micro, small and medium enterprises acquire necessary funds in order for them to grow, develop, market and commercialize their products and technologies. SIDBI also takes the initiative to offer various schemes and creates financial products and services that are tailor-made to meet an entrepreneur’s need for their business. SIDBI was vested with the duties of administering the Small Industries Development Fund, as well as the National Equity Fund, both of which were earlier operated by the Industrial Development Bank of India (IDBI).SIDBI also assists other financial institutions such as small finance banks, non-banking financial institutions and other banks to stretch out a helping hand to the MSME Industrial Sector. Set up on April 2, 1990 under an Act of Indian Parliament as a principal financial institution for: — Promotion — Financing and — Development of industries in the MSME sector and — Co-ordinating the functions of other institutions engaged in similar activities. Provision and Charter: SIDBI was established on April 2, 1990. The Charter establishing it, The Small Industries Development Bank of India Act, 1989 envisaged SIDBI to be “the principal financial institution for the promotion, financing and development of industry in the small-scale sector and to co-ordinate the functions of the institutions engaged in the promotion, financing or developing industry in the small-scale sector and for matters connected therewith or incidental thereto”. Business Domain of SIDBI: The business domain of SIDBI consists of small-scale industrial units, which contributes significantly to the national economy in terms of production, employment and exports. Business Strategy of SIDBI: The business strategy of SIDBI is to address the financial and non-financial gaps in the MSME ecosystem. Financial support to MSMEs is provided by way of (a) indirect finance / refinance to banks / financial institutions for onward lending to MSMEs and (b) direct finance in the niche areas like risk capital, sustainable finance, receivable financing, service sector financing, etc. What is Small Industries Development Bank of India (SIDBI)? Small Industries Development Bank of India (SIDBI) is an independent financial institution aimed at aiding the growth and development of Micro, Small and Medium Enterprises (MSMEs) which contribute significantly to the national economy in terms of production, employment and exports. SIDBI was established with the mission of facilitating and strengthening the flow of credit to Micro, Small and Medium Enterprises and for addressing the developmental and financial gaps in the ecosystem of MSMEs. It is a statutory body set up under an act of the Indian Parliament in 1990. Mission The following is the mission of SIDBI.- To facilitate and strengthen the flow of credit to MSMEs and to address financial, as well as developmental gaps, in the MSME eco-system. Vision The following is the vision of SIDBI.-To emerge as a single window that meets the financial and developmental needs of the MSME sector. To make the Sector robust, vibrant and globally competitive. To position SIDBI as a most-preferred brand and a customer-friendly institution. To enhance shareholder wealth and to uphold the highest corporate values through the latest technology. Functions The following are the functions of the SIDBI. Provides financial assistance to institutions and banks that have financed the MSME Industries. Discounts and Re-discounts bills. Offers monetary assistance to micro and small industries in order to market their products in the international market. Offers provisions for initial capital to entrepreneurs and provides loan assistance at a concessional rate of interest for a long duration. Offers assistance in setting up of non-core services such as plants and marketing of the same for the small scale industries. Factors and leases assistance to set up technologically-sound machinery for MSME Industries. Offers provisions for venture capital to upcoming ventures with the aim to promote self-employment. Offers improvisation for departments where an MSME may lack functioning. Functions of SIDBI It aims at emerging as a single-window to meet the developmental and financial needs of MSMEs in order to make them globally competitive, strong, vibrant and to protect the institution as a customer-friendly financial body.  It also aims at enhancing the wealth of shareholders through the modern technology platform. It is involved in the promotion and development of the MSME sector. It is the principal institution for the development, promotion and financing of the MSME sector and for coordination of functions of the institutions engaged in similar activities. SIDBI retained its position in the top 30 Development Banks of the World in the ranking of The Banker, London. SIDBI also functions as a Nodal/Implementing Agency to various ministries of the Government of India viz., Ministry of MSME, Ministry of Textiles, Ministry of Commerce and Industry, Ministry of Food Processing and Industry, etc. Benefits Custom-Made: The loans designed by SIDBI are as per the needs of its customers. SIDBI helps people by funding their businesses that do not necessarily fall in the normal category. Loan Size: SIDBI alters loans as per the size of the customer’s enterprise. Therefore, Micro, Small and Medium Enterprises may receive various loans that are custom-made suit their business. Rates: SIDBI has collaboration with a variety of banks and financial institutions, even on an international level, such as KfW, World Bank and Japan International Cooperation Agency. This enables its customers to avail concessional rates of interest. Assistance: Along with loans, SIDBI also ensures to offer expert support and advice on anything their customer requires. Relationship managers go the extra mile with their customers who are entrepreneurs to make the right decisions and to provide assistance throughout the loan process. Collateral-Free: Entrepreneurs may get up to INR 100 Lakhs without even offering any collateral. This is achieved through the Fund Trust for Micro and Small Enterprises (CGTMSE). Risk and Growth Capital: Entrepreneurs may acquire sufficient capital that is required to grow without diluting the ownership of the company. Venture and Equity Funding: SIDBI