On June 7, 2018, the Reserve Bank of India (“RBI”) issued a Circular to announce that it will soon introduce the SMF, an online facility for reporting total foreign investment;
Prior to formal implementation of the SMF, the RBI will provide an interface to Indian entities, to input the data on total foreign investment in a specified e-format (“Entity Master”). This interface will be available on RBI’s website between June 28, 2018 and July 12, 2018. Compliance with this interface is mandatory and any non-complying Indian entity will be unable to receive foreign investment (including indirect foreign investment) and will also be deemed to be non-compliant with the provisions of Foreign Exchange Management Act, 1999 and the regulations issued under it.
The objective of the RBI to introduce SMF and Entity Master is to integrate the extant reporting structure for various types of foreign investments in India. This will also lead to consolidation of all foreign investment-related information in the records of the RBI.
All Indian entities which have any kind of foreign investment will be required to submit the necessary information in the Entity Master, as per the guidelines provided on the interface to be available on the RBI website. The Circular has not clarified, if this reporting will substitute the Annual Return on Foreign Assets and Liabilities required to be filed by all Indian companies (which have any foreign investment) on or prior to July 15 of every year. We expect RBI to issue further clarifications in this regard.
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