**Executive Summary:**
This circular from the Reserve Bank of India (RBI) introduces a web-based online reporting portal called FLAIR to replace the existing email-based system for submitting the Annual Return on Foreign Liabilities and Assets (FLA). This change aims to enhance data security and quality. The new system is effective immediately and applicable for reporting information for the year 2018-19. Non-compliance will be treated as a violation of the Foreign Exchange Management Act, 1999.
**Key Points / Main Content:**
* **Transition to Web-Based Reporting:**
* The email-based system for FLA return submission is discontinued and replaced by the web-based system (FLAIR) accessible at [https://flair.rbi.org.in](https://flair.rbi.org.in).
* The web-portal facilitates data submission by eligible entities, including Alternative Investment Funds (AIFs) registered with SEBI and reporting of foreign investment in LLPs and investment vehicles.
* **FLAIR System Features:**
* Reporting entities must submit a User Registration Form with entity identification and business user details. LLPs and AIFs no longer require dummy CIN.
* Successful registration generates an RBI-provided login name and password for the FLA submission gateway.
* The system includes validation checks on submitted data.
* The form seeks investor-wise direct investment and other financial details on a fiscal year basis.
* All reporting entities must provide information on Foreign Affiliate Trade Statistics (FATS) related variables, previously mandatory only for subsidiary companies.
* The revised form seeks information on the first year of receipt of FDI/ODI and disinvestment.
* Entities receive a system-generated acknowledgement receipt upon successful submission.
* Entities can revise data and view/download submitted information.
* Entities can submit FLA information for earlier years after receiving RBI confirmation on their request email.
* **Compliance and Enforcement:**
* Indian entities not complying with the regulations will be treated as non-compliant with the Foreign Exchange Management Act, 1999.
* These directions are effective immediately and apply to reporting information for the year 2018-19.
**Impact Analysis:**
* **Category I Authorised Dealer Banks:**
* *Impact:* Banks are required to inform their constituents and concerned customers about the new reporting system.
* *Action Required:* Notify all relevant customers and constituents about the change to the FLAIR system and its implications.
* **Indian Companies with FDI/ODI, LLPs, and AIFs:**
* *Impact:* These entities must use the new web-based FLAIR system to submit their Annual Return on Foreign Liabilities and Assets (FLA).
* *Action Required:* Register on the FLAIR portal, familiarize themselves with the new form, and submit the required information for the year 2018-19 through the online system.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the foreign exchange market and issuing circulars related to foreign investments.
Foreign Liabilities and Assets (FLA): An annual return that Indian companies with foreign direct investment (FDI) and/or overseas direct investment (ODI) are required to file.
A.P. DIR Series Circular: A series of circulars issued by the Reserve Bank of India's Foreign Exchange Department to Authorised Dealer Category I banks regarding foreign exchange regulations. Several specific circulars are referenced.
Foreign Affiliate Trade Statistics (FATS): Statistics related to inward and outward foreign affiliate trade, which are required to be reported by Indian companies.
Limited Liability Partnerships (LLPs): A type of business structure that is required to report foreign investment.
Alternative Investment Funds (AIF): Investment funds registered with the Securities and Exchange Board of India (SEBI) that are required to report through the new web-based system.
Securities and Exchange Board of India (SEBI): The regulatory body for the securities market in India; AIFs registered with SEBI are mentioned.
Foreign Exchange Management Act (FEMA), 1999: The Act of the Parliament of India enacted in 1999 to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
RESERVE BANK OF INDIA
Foreign Exchange Department
Mumbai - 400 001
RBI/2018-19/226
A.P. (DIR Series) Circular No. 37 June 28, 2019
To
All Category - I Authorised Dealer Banks
Madam/Sir,
Annual Return on Foreign Liabilities and Assets
Reporting by Indian Companies
Attention of Authorised Dealer Category – I banks is invited to A.P. (DIR Series) Circular No.133
dated June 20, 2012 which stipulated that all Indian companies which have received FDI and/or
made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year,
should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can
be duly filled-in, validated and sent by e-mail to the Reserve Bank by July 15 of every year. The
coverage was enhanced to reporting of inward and outward foreign affiliate trade statistics
(FATS) and reporting by the limited liability partnerships (LLPs) through the subsequent circulars
{A .P. (DIR Series) Circular No. 145 dated June 18, 2014, A.P. (DIR Series) Circular No.22, dated
October 21, 2015, and A.P. (DIR Series) Circular No. 29, dated February 02, 2017}.
2. With the objective to enhance the security-level in data submission and further improve
the data quality, the present email-based reporting system for submission of the FLA return will
be replaced by the web-based system online reporting portal. It would facilitate data
submission by eligible entities {including the alternative investment funds (AIF) registered with
the Securities and Exchange Board of India (SEBI) as also the reporting of foreign investment in
the form of capital/profit share contribution received/transferred in case of LLPs and
investment by persons resident outside India in an investment vehicle and as defined in Foreign
Exchange Management (Transfer or issue of security by a person resident outside India)
Regulations 2017, dated November 7, 2017}.3. Following are the main features of the revised Foreign Liabilities and Assets Information
Reporting (FLAIR) system:
a) Reserve Bank would provide a web-portal interface https://flair.rbi.org.in to the
reporting entities for submitting “User Registration Form” (containing entity
identification and business user details, where LLPs and AIFs will no longer
required to use dummy CIN). The successful registration on web-portal will
enable users to generate RBI-provided login-name and password for using FLA
submission gateway and would include system-driven validation checks on
submitted data.
b) The form will seek investor-wise direct investment and other financial details on
fiscal year basis as hitherto, where all reporting entities are required to provide
information on FATS related variables (it was mandatory only for subsidiary
companies earlier). In addition, the revised form seeks information on first year
of receipt of FDI/ODI and disinvestment.
c) Reporting entities will get system-generated acknowledgement receipt upon
successful submission of the form.
d) They can revise the data, if required, and view/download the information
submitted.
e) Entities can submit FLA information for earlier year/s after receiving RBI
confirmation on their request email.
f) The existing mechanism of email-based submission of FLA forms will be
discontinued.
5. Indian entities not complying with above, will be treated as non-compliant with Foreign
Exchange Management Act, 1999 and regulations made thereunder.
6. These directions will come into force with immediate effect and would be applicable for
reporting of information for the year 2018-19. AD Category-I banks may bring the contents of
this circular to the notice of their constituents and customers concerned.
7. The directions contained in this circular have been issued under sections 10(4) and 11(1)
of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice
to permissions / approvals, if any, required under any other law.
Yours faithfully,
(R K Moolchandani)
Chief General Manager