Understanding Key Amendments (January - February 2025)

FOREIGN EXCHANGE MANAGEMENT ACT

FOREIGN EXCHANGE MANAGEMENT (MODE OF PAYMENT AND REPORTING OF NON- DEBT INSTRUMENTS) (THIRD AMENDMENT) REGULATIONS, 2025

 The amendment was officially notified on 14th of January 2025, via notification number: FEMA 395 (3)/ 2025 - RBand came into effect immediately upon publication. Amendments are in relation to investment mechanisms for persons resident outside India.

Key Amendments:

Schedule I (Purchase or sale of equity instruments of an Indian company by a person resident outside India):

 Mode of Payment:

• ·       Consideration (issue of equity shares or swap of equity instruments) must be paid through inward remittance via banking channels or from funds in repatriable foreign currency or Rupee accounts as per the Foreign Exchange Management (Deposit) Regulations, 2016. 

• ·       Equity instruments should be issued within 60 days from the receipt of consideration. 

• ·       If not issued within this period, the consideration must be refunded within 15 days after the 60 - day period. 

• ·       Indian companies issuing equity instruments can open foreign currency accounts with Authorized Dealers in India for these transactions. 

Remittance of Sale Proceeds:

•          Sale proceeds (net of taxes) can be remitted outside India or credited to repatriable accounts in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

Schedule I I (Investments by Foreign Portfolio Investors):

• Mode of Payment:

  • Investments can be made by remittance from abroad or from a Special Non- Resident Rupee (SNRR) account.

  • The SNRR account should be designated for the purpose of investment and maintained as per the Foreign Exchange Management (Deposit) Regulations, 2016. 

• Remittance of Sale Proceeds:

  • Sale proceeds (net of taxes) can be remitted outside India or credited to the SNRR account. 

Schedule VI (Investment in a Limited Liability Partnership): 

• Payment Procedure:

  • For capital contributions in an LLP, investors are required to transfer funds via inward remittance through banking channels or from any repatriable account (foreign currency or rupee) as outlined in the Deposit Regulations, 2016.

• Disinvestment Proceeds:

  • The funds received from exiting the investment can be sent abroad or credited into a repatriable account following the same guidelines

Schedule VII (Investment by a Foreign Venture Capital Investor):

• Payment Procedure:

  • Venture capital investors should remit funds through banking channels, either from a foreign currency account or a Special Non- Resident Rupee (SNRR) account maintained in accordance with the deposit regulations. 

  • Unless specified otherwise, the foreign currency account should be used exclusively for transactions under this schedule.

• Proceeds Remittance:

  • Sale or maturity proceeds (net of taxes) may be repatriated or credited to the appropriate account (either foreign currency or SNRR).

Schedule VIII (Investment by Non- Resident in an Investment Vehicle):

• Payment Procedure:

  • Payments are to be made by transferring funds via banking channels, through the swap of shares of a Special Purpose Vehicle, or using funds from any repatriable foreign currency or rupee account as specified by the Deposit Regulations, 2016.

• Proceeds Remittance:

  • Proceeds (after applicable taxes) can be remitted abroad or credited into the same type of repatriable account.

Schedule X (Issuance of Indian Depository Receipts):

• Payment Procedure: 

  • NRIs and OCIs may invest using funds available in their NRE/ FCNR(B) accounts maintained under the Deposit Regulations 2016

  • Foreign Portfolio Investors may utilize either a foreign currency account or a Special Non- Resident Rupee (SNRR) account, as periodically updated.

• Proceeds Remittance:

  • The conversion or redemption of depository receipts into the underlying shares must comply with the Foreign Exchange Management (Overseas Investment) Rules, 2022.

Regulation 3 Revisions:

• Convertible Notes by Start- ups:

  • For Indian start- ups issuing convertible notes to non- residents, the payment should be received via inward remittance or by debiting any repatriable foreign currency or rupee account, as per the Deposit Regulations, 2016. The process for remitting repayment or sale proceeds follows a similar channel.

• Clarification on “Banking Channels”:

  • The term “banking channels” now explicitly includes rupee vostro accounts (including Special Rupee Vostro Accounts) held by non- residents, as detailed in Regulation 7 (1) of the Deposit Regulations, 2016.

2. FOREIGN EXCHANGE MANAGEMENT (FOREIGN CURRENCY ACCOUNTS BY A PERSON RESIDENT IN INDIA) (FIFTH AMENDMENT) REGULATIONS, 2025

The amendment was officially notified on 14th of January 2025, Via notification number: FEMA 10 (R)(5)/ 2025 - RB [2].

Key Amendment:

 Regulation 5

• Introduced sub- regulation (CA), allowing Indian exporters to open, hold, and maintain Foreign Currency Accounts with banks outside India for:

  • Realization of full export value.

  • Advance remittances received for export of goods or services.

• Funds in these accounts can be used for: 

  • Paying for imports into India.

  • Repatriation into India within a period not exceeding the end of the next month from the date of receipt, after adjusting for forward commitments.

• Exporters must adhere to the realization and repatriation requirements specified in Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.

FOREIGN EXCHANGE MANAGEMENT (DEPOSIT)  (FIFTH  AMENDMENT) REGULATIONS, 2025

The amendment was officially notified on 14th of January 2025, Via notification number: FEMA 5 (R)(5)/ 2025 – RB

 Key Amendments:

• Regulation 5, Sub- Regulation (4):

  • Expanded to include " authorized dealer in India or its branch outside India," providing flexibility in deposit operations.

• Insertion of Regulation 9:

  • Transfer of Funds Between Repatriable Rupee Accounts:

  • Permits the transfer of funds for all bona fide transactions between repatriable Rupee accounts maintained as per the regulations.

 Schedule 4 Revisions: 

• Paragraph 1:

  • Non- residents with business interests in India can open a Special Non- Resident Rupee (SNRR) Account with an authorized dealer in India or its branch outside India for permissible current and capital account transactions with residents and non- residents.

• Explanation: Units in an International Financial Services Centre (IFSC) under Section 18 of the Special Economic Zones Act, 2005, may open an SNRR account with an authorized dealer in India (outside IFSC) for business- related transactions outside IFSC.

 Paragraph 2: Replaced " Indian bank" with " A bank."

 Paragraph 8: Aligned the tenure of the SNRR account with the duration of the contract, period of operation, or the business of the account holder.

 Paragraphs 9, 11, 12, and 13: Clarified that references pertain to SNRR accounts in India.

 KARNATAKA LABOUR WELFARE FUND

 KARNATAKA LABOUR WELFARE FUND (AMENDMENT) ACT, 2024

The amendment was officially notified on December 12, 2024, and came into effect immediately upon publication.

The Karnataka Labour Welfare Fund (Amendment) Act, 2024, introduces significant changes to the contribution structure of the Karnataka Labour Welfare Fund, aiming to enhance the welfare of workers in the state.

Key Amendments:

• Increased Contributions:

  • Employee Contribution: Raised from ₹ 20 to ₹ 50.

  • Employer Contribution: Increased from ₹ 40 to ₹ 100.

  •  State Government Contribution: Enhanced from ₹ 20 to ₹ 50.

 These revisions are stipulated in the amendment to Section 7 A (2) of the Karnataka Labour Welfare Fund Act, 1965.

 Implications:

• Enhanced Welfare Programs: The increased contributions are expected to bolster the Labour Welfare Fund, enabling the formulation of new programs for the welfare of workers and their families.

• Financial Impact: The adjustment is projected to raise the fund's corpus by approximately ₹15. 81 crores, augmenting it from the current ₹ 42 .18 crore.

 Proposed Utilization of Funds:

The enhanced fund is intended to support various welfare schemes, including:

•  Educational Assistance: Covering education fees for workers earning less than ₹ 35,000 per month, with a maximum of ₹ 20, 000 allocated for engineering students.

•  Medical Aid:  Providing medical assistance ranging from ₹ 1 ,000 to ₹25,000 to workers covered under the Employees’ State Insurance Scheme.

• Accident and Maternity Benefits: Offering accident benefits between ₹1, 000 to ₹10,000 and a maternity benefit of ₹10,000.

• Recreational Activities: Facilitating health camps and tours for workers.

 Compliance Requirements:

Employers are required to update their payroll systems to reflect the revised contribution rates and ensure timely remittance to the Karnataka Labour Welfare Board.

DIGITAL DATA PROTECTION RULES

DRAFT DIGITAL PERSONAL DATA PROTECTION RULES, 2025

Vide Notification No. G. S. R. 02 (E), dated January 3, 2025, under Section 40 (1) and (2) of the Digital Personal Data Protection Act, 2023 (DPDP Act), the Draft Rules had been released for public objections and suggestions on https://MyGov. in until February 18, 2025.

These Rules outline the implementation framework for the DPDP Act and are set to take effect upon publication in the official gazette, except for Rules 3 to 15, 21, and 22, which will be notified later.

Key Highlights:

1.     Obligations of Data Fiduciaries:

• Clear Notices: Data Fiduciaries must issue concise and standalone notices explaining what data is collected, the purpose of its use, and the services it is associated with, ensuring transparency for users.

• Contact Information: Fiduciaries must provide easily accessible contact details, such as those of a Data Protection Officer, for users to raise concerns or seek clarifications regarding their data.

• Security Measures: Comprehensive security protocols must be implemented, such as encryption to safeguard data, access controls to prevent unauthorized access, and regular backups to minimize risks of loss.

• Data Protection Impact Assessments (DPIA): Annual DPIAs are required to evaluate risks in data processing. Results must be reported to the Data Protection Board to ensure compliance and accountability.

• Data Localization: Data categorized by the Central Government as sensitive must be processed and stored within India. Restrictions on international data transfers may apply.

• Facilitating Data Principal Rights: Fiduciaries must outline procedures enabling users to exercise their rights, like accessing or erasing their data, with defined timelines for addressing grievances.

2.  Consent Managers: 

• Registration and Compliance: Consent Managers, responsible for managing user permissions, must register with the Data Protection Board and adhere to prescribed technical and procedural standards.

• Role in Consent Handling: They act as a single interface, allowing users to give, withdraw, or manage their consent for data usage, ensuring a seamless and secure experience.

3.  Processing of Children’s and Persons wi th Disabili t ies’ Data

• Parental or Guardian Consent: Fiduciaries must obtain verifiable consent from parents or lawful guardians before collecting or processing data of children (below 18 years) or persons with disabilities. Verification methods may include government- issued tokens or identity checks

• Restrictions on Activities: Tracking, behavioral monitoring, or targeted advertising towards children is prohibited to safeguard their privacy and well- being.

• Exemptions: Certain fiduciaries, specified under the Fourth Schedule of the Draft Rules, are exempted from restrictions when processing data for specific purposes like education, healthcare, or safety, provided safeguards are in place.

4.  Data Breach Notifications:

• Notifying Data Principals: Affected users must be informed promptly about breaches, detailing the type of breach, potential risk, and measures taken to mitigate harm.

•  Reporting to Data Protection Board: Fiduciaries must report breaches within 72 hours to the Data Protection Board, providing a comprehensive incident report and actions undertaken.

5. Rights of Data Principals:

• Access and Correction of Data: Users can request access to their personal data and demand corrections or deletions if the data is inaccurate or outdated.

• Nomination Rights: Data Principals can nominate representatives to exercise their rights in cases of incapacity or death, ensuring continued protection of their data.

• Grievance Redressal: Fiduciaries must establish mechanisms to address user complaints, ensuring resolutions are provided within reasonable timeframes.

6. Data Protection Board:

• Establishment and Structure: The Board will function as an independent authority, headed by a chairperson, to oversee compliance with data protection laws.

• Functions and Powers: The Board will investigate violations, enforce penalties, and guide entities in aligning with the DPDP Act and rules.

7. Exemptions:

• Schedule II: The provisions of the DPDP Act shall not be applicable to the processing of personal data for research, archival, or statistical purposes, provided such processing adheres to the standards prescribed under Schedule I I of the Draft Rules.

MINISTRY OF ENVIRONMENT, FOREST AND CLIMATE CHANGE

THE PLASTIC WASTE MANAGEMENT (AMENDMENT) RULES, 2025

Notified on January 23, 2025, via G. S. R. 73 (E), these amendments to the Plastic Waste Management Rules, 2016, took immediate effect upon publication in the Official Gazette. These amendments aim to enhance traceability and accountability in the plastic packaging ecosystem, thereby strengthening the overall framework for plastic waste management in India.

Key Amendments:

Rule 11 – Introduction of Sub- rule (1 A):

• Effective July 1, 2025, producers, importers, or brand owners are permitted to display the required product information on plastic packaging through:

  • A barcode or Quick Response (QR) code, 

  • A product information brochure, or

  • A unique number issued under existing law (printed on the packaging).

• Details about the chosen method— whether barcode/ QR code, brochure, or unique number— must be reported to the Central Pollution Control Board (CPCB).

• The CPCB will publish and update a quarterly l it’s of all entities (producers, importers, brand owners) that have provided the requisite details.

Insertion of Rule 19 – Action for Contravention:

• Non- compliance or violation of any provision under these rules will attract penalties as described under Section 15 of the Environment (Protection) Act, 1986.

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

IBBI INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS (AMENDMENT) REGULATIONS, 2025

The amendment was officially notified on 3rd February 2025 (F. No. IBBI/ 2024 - 25 / GN/ REG 122) and came into effect immediately upon publication. The changes are aimed at expediting the insolvency resolution process for corporate entities while improving transparency and stakeholder representation.

Key Amendments:

Accelerated Timelines & Updated Eligibility:

• Revised time- bound milestones for  filing, admission, and resolution, with clearer criteria to identify distressed corporate persons.

• Enhanced roles for insolvency professionals and better-defined responsibilities for committees.

Additional Regulatory Sub- Sections

• 4 E. Handing over the possession:

After obtaining approval from the committee with not less than 66 % of the total votes, the resolution professional shall hand over possession of the property (plot, apartment, or building) or any instruments agreed to be transferred under the real estate project, and facilitate registration when the allottee has duly performed their part.

• 16 C. Appointment of facilitators:

If the number of creditors in a class exceeds one thousand, the committee may direct the interim resolution professional or resolution professional (as the case maybe) to appoint a facilitator for a sub- class of creditors— provided that at least one hundred creditors request such an appointment. The total number of facilitators is capped at five, and each facilitator’ s fee shall be limited to 20 % of the fee prescribed for the authorised representative. The committee may replace the facilitator on the recommendation of a majority of the members of the sub- class.

• 16 D. Roles and responsibilities of the facilitator:

Facilitators are tasked with (i) facilitating communication between the authorised representative and the sub- class of creditors, (ii) attending committee meetings as observers, to facilitate communication between creditors of the respective sub- class, (iii) providing necessary clarifications regarding the insolvency resolution process and (iv) any other tasks assigned by the committee to improve representation and communication.

• Regulation 18, Sub- regulation (4):

For corporate debtors with real estate projects, the committee may instruct the resolution professional to invite the ‘competent authority’ (as defined under Section 2 (p) of the Real Estate (Regulation and Development) Act, 2016) to attend meetings (without voting rights) to offer inputs on project development.

30 C. Report on the status of development rights and permissions:

The resolution professional is required to (i) prepare a detailed report on the status of the development rights and permissions for any real estate project, (ii) submit It to the committee for comments and (iii) submit the report along with the committee’ s feedback to the Adjudicating Authority on or before the 60th day from the insolvency commencement date.

Competition Commission of India

CCI MANNER OF RECOVERY OF MONETARY PENALTY REGULATIONS, 2025

The amendment was officially notified on 25th February 2025 (F. No. CCI/ Reg.- R. R./ 2024 - 25) and became effective upon publication. The revisions aim to introduce a robust and structured framework for the recovery of monetary penalties under the Competition Act, 2002.

 Key Amendments:

Structured Recovery Process:

• Detailed procedures have been laid out for issuing demand notices and recovery certificates.

• Clear timelines are specified for the deposit of penalties, and non- compliance triggers additional recovery measures.

 Enhanced Modes of Recovery:

• In cases of default, the recovery officer is empowered to initiate recovery through multiple modes, including the attachment and sale of movable and immovable properties, and may apply to courts for the collection of dues. 

• Simple interest of 1 % on outstanding amount shall be levied, however, CCI can reduce or waive the amount of interest payable at its discretion.

 Robust Documentation & Recovery Officer Functions:

• The regulations specify the use of standard forms (such as Form I for demand notice, Form I I I for recovery certificate, and Form IV for the penalty recovery register) to ensure transparency.

• Recovery officers are tasked with serving notices, recording payments, and executing recovery certificates if penalties remain unpaid.

 Reference by the Commission to the Income- tax Authority

The regulation states that i f the CCI is of the opinion that it will be expedient to recover the penalty in accordance with the provisions of Income- tax Act, 1961, it can refer to the Income- tax authority for recovery of penalty as “tax due”.

 Refund of excess penalty

The regulation specifies the provision for refund of excess penalty. I f the NCLT/ SC/ HC decides that any enterprise/ person is not liable to pay any penalty or penalty amount is less than what was originally stated by CCI then the demand notice/ recovery certificate should be withdrawn, if no penalty is due or it will be modified it the penalty amount is reduced.

In case any excess penalty has been paid will be refunded

RESERVE BANK OF INDIA

RBI FORWARD CONTRACTS IN GOVERNMENT SECURITIES DIRECTIONS, 2025

The directions were officially notified on 21st February 2025 (Notification No. FMRD. DIRD. 17 / 14. 03. 042 / 2024 - 25) and will come into force from 2nd May 2025. These directions update the framework for executing bond forward transactions in the Over- the- Counter (OTC) market in India.

 Key Amendments:

Revised Transactional Guidelines & Definitions:

• Updated definitions for key terms such as “bond forward,” “cash settlement,” “covered short,” and “uncovered short” provide greater clarity.

• The directions delineate the scope of transactions and eligibility for both resident and non- resident market participants.

 Enhanced Settlement Procedures and Risk Management:

• Detailed procedures for both physical and cash settlement of bond forwards have been prescribed.

• Market participants are required to adhere to robust risk management protocols, including enhanced margining requirements and regular reporting to a designated Trade Repository.

• Reporting of transactions and settlements to the Trade Repository (TR) is mandatory, with additional documentation standards recommended by the Fixed Income Money Market and Derivatives Association of India (FIMMDA).

 Integration with Master Directions:

• Amendments incorporate revisions from the Master Directions on market- makers in OTC derivatives and margining for non- centrally cleared OTC derivatives, ensuring alignment across RBI regulations.
  

 SECURITIES EXCHANGE BOARD OF INDIA

NOTIFICATION UNDER CLAUSE (U) OF SUB- SECTION (1) OF SECTION 2 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002

The amendment was officially notified on 28th February 2025 via notification number F. No. SEBI/ LAD- NRO/ GN/ 2025 / 231 and came into effect immediately upon publication. This notification supersedes the earlier notification dated 31st March 2008, and designates all non ‑ banking financial companies (including housing finance companies regulated by the RBI) as qualified buyers under the Act, subject to specific conditions.

 Key Amendments:

Designation of Qualified Buyers:

• All non‑banking financial companies, including housing finance companies, are now recognized as qualified buyers for securitised assets.

Restrictions on Promoter Access:

• Defaulting promoters or their related parties are prohibited from directly or indirectly accessing secured assets via security receipts.

 Compliance with RBI Conditions:

• These companies must also adhere to additional conditions as specified periodically by the Reserve Bank of India.

NOTIFICATION UNDER SECURITIES AND EXCHANGE BOARD OF INDIA (CERTIFICATION OF ASSOCIATED PERSONS IN THE SECURITIES MARKETS) REGULATIONS, 2007

 The amendment was officially notified on 14th February 2025 via notification number SEBI/ LAD- NRO/ GN/ 2025 / 231 and will come into force from 1st March 2025. This notification mandates that individuals and entities acting as research analysts must obtain the requisite certifications from the National Institute of Securities Markets (NISM).

Key Amendments:

Mandatory Certification for Research Analysts:

• All research analysts under the RA Regulations, 2014 are required to secure certification by passing the “NISM- Series- XV: Research Analyst Certification Examination” in accordance with the established guidelines.

 Certification Renewal Requirements:

• To ensure continuous compliance, research analysts must renew their certification by passing the “NISM- Series- XV- B: Research Analyst Certification (Renewal) Examination” before the expiry of their current certification.

Supersession of Prior Notification:

• The earlier notification dated 24th March 2015 is rescinded with effect f rom 1 st March 2025.
  

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