Key Changes In Foreign Exchange Regime Of India

INTRODUCTION

Over the years, India was facing a regulatory overlap when it came to the regulation and governance of foreign investments in India. While the Reserve Bank of India ("RBI") was the regulatory body to come up with the regulations and rules pertaining to issue or transfer of securities, the Central Government i.e., the Ministry of Finance, was still in charge of framing policies for foreign direct investment ("FDI") in India. This bifurcation of power was often muddled in instances where the FDI policy notified by the Government was incorporated by the RBI into its current foreign exchange regulations through master directions issued by it. However, there were instances of gaps and omissions in incorporating and implementing the FDI policy into the foreign exchange regulations. This regulatory overlap has been highlighted in various reports including the Report of the Committee¹ on Financial Sector Reform 'A Hundred Small Steps' issued by Government of