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Circular No. A.P. (DIR Series) Circular No. 06; Dated: 23-05-2025

1. Background

Under the Foreign Exchange Management Act (FEMA) framework, Investment Vehicles (“IVs”)—including Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and Alternative Investment Funds (AIFs)—may raise funds from persons resident outside India (“PROI”). Until recently, the Reserve Bank of India (RBI) allowed these IVs to issue partly paid units but did not provide a specific one-time relaxation for delayed reporting of such issuances.

2. Earlier Permission to Issue Partly Paid Units

Initial Relaxation – The RBI had already granted IVs the flexibility to issue partly paid units to PROI, recognising the need for staggered capital calls that align with project milestones.
Routine Reporting Obligation – Even under this relaxation, every issuance had to be reported in Form InVI within 30 days of the allotment date.

3. New Circular—Key Changes

Grace Period for Past Issuances (Before 23 May 2025)

1. Who is covered – IVs that issued partly paid units on or before 22 May 2025.
2. Extended Deadline – Such IVs now have 180 days from the date of the circular to file Form InVI.
3. Fee Waiver – No Late Submission Fee (LSF) will be charged for these delayed filings.

Compliance for Future Issuances (On or After 23 May 2025)

1. The long-standing rule continues – Form InVI must be filed within 30 days of each issuance of partly paid units.
2. Any delay after this window will attract the usual Late Submission Fee under the RBI’s compounding framework.

4. Action Points for Compliance Teams

Audit Past Issuances – Compile a list of all partly paid units allotted up to 22 May 2025 and ensure Form InVI is submitted within the 180-day grace period.
Update Internal Calendars – Reinforce the 30-day reporting cycle for any new issuances.
Document Procedures – Maintain an internal checklist to track the issuance date, due date for Form InVI, and confirmation of filing.
Train Staff – Brief finance and secretarial teams on the grace period to avoid missing the special window.
Monitor RBI Notifications – Keep watch for any further clarifications, especially regarding compounding fees or digital filing processes.

5. Conclusion

The RBI’s one-time relief offers IVs a valuable opportunity to regularise past non-compliance without incurring penalties. Going forward, stringent adherence to the 30-day Form InVI deadline remains essential to avoid Late Submission Fees and regulatory scrutiny.