The Reserve Bank of India (RBI) has introduced the PRAVAAH portal, a groundbreaking digital interface designed to streamline the process of obtaining approvals under the Foreign Exchange Management Act (FEMA). This initiative marks a significant shift from the traditional, often cumbersome, method of routing applications through authorised dealer (AD) banks, which could involve lengthy due diligence procedures and potential biases. This explainer delves into how the PRAVAAH portal is set to revolutionize the approval process, offering a faster, more straightforward solution for managing FEMA-related matters.
What is the PRAVAAH portal?
The PRAVAAH portal is a digital interface launched by the Reserve Bank of India (RBI) to streamline the process of seeking various approvals under the Foreign Exchange Management Act (FEMA).
How will PRAVAAH improve the process for FEMA approvals for corporates and NRIs?
PRAVAAH allows direct digital communication with the RBI, bypassing the need for intermediaries like authorised dealer (AD) banks. This direct approach is expected to reduce the overall processing time for applications and minimize complexities.
How did the process for FEMA approvals work before the new portal?
Previously, all communications for FEMA approvals had to be routed through authorised dealer (AD) banks. These banks followed their own internal due diligence measures, which often made the process complex and time-consuming. This method also had potential for favouritism towards bigger clients.
How will the portal assist Indian corporates?
Indian corporates will benefit from the PRAVAAH portal in several ways:
Opening multiple bank accounts: Corporates can seek RBI approval for opening more than one bank account for their branch offices in India.
Prepayment of External Commercial Borrowings: The portal allows Indian companies to get approvals for prepaying loans to foreign lenders more efficiently.
Foreign branch maintenance: Companies can apply for remittance approvals beyond stipulated limits to maintain their foreign branches.
Expansion and fund diversion: Foreign companies operating in India can directly apply for approvals to expand branch activities or divert funds between project offices during intermittent stoppages.
How will NRIs benefit from the PRAVAAH portal?
NRIs will find the PRAVAAH portal useful for various financial transactions and property matters.
Sale of agricultural land: NRIs can apply for approvals related to the sale of inadvertently acquired agricultural land in India.
Inheritance Remittance: The portal facilitates applications for remitting inheritance amounts exceeding $1 million in a financial year outside India.
Receiving gifts of property: NRIs can apply for approvals to receive gifts of immovable property from relatives, such as ageing grandparents in India.
Sale proceeds credit: NRIs can use the portal to get approval for crediting sale proceeds from more than two house properties into their non-resident (external) bank accounts to meet liquidity needs outside India.
What other features does the PRAVAAH portal offer?
The PRAVAAH portal currently supports 60 application forms for various RBI approvals or licenses. It also includes a feature for general-purpose applications that do not fit any specific application format provided on the portal.
What broader impacts are expected from the launch of the PRAVAAH portal?
The digitisation of the approval process is part of the Finance Minister’s initiative to enhance regulatory efficiency. This includes faster processing times, reduced bureaucracy, and improved transparency in handling FEMA-related matters.
