Master Direction explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
These paragraphs of the Reserve Bank's Master Direction on overseas investment are the operating manual for banks. Paragraph 15 allows an Indian entity a foreign currency account abroad. Paragraph 26 requires one designated bank and maps UIN prefixes to Reserve Bank Regional Offices. Paragraph 27 says what the bank must obtain before remitting, and paragraph 28 sets out the online reporting system.
As per the Master Direction, updated as on April 01, 2026, an eligible person making ODI or financial commitment must route all transactions through one designated AD bank, a switch needs an NOC from the existing bank, and the bank allows remittance on Form FC together with Form A2. A bank that facilitates remittance for financial commitment without a duly completed Form FC is liable for penal action under sections 11 and 13. Pre-incorporation expenses are allowed up to USD 100,000 per foreign entity.
The text and its footing
The Master Direction - Overseas Investment is FED Master Direction No.15/2024-25, July 24, 2024, "Updated as on April 01, 2026", issued to Authorised Dealer Category - I banks under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999; see our articles on section 10 and sections 11 and 12. It is a direction to banks. The forms (Form FC, Form A2) are named only; Form FC is in the Master Direction on Reporting, which is not in the sources consulted, and Appendix A (the request form for a user id) is not on the page consulted. Later amendments and circulars should be checked on the Reserve Bank site. If you need an overseas filing made through a bank, our APR filing for ODI team can coordinate it.
Paragraph 15: foreign currency account abroad
An Indian entity may open, hold and maintain a Foreign Currency Account abroad for the purpose of making ODI, in accordance with regulation 5(D) of Notification No. FEMA.10(R)/2015-RB, the Foreign Exchange Management (Foreign Currency Accounts by a resident in India) Regulations, 2015.
Paragraph 26: the designated bank
26(1). An eligible person resident in India making ODI (or financial commitment) in a foreign entity must route all transactions relating to that investment through the AD bank designated by it. Where a foreign entity is set up by two or more persons resident in India, all of them route all transactions for that foreign entity through one designated AD bank. Different AD banks may be designated for different foreign entities.
26(2). To switch to another AD bank, the person approaches the new bank after obtaining an NOC from the existing AD bank.
26(3). All communication from the person to the Regional Office of the Reserve Bank is routed through the nodal branch of the designated AD bank, by the bank through the relevant form on the PRAVAAH portal, according to the UIN mapping:
| UIN prefix | Regional Office of the Reserve Bank |
|---|---|
| AH | Ahmedabad |
| BG | Bengaluru |
| BL, BY or PJ | Mumbai |
| BN, CA, GA or GH | Kolkata |
| CG, JM, JR, KA, ND, PT or WR | New Delhi |
| HY | Hyderabad |
| KO or MA | Chennai |
For proper follow-up the bank maintains person-wise records for each foreign entity. The UIN itself is explained in the article on regulation 9; the same mapping is used for the Late Submission Fee in the article on regulations 11 and 12.
Paragraph 27: what the bank obtains and checks
- 27(1). AD banks may allow remittance towards overseas investment up to the permissible limits on receipt of an application in Form FC together with Form A2, duly filled in, subject to compliance with the OI Rules, Regulations and Directions. Banks render themselves liable to penal action under sections 11 and 13 of FEMA, 1999 if they facilitate remittances towards financial commitment without obtaining the requisite duly completed Form FC. The Explanation says banks have an additional timeline of 15 days to report investments and financial commitment by their constituents to the Reserve Bank in the OID application (other than the first remittance, which must be reported in the OID system before executing the transaction, to generate the UIN); it is not to be used by Indian entities or resident individuals for submitting forms and documents to the bank.
- 27(2). A bank should allow remittance towards a loan to the foreign entity and/or issue a bank guarantee to or on behalf of the foreign entity only after ensuring that the Indian entity has made ODI and has control in the foreign entity.
- 27(3). The Reserve Bank will not, generally, specify the documents to be verified for bona fides. Banks rely on section 10(5) of the Act (declaration and information that reasonably satisfy the bank that the transaction will not involve contravention or evasion), and put in place a standard policy on requirements and documents for their branches.
- 27(4). Banks ensure bona fides, compliance with FEMA, KYC guidelines and anti-money laundering guidelines or laws. Doubtful or suspicious cases are referred to the Directorate of Enforcement.
- 27(5). For ODI by capitalisation of export proceeds or other entitlements, the Indian entity or resident individual applies in Form FC to the designated bank; the bank ensures reporting in Form FC, compliance with the Rules and Regulations and necessary reporting in EDPMS, wherever applicable. Where proceeds are overdue beyond the period for realisation or repatriation, the bank may grant necessary extension after due diligence before permitting capitalisation.
- 27(6). Pre-incorporation expenses: the bank may allow remittance after satisfying itself of the reasonableness, up to a maximum of USD 100,000 per foreign entity. Remittances by a resident individual are reckoned towards the LRS limit. The person may capitalise such expenses (ODI), recognise them as receivables (debt), or account them as expenses in the books. Unless recognised as financial commitment, the expenses do not attract the OI Rules or Regulations. (The Current Account Transactions Rules print a different pre-incorporation threshold for reimbursement by an entity in India; see our article on remittances by companies and firms. The two texts deal with different remittances.)
Paragraph 28: online reporting
- 28(1). The online application has Maker, Checker and Authoriser. The AD Maker initiates and submits to the Checker for verification before submission to the Reserve Bank. In a case of delay in reporting, the transaction is reported only after a middle management level officer designated as authoriser ratifies it by recording reasons.
- 28(2). The three officers identified by the bank obtain a user-id for the online OID application by submitting a request in the format of Appendix A.
- 28(3). Online reporting is by the Centralised Unit or Nodal Office of AD banks. The application is hosted on the Reserve Bank's website. Banks are responsible for the validity of the information reported.
- 28(4). The Reserve Bank reserves the right to place information received through the forms in the public domain.
- 28(5). Banks put in place proper processes and systems and issue instructions to dealing officials to ensure compliance.
Example
Chambal Agro Ltd and Betwa Foods Ltd jointly set up a foreign entity. Under paragraph 26(1) both route all transactions for that foreign entity through one designated AD bank; they could designate a different bank for another foreign entity. Later Chambal wants to move to a different bank. It must first obtain an NOC from the existing bank (26(2)). Before the first remittance, the bank reports to the OID application so that a UIN is generated. For pre-incorporation costs of USD 80,000 Chambal pays before the foreign entity is formed, the bank can allow remittance after satisfying itself of reasonableness (27(6)), and Chambal decides whether to capitalise, record as receivable or expense the amount. If Chambal's bank released money without a duly completed Form FC, the bank would be liable to penal action under sections 11 and 13.
Common mistakes
- Using two banks for the same foreign entity.
- Changing banks without the NOC from the existing bank.
- Treating the 15 days in paragraph 27(1) as extra time for the customer.
- Expecting Form FC to be optional with Form A2.
- Assuming pre-incorporation expenses are outside FEMA in every case; unless recognised as financial commitment, they do not attract the Rules, but the limit and reasonableness test apply to the remittance.
Need help with the bank-side process?
Bank-side friction, such as UIN generation, Form FC, document policy and reporting delays, is where overseas filings stall. Our APR filing for ODI team can prepare the application set and coordinate with your designated bank.
Key takeaways
- One designated AD bank per foreign entity; switching needs an NOC from the existing bank.
- UIN prefixes map to Regional Offices of the Reserve Bank.
- Form FC with Form A2 is required for remittance; the bank is liable if it facilitates without Form FC.
- Pre-incorporation expenses are allowed up to USD 100,000 per foreign entity, subject to reasonableness.
- Online reporting runs through Maker, Checker and Authoriser, with a ratification for delayed entries.
Read next
- Share certificate, UIN and repatriation duties: regulation 9
- Late submission fee and bar on further commitment: regulations 11 and 12
- How to file Form ODI
- Funds, IFSC and immovable property abroad: paragraphs 20 and 23 to 25
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.