The Reserve Bank of India (RBI) vide a 2012 circular, stipulated that Indian companies which have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can be duly filled-in, validated and sent by e-mail to the Reserve Bank by July 15 of every year. The coverage was enhanced to reporting of inward and outward foreign affiliate trade statistics (FATS) and reporting by the limited liability partnerships (LLPs) through the subsequent circulars.
With the objective of enhancing the security-level in data submission and further improving the data quality, The RBI has with effect from 29th June, 2019 replaced the present email-based reporting system for submission of the FLA return by a web-based system online reporting portal. It would facilitate data submission by eligible entities; i.e. companies and LLPs that have received FDI and/or made FDI abroad (i.e. overseas investment). Eligible entities would also include the alternative investment funds (AIF) registered with the Securities and Exchange Board of India (SEBI).
The revised Foreign Liabilities and Assets Information Reporting (FLAIR) system, as it is now called, is a web-portal interface available at https://flair.rbi.org.in. Reporting Entities will need to submit a “User Registration Form” (containing entity identification and business user details, where LLPs will no longer required to use dummy CIN). The successful registration on the web-portal will enable users to generate RBI-provided login-name and password for using the FLA submission gateway.
The form available on the FLAIR portal will seek investor-wise direct investment and other financial details on fiscal year basis up till now, where all reporting entities are required to provide information on foreign affiliate trade statistics related variables (it was mandatory only for subsidiary companies earlier). In addition, the revised form seeks information on first year of receipt of FDI/ODI and disinvestment.The FLAIR portal offers system driven validation checks while submitting the return and reporting entities will get a system-generated acknowledgement receipt upon successful submission of the form. They can thereafter revise the data, if required, and view/download the information submitted.
On perusal of the FLAIR portal home page, we noticed that a reporting company needs to take approval from the RBI in case of submission of the FLA after the due date, and also for submission of the FLA for previous years.
FLAIR will come into force with effect from June 29th, 2019 and would be applicable for reporting of information for the year 2018-19, which will need to be submitted prior to July 15, 2019. Indian entities not complying with these requirements, will be treated as non-compliant with Foreign Exchange Management Act, 1999 and regulations made there under.