Foreign Liabilities and Assets (FLA) Return

An AIF that takes money from abroad, or invests money abroad, becomes part of India's external balance sheet. The RBI needs to track that.

The FLA Return is how it does it. Any Category I or Category II AIF that received foreign investment, or made foreign investment abroad, in the current or any previous financial year, must file this return every year by 15 July. It is filed online, through the RBI's FLAIR portal — the Foreign Liabilities and Assets Information Reporting portal.

This is separate from other FEMA filings an AIF with foreign money may also have to make, such as reporting through the Single Master Form.

The three separate FEMA filings an AIF with foreign investment may need, and how they differ:

The FLA Return is filed on the FLAIR (Foreign Liabilities and Assets Information Reporting) portal. The SMF is filed through the FIRMS (Foreign Investment Reporting and Management System) portal, and once filed there, is verified, scrutinised and acknowledged or rejected by the AIF's own Authorised Dealer (AD) Bank.

Meridian Global Opportunities Fund, a Category II AIF, receives a Rs 40 crore commitment from a Mauritius-based fund of funds in October of a financial year, and separately makes a USD 5 million overseas investment in an offshore venture capital undertaking the same year.

Because it both received and made foreign investment, Meridian must file its FLA Return by 15 July of the following year on the FLAIR portal, covering both transactions. It must also have already filed the Single Master Form through FIRMS, since it carries existing foreign investment, for its Authorised Dealer Bank to verify.

If Meridian separately makes a downstream investment — say, investing part of its corpus into another Indian operating company — it must file Form DI within 30 days of that company allotting the relevant shares.

Chapter 4 (Regulatory Framework — Indian Context), in the FEMA reporting requirements for AIFs with foreign investment, names the FLA Return, its 15 July deadline and the FLAIR portal, alongside the SMF/FIRMS filing and Form DI. Expect a question matching each filing to its deadline and its portal, since the three are easily confused.

• 15 July is the FLA Return deadline — do not confuse it with Form DI's 30-day window, which runs from a specific allotment date, not from the financial year end.
• The FLA Return is triggered by foreign investment in either direction — received by the AIF, or made by the AIF abroad — not only inbound investment.
• FLAIR and FIRMS are two different portals for two different filings. FLA Return goes through FLAIR; the Single Master Form goes through FIRMS.
• The SMF filing is verified by the AIF's own Authorised Dealer Bank, not directly by the RBI in the first instance.