Investment by NRIs/OCBs
in Non-Convertible Debentures - Redemption thereof
AP (Dir Series) (2002-2003) Circular No. 39, dated 5-11-2002
Investment by NRIs/OCBs in Non-Convertible Debentures - Redemption thereof
Authorised
Dealers are aware that Indian companies were being permitted under FERA,1973
(since repealed) to issue non-convertible debentures (NCDs) to NRIs/OCBs. While
granting such permission to the Indian companies to issue NCDs, they were
advised to seek prior permission of the Reserve Bank for repatriating
redemption proceeds thereof.
2. In terms
of Regulation 5 of Notification No.FEMA 4/2000-RB dated 3rd May, 2000, general
permission has been given to companies incorporated in India to borrow in
rupees by way of issue of non-convertible debentures subject to certain
conditions, on repatriation or non-repatriation basis, from a non-resident
Indian or a person of Indian origin resident outside India or an overseas
corporate body (OCB).
3. It is
clarified that, in view of Regulation 5 referred to above, Indian companies,
which were granted permission by Reserve Bank under FERA to issue NCDs on
repatriation basis, subject to the condition that the company would seek prior
permission of the Reserve Bank for repatriation of redemption proceeds, hereafter
do not require prior permission of Reserve Bank to remit the redemption
proceeds of the NCDs/PCDs issued by them, provided, they have complied with all
other conditions stipulated in the relevant approval letter.
4. Authorised
Dealers may bring the contents of this circular to the notice of their
constituents concerned.
5. The
directions have been issued under section 10(4) and section 11(1) of the
Foreign Exchange Management Act,1999 (42 of 1999).