A.P. (DIR Series) (2002-2003) Circular No. 97, Dated 29-4-2003
1. Attention
of authorised dealers is invited to A.P. (DIR Series) Circular No. 66 dated
January 13, 2003, in terms of which, Indian corporates and resident individuals
are permitted to invest in the equity of listed foreign companies who have
shareholding of at least 10 per cent in companies listed on a recognised stock
exchange in India.
As
a measure of further liberalisation, it has now been decided to permit Indian
corporates and resident individuals to invest within the respective ceilings as
applicable, in rated bonds/fixed income securities also. The rating should be
at least A-1/AAA by Standard & Poor or P-1/Aaa by Moody’s or F1/AAA by
Fitch IBCA etc. for short-term obligations and corresponding ratings for
long-term ones.
2. At
present, Indian Mutual Funds are permitted to invest in ADRs/GDRs of Indian
companies and rated debt/equity instruments within an overall cap of USD 1.0
(One) billion. Mutual Funds desirous of availing of this facility have to
approach the Reserve Bank, under FEMA 1999 after obtaining necessary permission
from Securities and Exchange Board of India (SEBI) in the matter.
It
has now been decided to accord general permission and dispense with the
requirement of obtaining separate permission from the Reserve Bank under FEMA
1999. Accordingly, Mutual Funds desirous of availing of this facility and
having the approval from SEBI for undertaking such investments, need not obtain
separate approval from the Reserve Bank.
3. Monthly
reporting requirement to the Reserve Bank stipulated vide A.P. (DIR Series)
Circular No. 96 dated April 28, 2003 would continue.
4. Necessary
amendments to the Foreign Exchange Management Regulations, 2000 are being
issued separately.
5. Authorised
dealers may bring the contents of this circular to the notice of their
constituents concerned.
6. The
directions contained in this circular have been issued under section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).