Investment by FIIs/NRIs in Exchange Traded Derivative Contracts (ETDCs)

A.P. (DIR Series) (2003-2004) Circular No. 13, dated 1-9-2003,
Issued by Exchange Control Department, RBI

Attention of Authorised Dealers is invited to Regulation 5 of Notification No. FEMA 20/2000-RB dated 3rd May, 2000 conveying permission for purchase of shares by certain persons resident outside India.

2. As part of the measures for further liberalisation, it has been decided that :—

(i) A registered Foreign Institutional Investor (FII) having valid approval under FERA, 1973 or under FEMA, 1999 may trade in all exchange traded derivative contracts approved by SEBI from time to time subject to the limits prescribed by SEBI.

(ii) A Non-Resident Indian (NRI) may invest in exchange traded derivative contracts approved by SEBI from time to time out of INR funds held in India on non-repatriable basis subject to the limits prescribed by SEBI. Such investments will however not be eligible for repatriation benefits.

3. The necessary amendment to the Foreign Exchange Management Act (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 referred to above has been notified vide Notification No. FEMA 85/2003-RB dated 17th January, 2003.

4. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

5. 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).