[See Regulation 5(3)(i)]
Purchase/sale of shares and/or convertible debentures
by an NRI 3[***] on a Stock Exchange In India on repatriation
and/or non-repatriation basis under Portfolio Investment Scheme
A Non-resident Indian (NRI) 4[***] may
purchase/sell shares and/or convertible debentures of an Indian company,
through a registered broker on a recognised stock exchange, subject to the
following conditions :—
5[(i) NRIs may purchase and sell
shares/convertible debentures under the Portfolio Investment Scheme through a
branch designated by an Authorised Dealer for the purpose and duly approved by
the Reserve Bank of India;]
(ii) the paid-up value of shares of an Indian
company, purchased by each NRI 6[***] both on repatriation
and on non-repatriation basis, does not exceed 5 per cent of the paid-up value
of shares issued by the company concerned;
(iii) the paid-up value of each series of
convertible debentures purchased by each NRI 6[***] both on repatriation
and non-repatriation basis does not exceed 5 per cent of the paid-up value of
each series of convertible debentures issued by the company concerned;
(iv) the aggregate paid-up value of shares of
any company purchased by all NRIs 7[***] does not exceed 10 per
cent of the paid-up capital of the company and in the case of purchase of
convertible debentures the aggregate paid-up value of each series of debentures
purchased by all NRIs 7[***] does not exceed 10 per cent of the paid-up
value of each series of convertible debentures :
Provided that the aggregate ceiling
of 10 per cent referred to in this clause may be raised to 24 per cent if a
special resolution to that effect is passed by the General Body of the Indian
company concerned;
(v) the NRI 1[***] investor takes delivery of the shares
purchased and gives delivery of shares sold;
(vi) payment for purchase of shares and/or
debentures is made by inward remittance in foreign exchange through normal
banking channels or out of funds held in NRE/FCNR account maintained in India
if the shares are purchased on repatriation basis and by inward remittance or
out of funds held in NRE/FCNR/NRO/NRNR/NRSR account of the NRI 1a[***] concerned maintained
in India where the shares/debentures are purchased on non-repatriation basis;
(vii) 1b[***]
Report to Reserve
Bank.
2[The link office of the
designated branch of an authorised dealer referred to in paragraph 1 shall
furnish to the Chief General Manager, RBI, ECD, Central Office, Mumbai, a
report on daily basis on PIS transactions undertaken by it, such report to be
furnished on line or on floppy or in hard copy in a format supplied by Reserve
Bank.]
3[Remittance/credit
of sale/maturity proceeds of shares and/or debentures.
The net sale/maturity
proceeds (after payment of taxes) of shares and/or debentures of an Indian
company purchased by NRI 4[***] under this
scheme, may be allowed by the designated branch of an authorised dealer
referred to in paragraph 1,
(a) to be credited to NRO account of the NRI5 [***] investor where the payment
for purchase of shares and/or debentures sold was made out of funds held in NRO
account or where the shares and/or debentures were purchased on
non-repatriation basis, or
(b) at the NRI 4[***]
investor’s
option, to be remitted abroad or credited to his/its NRE/FCNR/NRO account of
the NRI, where shares and/or debentures were purchased on repatriation basis.]
[See Regulation 5(3)(ii)]
Purchase and sale of shares/convertible debentures by
a
Non-resident Indian (NRI) 6[***], on non-repatriation basis
Prohibition on purchase of shares/convertible debentures of certain companies.
No purchase of shares or
convertible debentures of an Indian company shall be made under this scheme if
the company concerned is a chit fund or a nidhi company or is engaged in
agricultural/plantation activities or real estate business or construction of
farm houses or dealing in Transfer of Development Rights.
Explanation - For the purpose of this
paragraph, real estate business shall not include development of township,
construction of residential/commercial premises, roads, bridges, etc.
Permission to purchase and/or sell shares/convertible debentures of an Indian company.
Subject to paragraph 1, a
Non-resident Indian 1[***] may without any
limit, purchase on non-repatriation basis, shares or convertible debentures of
an Indian company issued whether by public issue or private placement or right
issue :
2[Provided that the person to whom the
shares are being transferred, has obtained prior permission of Central Government
to acquire the shares if he has previous venture or tie up in India through
investment in shares or debentures or a technical collaboration or a trade mark
agreement or investment by whatever name called in the same field or allied
field in which the Indian company whose shares are being transferred is engaged
:
Provided further that this restriction shall
not apply to the transfer of shares to International Financial Institutions
such as Asian Development Bank (ADB), International Finance Corporation (IFC),
Commonwealth Development Corporation (CDC), Deutsche Entwicklungs Gesselschaft
(DEG) and transfer of shares of an Indian company engaged in Information
Technology Sector.]
Method of payment for purchase of shares/convertible debentures.
The amount of consideration
for purchase of shares or convertible debentures of an Indian company on
non-repatriation basis, shall be paid by way of inward remittance through
normal banking channels from abroad or out of funds held in
NRE/FCNR/NRO/NRSR/NRNR account maintained with an authorised dealer or as the
case may be with an authorised bank in India :
Provided that in the case of an NRI 3[***] resident in
Nepal and Bhutan, the amount of consideration for purchase of shares or
convertible debentures of an Indian company on non-repatriation basis, shall be
paid only by way of inward remittance in foreign exchange through normal
banking channels.
Sale/Maturity proceeds of shares or convertible debentures.
(i) The sale/maturity proceeds (net of
applicable taxes) of shares or convertible debentures purchased under this
Scheme shall be credited only to NRSR account where the purchase consideration
was paid out of funds held in NRSR account and to NRO or NRSR account at the
option of the seller where the purchase consideration was paid out of inward
remittance or funds held in NRE/FCNR/NRO/NRNR account.
(ii) The amount invested in shares or
convertible debentures under this Scheme and the capital appreciation thereon
shall not be allowed to be repatriated abroad.
[See Regulation 5(4)]
Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India
Permission to Foreign Institutional Investors for purchase of securities.
A registered Foreign
Institutional Investor may purchase, on repatriation basis, dated Government
securities/treasury bills, non-convertible debentures/bonds issued by an Indian
company and units of domestic mutual funds either directly from the issuer of
such securities or through a registered stock broker on a recognised stock
exchange in India :
Provided that
(i) the FII shall restrict allocation of
its total investment between equity and debt instruments (including dated
Government Securities and Treasury Bills in the Indian capital market) in the
ratio of 70 : 30, and
(ii) if the FII desires to invest upto 100
per cent in dated Government securities including Treasury Bills,
non-convertible debentures/bonds issued by an Indian company, it shall form a
100 per cent debt fund and get such fund registered with SEBI.
Permission to
Non-resident Indian 1[***] for
purchase of securities.
(1) A Non-resident Indian 2[***] may, without
limit, purchase on repatriation basis,
(i) Government dated securities (other than
bearer securities) or treasury bills or units of domestic mutual funds;
(ii) bonds
issued by a public sector undertaking (PSU) in India;
(iii) shares in Public Sector Enterprises being
disinvested by the Government of India, provided the purchase is in accordance
with the terms and conditions stipulated in the notice inviting bids.
(2) A Non-resident Indian 2[***] may, without
limit, purchase on non-repatriation basis, dated Government securities (other
than bearer securities), treasury bills, units of domestic mutual funds, units
of Money Market Mutual Funds in India, or National Plan/Savings Certificates.
3[(3) A Multilateral Development Bank which is specifically permitted
by Government of India to float rupee bonds in India may purchase Government
dated securities.]
Method of payment of purchase consideration.
(1) A registered Foreign Institutional
Investor who purchases securities under the provisions of this Schedule shall
make the payment for purchase of such securities either by inward remittance
through normal banking channels or out of funds held in Foreign Currency
Account or Non-resident Rupee Account maintained by the Foreign Institutional
Investor with a designated branch of an authorised dealer with the approval of
Reserve Bank in terms of paragraph 2 of Schedule 2.
(2) A non-resident Indian 2[***] who purchases
securities on repatriation basis, under sub-paragraph (1) of paragraph 2, of
this Schedule, shall make payment either by inward remittance through normal
banking channels or out of funds held in his/its NRE/FCNR account.
(3) A non-resident Indian 2[***] who purchases
securities on non-repatriation basis, under sub-paragraph (2) of paragraph 2 of
this Schedule, shall make payment either by inward remittance through normal
banking channels or out of funds held in his/its NRE/FCNR/NRO/NRSR/NRNR
account.
3 [(4) A Multilateral Development Bank which purchases Government dated
securities under this Schedule, shall make payment either by inward remittance
through normal banking channels or out of funds held in the account opened with
the specific approval of RBI.]
Permission for Sale of Securities.
A person resident outside
India who has purchased securities in accordance with this Schedule may (a)
sell such securities through a registered stock broker on a recognised stock
exchange or (b) tender units of mutual funds to the issuer for
repurchase or for payment of maturity proceeds or (c) tender Government
securities/treasury bills to the Reserve Bank for payment of maturity proceeds.
Remittance/credit of sale/maturity proceeds.
(i) In the case of a registered Foreign
Institutional Investor who has sold securities in accordance with paragraph 4,
the designated branch of an authorised dealer referred to in sub-paragraph (1) of
paragraph 3 may allow remittance of net sale/maturity proceeds (after payment
of taxes) or credit the net amount of sale/maturity proceeds of such securities
to the foreign currency account or Non-resident Rupee Account of the FII
investor maintained in accordance with the provisions of paragraph 2 of
Schedule 2.
(ii) In the case of a Non-resident Indian 1[***] who has sold
securities in accordance with paragraph 4, the net sale/maturity proceeds
(after payment of taxes) of such securities, may be :
(a) credited only to NRSR account of the NRI
investor where the payment for purchase of securities sold was made out of
funds held in NRSR account, or
(b) credited, at the NRI 2[***] investor’s
option, to his/its NRO or NRSR account, where the payment for the purchase of
the securities sold was made out of funds held in NRO account, or
(c) remitted abroad or at the NRI 2[***] investor’s
option, credited to his/its NRE/FCNR/NRO/NRSR/NRNR account, where the
securities were purchased on repatriation basis in accordance with
sub-paragraph (1) of paragraph 2 and the payment for purchase of the
securities sold was made by inward remittance through normal banking channels
or out of funds held in NRE/FCNR account;
3[(iii) In the case of sale of Government dated securities by a
Multilateral Development Bank, the net maturity proceeds (after payment of
taxes) may be remitted abroad or credited to fund account opened with the prior
permission of the Reserve Bank.]
[See Regulation 5(5)]
Investment in an Indian Venture Capital Undertaking by a registered Foreign Venture Capital Investor
Investment by Foreign Venture Capital Investor.
(1) A registered Foreign Venture Capital
Investor (FVCI) may, through the Securities and Exchange Board of India, apply
to the Reserve Bank for permission to invest in Indian Venture Capital
Undertaking (IVCU) or in a VCF or in a scheme floated by such VCFs. Permission
may be granted by Reserve Bank subject to such terms and conditions as may be
considered necessary.
(2) The registered FVCI permitted by Reserve
Bank under sub-paragraph (1), may purchase equity/equity linked
instruments/debt/debt instruments, debentures of a IVCU or of a VCF through
Initial Public Offer or Private Placement or in units of schemes/funds set up
by a VCF.
(3) The amount of consideration for investment
in VCFs/IVCUs shall be paid out of inward remittance from abroad through normal
banking channels or out of funds held in an account maintained with the
designated branch of an authorised dealer in India in accordance with
Para 2.
Maintenance of account by the registered FVCI for investment in IVCUs/VCFs or schemes/funds set up by the VCFs.
The Reserve Bank may, on
application, permit a FVCI which has received ‘in principle’ registration from SEBI
to open a Foreign Currency Account and/or a Rupee Account with a designated
branch of an authorised dealer with the following permissible transactions :
(i) Crediting inward remittance received
through normal banking channels or the sale proceeds (net of taxes) of investments.
(ii) Making
investment in accordance with the provisions of paragraph 1 above.
(iii) Transferring funds from the Foreign
Currency Account of the FVCI to their own Rupee account.
(iv) Remitting funds from the Foreign Currency
or rupee account subject to payment of applicable taxes.
(v) Meeting
local expenses of the FVCI.
Forward Cover.
Authorised Dealers may offer
forward cover to FVCIs to the extent of total inward remittance. In case the
FVCI has made any remittance by liquidating some investments, original cost of
the investments will be deducted from the eligible cover.
Valuation of Investments.
The FVCI may acquire by
purchase or otherwise or sell shares/convertible debentures/units or any other
investment held by it in the IVCUs or VCFs or schemes/funds set up by the VCFs
at a price that is mutually acceptable to the buyer and the seller/issuer. The
FVCI may also receive the proceeds arising of the liquidation of VCFs or
schemes/funds set up by the VCFs.
FVCIs shall abide by the
relevant regulations/guidelines issued by Securities and Exchange Board.]
[K1]Words “/OCB” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K2]Words “or an Overseas Corporate Body (OCB)” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K3]Substituted
by the FEM (Transfer or Issue of Security by a Person Resident outside India)
(Second Amendment) Regulations, 2003, w.e.f. 18-6-2003. Prior to
substitution, sub-paragraph (i), as amended by the FEM (Transfer or
Issue of Security by a Person Resident outside India) (Amendment) Regulations,
2001, w.e.f. 29-11-2001, read as under :
“(i) the NRI designates a branch of an authorised
dealer for routing his transactions relating to purchase and sale of
shares/convertible debentures under this Scheme, and routes all such
transactions only through the branch so designated;”
[K4]Words “or OCB” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K5]Words “or OCB” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K6]Words “or OCBs” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K7]Words “or OCBs” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K8]Words “or OCB” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K9]Words “/OCB” omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K10]Omitted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K11]Substituted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f. 29-11-2001.
[K12]Substituted
by the FEM (Transfer or Issue of Security by a Person Resident outside India)
(Second Amendment) Regulations, 2003, w.e.f. 18-6-2003. Prior to
substitution, paragraph 3, as amended by the FEM (Transfer or Issue of Security
by a Person Resident outside India) (Amendment) Regulations, 2001, w.e.f.
29-11-2001, read as under :
“3. Remittance/credit of
sale/maturity proceeds of shares and/or debentures.—The net sale/maturity
proceeds (after payment of taxes) of shares and/or debentures of an Indian
company purchased by NRI under this Scheme, may be allowed by the designated
branch of an authorised dealer referred to in paragraph 1,
(a) to be credited to NRSR account of the NRI
investor where the payment for purchase of shares and/or debentures sold was
made out of funds held in NRSR account, or
(b) at the NRI investor’s option to be credited to
his/its NRO or NRSR account, where the shares and/or debentures were purchased
on non-repatriation basis, or
(c) at the NRI investor’s option, to be remitted
abroad or credited to his/its NRE/FCNR/NRO/NRSR account, where shares and/or
debentures were purchased on repatriation basis.”
[K13]Words “or OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K14]Words “/OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K15]Words “or OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K16]Words “or an Overseas Corporate Body (OCB)” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K17]Words “or an Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K18]Inserted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2003, w.e.f. 18-6-2003.
[K19]Word “/OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K20]Words “and Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K21]Words “or an Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K22]Words “or an Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K23]. Inserted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2003, w.e.f. 27-10-2003.
[K24]Words “or an Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K25]Inserted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2003, w.e.f. 27-10-2003.
[K26]Inserted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2003, w.e.f. 27-10-2003.
[K27]Words “or an Overseas Corporate Body” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K28]Words “or OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K29]Words “or OCB” omitted by the FEM [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, w.e.f. 3-10-2003.
[K30]Inserted by the FEM (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2003, w.e.f. 27-10-2003.
[K31]Inserted by FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2000, w.e.f. 26-12-2000.
[K32]. Inserted by FEM (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2000, w.e.f. 26-12-2000.