RBI/2011-12/177
A.P. (DIR Series) Circular No.16
September 15, 2011
To
All Banks Authorised to Deal in Foreign Exchange
Madam / Sir,
Credit of sale proceeds of Foreign Direct
Investments in India to NRE/FCNR (B) accounts - Clarification
Attention of the Authorised Dealer (AD) banks is invited to Regulation 11 of
the
Notification No. FEMA 20/2000-RB dated May 3, 2000 viz. Foreign Exchange
Management (Transfer or issue of Security by a Person Resident outside India)
Regulations, 2000, as amended from time to time.
- The Committee constituted to Review the Facilities for Individuals
under the Foreign Exchange Management Act, 1999 in its Report has
recommended that sale proceeds of FDI investments may be permitted to be
credited to NRE/FCNR accounts as there is no provision under Regulation 11,
ibid, for credit of the sale proceeds of FDI investments into NRE/FCNR
accounts.
- Hitherto, in terms of Schedule 3, 4 and 5 of the FEMA Notification No.
20/2000-RB dated May 3, 2000, sale proceeds of Foreign Investments in India
were treated as eligible credit to NRE/FCNR (B) accounts, where the purchase
consideration was paid by the Non-resident Indians / Persons of Indian
Origin out of inward remittance or funds held in their NRE/FCNR (B) accounts
and subject to applicable taxes, if any. It is now clarified that the same
facility would be available to NRIs/ PIOs under Regulation 11 of the said
Notification.
- AD banks may be accordingly guided and bring the contents of this
circular to the notice of their constituents/customers concerned.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
and are without prejudice to permissions/approvals, if any, required under
any other law.
Yours faithfully,
(Meena Hemchandra)
Chief General Manager In-Charge