RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
A. P. (DIR Series) Circular No.121
May 08, 2012
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign investment in Commodity Exchanges and NBFC Sector -Amendment to the Foreign Direct Investment (FDI) Scheme
Attention of Authorised Dealers Category – I (AD Category - I) banks is invited
to Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security
by a Person Resident Outside India) Regulations, 2000 notified vide Notification
No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time read with para 2 of
A.P (DIR Series) Circular No.41 dated April 28, 2008, which allowed
foreign investment in commodity exchanges, subject to a composite (FDI & FII)
ceiling of 49 per cent with FDI limit of 26 per cent and FII limit of 23 per
cent under Portfolio Investment Scheme (PIS), subject to conditions stated
therein.
- The extant policy for foreign investment in commodity exchanges, has since
been reviewed and it has been decided that prior approval of the Government
(FIPB) would be required only for FDI component and Government approval would
not be required for investment by registered FIIs in commodity exchanges. All
other conditions contained in A.P (DIR Series) Circular No.41 dated April 28,
2008 shall remain unchanged.
- Further, under the extant FDI policy, ‘leasing and finance’ is one of the 18
NBFC activities wherein FDI up to 100 per cent is permitted under automatic
route, subject to minimum capitalisation norms. It is hereby clarified that FDI
is permitted only in ‘financial leases’ (financial leasing activity) and not in
’operating leases’ (operating leasing activity).
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Necessary amendments to Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident Outside India) Regulations, 2000 (Notification No.
FEMA 20/2000-RB dated May 3, 2000) are being notified separately.
- 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,
(Rudra Narayan Kar)
Chief General Manager
RBI/2011-12/542