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Investment by NRIs/ OCBs in Non-Convertible Debentures � Redemption
thereof
A.P.
(Dir Series) Circular No. 39 date 5th November 2002
Authorised
Dealers are aware that Indian companies were being permitted under FERA, 1973
(since repealed) to issue non-convertible debentures (NCDs) to NRIs/ OCBs. While
granting such permission to the Indian companies to issue NCDs, they were
advised to seek prior permission of the Reserve Bank for repatriating redemption
proceeds thereof.
2.
In terms of Regulation 5 of Notification No. FEMA 4/ 2000-RB dated 3rdMay 2000, general permission has been given to companies incorporated in
India to borrow in rupees by way of issue of non-convertible debentures subject
to certain conditions, on repatriation or non-repatriation basis, from a
non-resident Indian or a person of Indian origin resident outside India or an
overseas corporate body (OCB).
3.
It is clarified that, in view of Regulation 5 referred to above, Indian
companies, which were granted permission by Reserve Bank under FERA to issue
NCDs on repatriation basis, subject to the condition that the company would seek
prior permission of the Reserve Bank for repatriation of redemption proceeds,
hereafter do not require prior permission of Reserve Bank to remit the
redemption proceeds of the NCDs/ PCDs issued by them, provided, they have
complied with all other conditions stipulated in the relevant approval letter.
4.
Authorised Dealers may bring the contents of this circular to the notice
of their constituents concerned.
5.
The directions have been issued under Section 10(4) and Section 11(1) of
the Foreign Exchange Management Act, 1999 (42 of 1999).
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