RBI/2010-11/491
A.P. (DIR Series) Circular No. 54
April 29, 2011
To
All Category – I Authorised Dealer banks
Madam / Sir,
Issue of Irrevocable Payment Commitment (IPCs) to Stock Exchanges on behalf of
Mutual Funds (MFs) and Foreign Institutional Investors (FIIs)
Attention of Authorised Dealer Category - I (AD Category-I) banks is invited to
Regulation 5(2) and Schedule 2 of 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, in terms of which Foreign Institutional Investors (FIIs) registered with
SEBI may purchase shares or convertible debentures of an Indian company under
the Portfolio Investment Scheme (PIS). Further, attention of AD Category – I
banks is also invited to the Foreign Exchange Management (Guarantee)
Regulations, notified vide
Notification No. FEMA 8/2000-RB dated May 3, 2000, as
amended from time to time, in terms of which, no fund based / non-fund based
facilities are permitted to the FIIs.
- It has now been decided to allow custodian banks to issue Irrevocable Payment
Commitments (IPCs) in favour of the Stock Exchanges / Clearing Corporations of
the Stock Exchanges, on behalf of their FII clients for purchase of shares under
the PIS. Issue of IPCs should be in accordance with the Reserve Bank regulations
on banks’ exposure to the capital market issued by the Reserve Bank from time to
time. Further, AD Category – I banks may also comply with the instructions
issued by our Department of Banking Operations and Development (DBOD) vide
circular no. DBOD Dir. BC.46/13.03.00/2010-11 dated September 30, 2010.
- Necessary amendments to the Foreign Exchange Management (Guarantee)
Regulations, 2000, notified vide
Notification No. FEMA 8/2000-RB dated May 3,
2000 will be issued separately.
- AD Category – I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
5. 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