Reserve Bank Of India
A. P. (DIR Series) Circular No. 16
August 22, 2012
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign Direct Investment by citizen / entity incorporated in Pakistan
Attention of Authorised Dealer (AD Category - I) banks is invited 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(hereinafter referred to as Notification No.FEMA 20), and as amended
from time to time.
- In terms of sub-regulation (1) of Regulation 5 of the Notification ibid, a
person resident outside India who is a citizen of Pakistan or an entity
incorporated outside India in Pakistan, is not allowed to purchase shares or
convertible debentures of an Indian company under Foreign Direct Investment
Scheme.
- It has now been decided that notwithstanding anything contained in
sub-regulation (1) of Regulation 5 of the Notification No.FEMA. 20,a person who
is a citizen of Pakistan or an entity incorporated in Pakistan may, with the
prior approval of the Foreign Investment Promotion Board of the Government of
India, purchase shares and convertible debentures of an Indian company under
Foreign Direct Investment Scheme, subject to the terms and conditions specified
in Schedule 1 of the Notification, ibid, provided further that notwithstanding
anything contained in Schedule I of the Notification, ibid, the Indian company,
receiving such foreign direct investment, is not engaged or shall not engage in
sectors / activities pertaining to defence,spaceandatomicenergyand sectors/
activities prohibited for foreign investment.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers and constituents 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,
RBI/2012-13/173
(Rudra Narayan Kar)
Chief General Manager