RBI/2013-14/366
A. P. (DIR Series) Circular No.72
November 11, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign Direct Investment in Financial Sector – Transfer of Shares
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
Regulation 10(A)(v) of 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
and Para 2(B)(iv) of
A.P.(DIR Series) Circular No.43 dated November 4, 2011, in
terms which for transfer of shares from Residents to Non-Residents where the
investee company is in the financial services sector, No Objection Certificate (NoC)
is required to be obtained from the respective financial sector
regulator/regulators of the investee company as well as transferor and
transferee entities and such NoC(s) are to be filed with the form FC-TRS to the
AD bank.
- On a review, it has now been decided that the requirement of NoC(s) will be
waived from the perspective of Foreign Exchange Management Act, 1999 and no such
NoC(s) need to be filed along with form FC-TRS. However, any 'fit and proper/
due diligence' requirement as regards the non-resident investor as stipulated by
the respective financial sector regulator shall have to be complied with.
- All the other instructions contained in the above referred A.P.(DIR Series)
Circular shall remain unchanged.
- AD Category – I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank of India has since amended the relevant Regulations and notified
vide
Notification No.FEMA.290/2013-RB dated October 4, 2013, notified vide.
G.S.R.No.682(E) dated October 11, 2013.
- 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-in-Charge