RBI/2013-14/632
A.P. (DIR Series) Circular No.140
June 6, 2014
To
All Category – I Authorised Dealer Banks
Madam/ Sir,
Foreign investment in India – participation by registered FPIs, SEBI
registered long term investors and NRIs in non-convertible/redeemable preference
shares or debentures of Indian companies
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by
a Person Resident outside India) Regulations, 2000 (the Principal Regulations)
notified vide
Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended
from time to time, in terms of which SEBI registered Foreign Institutional
Investors (FIIs), Qualified Foreign Investors (QFIs), registered Foreign
Portfolio Investors (FPIs) and long term investors registered with SEBI, may
purchase, on repatriation basis, Government securities and non-convertible
debentures (NCDs) / bonds issued by an Indian company subject to such terms and
conditions as mentioned therein and limits as prescribed for the same by RBI and
SEBI from time to time. The present limits for investments by FIIs/FPIs, QFIs
and long term investors registered with SEBI in corporate debt stands at USD 51
billion.
- Attention of AD Category - I banks is also invited to
A.P. (DIR Series)
Circular No. 84 dated January 6, 2014 in terms of whichan Indian company is
permitted to issue non-convertible/redeemable preference shares or debentures to
non-resident shareholders, including the depositories that act as trustees for
the ADR/GDR holders by way of distribution as bonus from its general reserves
under a Scheme of Arrangement approved by a Court in India under the provisions
of the Companies Act, as applicable, subject to no-objection from the Income Tax
Authorities.
- On review, it has now been decided to allow registered Foreign Institutional
Investors (FIIs), Qualified Foreign Investors (QFIs) deemed as registered
Foreign Portfolio investors, registered Foreign Portfolio Investors (FPIs), long
term investors registered with SEBI – Sovereign Wealth Funds (SWFs),
Multilateral Agencies, Pension/ Insurance/ Endowment Funds, foreign Central
Banks to invest on repatriation basis, in non-convertible/redeemable preference
shares or debentures issued by an Indian company in terms of
A.P. (DIR Series)
Circular No. 84 dated January 6, 2014 and listed on recognized stock exchanges
in India, within the overall limit of USD 51 billion earmarked for corporate
debt. Further, NRIs may also invest, both on repatriation and non-repatriation
basis, in non-convertible/redeemable preference shares or debentures as above.
- AD Category - I banks may bring the contents of this circular to the notice
of their constituents and customers.
- Reserve Bank has since amended the Principal Regulations through the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) (Fifth Amendment) Regulations, 2014 notified vide
Notification No. FEMA.
304 /2014-RB dated May 22, 2014, c.f. G.S.R. No.371(E) dated May 30, 2014.
- 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,
(B.P. Kanungo)
Principal Chief General Manager