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RBI/2021-22/48
A.P. (DIR Series) Circular No.06
June 4, 2021
To
All Authorised Persons
Madam / Sir
Payment of margins for transactions in Government Securities by Foreign
Portfolio Investors
Please refer to Paragraph 4 of the Statement on
Developmental and Regulatory Policies, issued as a part of the second Bi-monthly
Monetary Policy Statement for 2021-22 dated June 04, 2021 regarding placement of
margins for Government securities transactions on behalf of Foreign Portfolio
Investors (FPIs). Attention is also invited to the Foreign Exchange Management
(Borrowing and Lending) Regulations, 2018 notified, vide Notification No. FEMA
3(R)/2018-RB dated December 17, 2018, as amended from time to time, and the
relevant directions issued thereunder.
2. All transactions in government
securities concluded outside the recognized stock exchanges are settled on a
guaranteed basis by the Clearing Corporation of India Ltd. (CCIL) which acts as
the central counter party. Based on requests received, it has been decided to
allow banks in India having an Authorised Dealer Category-1 licence under FEMA,
1999 to lend to FPIs in accordance with their credit risk management frameworks
for the purpose of placing margins with CCIL in respect of settlement of
transactions involving Government Securities (including Treasury Bills and State
Development Loans) by the FPIs.
3. Necessary amendments to Foreign
Exchange Management (Borrowing and Lending) Regulations, 2018 have been carried
out, vide Notification No. FEMA 3(R)2/2021-RB dated May 24, 2021.
4.
These Directions shall be applicable with immediate effect.
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
(Dimple Bhandia)
Chief
General Manager
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