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RBI/2014-15/636
A. P. (DIR Series) Circular No.107
June 11, 2015
To
All Authorised Dealer Category-I Banks
Madam / Sir,
Subscription to chit funds by Non-Resident Indian on non-repatriation basis
Attention of Authorised Dealers Category – I (AD Category - I) banks is invited
to the Foreign Exchange Management (Permissible Capital Account Transactions)
Regulations 2000, notified vide
Notification No. FEMA 1/2000-RB dated May 3,
2000, as amended from time to time and 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.
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In terms of Regulation 4(b) (i) of
Notification No. FEMA 1/2000-RB dated
3rd May 2000, no person resident outside India shall make investment in India,
in any form, in a company or partnership firm or proprietary concern or any
entity, whether incorporated or not, which is engaged or proposes to engage “in
the business of chit fund”.
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The extant guidelines for subscription to the chit funds have been reviewed
in consultation with the Government of India and accordingly, it has been
decided to permit Non-Resident Indians (NRIs) to subscribe to the chit funds,
without limit, on non-repatriation basis subject to the following conditions:
The Registrar of Chits or an officer authorised by the State Government in
accordance with the provisions of the Chit Fund Act in consultation with the
State Government concerned, may permit any chit fund to accept subscription from
Non-Resident Indians on non-repatriation basis;
The subscription to the chit funds shall be brought in through normal banking
channel, including through an account maintained with a bank in India.
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AD Category – I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
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Reserve Bank has since amended the subject Regulations accordingly through
the Foreign Exchange Management (Permissible Capital Account Transactions)
(Second Amendment) Regulations, 2015 and Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident outside India) (Second Amendment)
Regulations, 2015 which have been notified through
Notification No.
FEMA.337/2015-RB dated March 2, 2015, vide G.S.R. No. 283(E) dated April 13,
2015 and
Notification No. FEMA.338/2015-RB dated March 2, 2015, vide G.S.R. No.
284 (E) dated April 13, 2015, respectively.
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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
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