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RBI/2018-19/187
A.P. (DIR Series) Circular No.34
May 24, 2019
To
All Authorized Persons
Madam / Sir
‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to
the following regulations, as amended from time to time, and the relevant
directions issued under these regulations.
Foreign Exchange Management
(Permissible Capital Accounts Transactions) Regulations, 2000 notified vide
Notification No. FEMA 1/2000-RB dated May 03, 2000;
Foreign Exchange
Management (Borrowing and Lending) Regulations, 2018 notified vide Notification
No. FEMA 3(R)/2018-RB dated December 17, 2018;
Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India)
Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated
November 07, 2017; and
Foreign Exchange Management (Foreign Exchange
Derivative Contracts) Regulations, 2000 notified vide Notification No. FEMA
25/RB – 2000 dated May 03, 2000.
2. AD Category – I banks may refer to
A.P.(DIR Series) Circular No. 21 dated March 01, 2019 on ‘Voluntary Retention
Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt. Based on
the feedback received the directions have been revised as given in the Annex.
These changes include, inter alia, the following:-
Introduction of a
separate category, viz., VRR-Combined (see para 2.x, Annex).
The
requirement to invest at least 25% of the Committed Portfolio Size within one
month of allotment has been removed (see para 6.a, Annex).
FPI are
provided with an additional option at the end of the retention period, viz.,
continue to hold their investment until the date of maturity or the date of
sale, whichever is earlier (see para 6.c, Annex).
3. FPIs that were
allotted investment limits under the ‘tap’ open during March 11, 2019 - April
30, 2019 may, at their discretion, convert their full allotment to VRR-Combined.
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
(T. Rabi Sankar)
Chief General Manager
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