5.

Remittance/credit of sale/maturity proceeds.

(i)

In the case of a registered Foreign Institutional Investor who has sold securities in accordance with paragraph 4, the designated branch of an authorised dealer referred to in sub-paragraph (1) of paragraph 3 may allow remittance of net sale/ maturity proceeds (after payment of taxes) or credit the net amount of sale/ maturity proceeds of such securities to the foreign currency account or Non-resident Rupee Account of the FII investor maintained in accordance with the provisions of paragraph 2 of Schedule 2.form LEC⁴

(ii)

In the case of a Non-resident Indian [***]² who has sold securities in accordance with paragraph 4, the net sale/ maturity proceeds (after payment of taxes) of such securities, may be

a)

credited only to NRSR account of the NRI investor where the payment for purchase of securities sold was made out of funds held in NRSR account, or

b)

credited, at the NRI [***]³ investor’s option, to his/its NRO or NRSR account, where the payment for the purchase of the securities sold was made out of funds held in NRO account, or

c)

remitted abroad or at the NRI [***]³ investor’s option, credited to his/its NRE/FCNR /NRO/NRSR/NRNR account, where the securities were purchased on repatriation basis in accordance with sub-paragraph (1) of paragraph 2 and the payment for purchase of the securities sold was made by inward remittance through normal banking channels or out of funds held in NRE/FCNR account.form A2⁵,form DSP⁶

In the case of sale of Government dated securities by a Multilateral Development Bank, the net maturity proceeds     (after payment of taxes) may be remitted abroad or credited to fund account opened with the prior permission of the Reserve Bank.

¹SCHEDULE 6 
[ See Regulation 5(5) ]

1. 

Investment by Foreign Venture Capital Investor.

1.

A registered Foreign Venture Capital Investor (FVCI) may, through the Securities and Exchange Board of India, apply to the Reserve Bank for permission to invest in Indian Venture Capital Undertaking (IVCU) or in a VCF or in a scheme floated by such VCFs. Permission may be granted by Reserve Bank subject to such terms and conditions as may be considered necessary.

2.

The registered FVCI permitted by Reserve Bank under sub-paragraph (1), may purchase equity / equity linked instruments / debt / debt instruments, debentures of a IVCU or of a VCF through Initial Public Offer or Private Placement or in units of schemes/funds set up by a VCF.

3.

The amount of consideration for investment in VCFs/IVCUs shall be paid out of inward remittance from abroad through normal banking channels or out of funds held in an account maintained with the designated branch of an authorised dealer in India in accordance with Para 2.

2

Maintenance of account by the registered FVCI for investment in IVCUs/VCFs or schemes/funds set up by the VCFs.

The Reserve Bank may, on application, permit a FVCI which has received ‘in principle’ registration from SEBI to open a Foreign Currency Account and/or a Rupee Account with a designated branch of an authorised dealer with the following permissible transactions:

i)

Crediting inward remittance received through normal banking channels or the sale proceeds (net of taxes) of investments.

ii)

Making investment in accordance with the provisions of paragraph 1 above.

iii)

Transferring funds from the Foreign Currency Account of the FVCI to their own Rupee account.

iv)

Remitting funds from the Foreign Currency or rupee account subject to payment of applicable taxes.

v)

Meeting local expenses of the FVCI.

3.

 Forward Cover.

Authorised Dealers may offer forward cover to FVCIs to the extent of total inward remittance. In case the FVCI has made any remittance by liquidating some investments, original cost of the investments will be deducted from the eligible cover.

4.

Valuation of Investments.

The FVCI may acquire by purchase or otherwise or sell shares/ convertible debentures/units or any other investment held by it in the IVCUs or VCFs or schemes/funds set up by the VCFs at a price that is mutually acceptable to the buyer and the seller/issuer. The FVCI may also receive the proceeds arising of the liquidation of VCFs or schemes/funds set up by the VCFs.