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FEM (Transfer or issue of security by a person resident outside India) Regulations, 2000 

Pg. 9

 

Provided that in the case of an NRI [***]1resident in Nepal and Bhutan, the amount of consideration for purchase of shares or convertible debentures of an Indian company on non-repatriation basis, shall be paid only by way of inward remittance in foreign exchange through normal banking channels.

4.

Sale/ Maturity proceeds of shares or convertible debentures.

 

i)

The sale/maturity proceeds (net of applicable taxes) of shares or convertible debentures purchased under this Scheme shall be credited only to NRSR account where the purchase consideration was paid out of funds held in NRSR account and to NRO or NRSR account at the option of the seller where the purchase consideration was paid out of inward remittance or funds held in NRE/FCNR/NRO/NRNR account.form DSP5

 

ii)

The amount invested in shares or convertible debentures under this Scheme and the capital appreciation thereon shall not be allowed to be repatriated abroad.

 

SCHEDULE 5

[ See Regulation 5 (4) ]

Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India.

  1.

Permission to Foreign Institutional Investors for purchase of securities.

  6

A registered Foreign Institutional Investor may purchase, on repatriation basis, dated Government Securities/treasury bills, non-convertible debentures/bonds issued by an Indian company, units of domestic mutual funds and Security Receipts issued by Asset Reconstruction Companies either directly from the issuer of such securities or through a registered stock broker on a recognized stock exchange in India:

 

 Provided that

 

(i)

The FII shall restrict allocation of its total investment between equity and debt instruments (including dated Government Securities and Treasury Bills in the Indian Capital Market) in the ratio of 70:30, and

 

(ii)

If the FII desires to invest up to 100 per cent in dated Government Securities including Treasury Bills, non-convertible debentures/bonds issued by an Indian company, it shall form a 100 per cent debt fund and get such fund registered with SEBI.

 

(iii)

The total holding by a single FII in each tranche of scheme of Security Receipts shall not exceed 10 per cent of the issue and the total holdings of all FIIs put together shall not exceed 49 per cent of the paid up value of each tranche of scheme of Security receipts issued by the Asset Reconstruction Companies.

2.

Permission to Non-resident Indian [***]2 for purchase of securities.

 

(1)

A Non-resident Indian [***]3 may, without limit, purchase on repatriation basis,

i)

Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds;

ii)

bonds issued by a public sector undertaking (PSU) in India;

iii)

shares in Public Sector Enterprises being disinvested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.

(2)

A Non-resident Indian [***]3 may, without limit, purchase on non-repatriation basis, dated Government securities (other than bearer securities), treasury bills, units of domestic mutual funds, units of Money Market Mutual Funds in India, or National Plan/Savings Certificates.
    4 (3)

A Multilateral Development Bank which is specifically permitted by Government of India to float rupee bonds in India may purchase Government dated securities.

2A.

 		 Permission to Foreign Central Banks for purchase of Government Securities.
 7 A Foreign Central Bank may purchase and sell dated Government securities/treasury bills in the secondary market
  subject to the conditions as may be stipulated by the Reserve Bank from time to time.

3.

Method of payment of purchase consideration.

 

(1)

A registered Foreign Institutional Investor who purchases securities under the provisions of this Schedule shall make the payment for purchase of such securities either by inward remittance through normal banking channels or out of funds held in Foreign Currency Account or Non-resident Rupee Account maintained by the Foreign Institutional Investor with a designated branch of an authorised dealer with the approval of Reserve Bank in terms of paragraph 2 of Schedule 2.

 

(2)

A Non-resident Indian  [***]3 who purchases securities on repatriation basis, under sub-paragraph (1) of paragraph 2 of this Schedule, shall make payment either by inward remittance through normal banking channels or out of funds held in his/its NRE/FCNR account.

 

(3)

A Non-resident Indian  [***]3  who purchases securities on non-repatriation basis, under sub-paragraph (2) of paragraph 2 of this Schedule, shall make payment either by inward remittance through normal banking channels or out of funds held in his/its NRE/FCNR/NRO/NRSR/NRNR account.
    4 (4)

A Multilateral Development Bank which purchases Government dated securities under this Schedule, shall make 

payment either by inward remittance through normal banking channels or out of funds held in the account 

opened with the specific approval of RBI.

4.

Permission for Sale of Securities.

 

A person resident outside India who has purchased securities in accordance with this Schedule may (a) sell such securities through a registered stock broker on a recognised stock exchange or (b) tender units of mutual funds to the issuer for repurchase or for payment of maturity proceeds or (c) tender Government securities/treasury bills to the Reserve Bank for payment of maturity proceeds.

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1 Word / OCBs' deleted  vide Notification No.101/2003-RB Dated Oct. 3, 2003.
2 Word 'and  overseas corporate body (OCB)' deleted  vide Notification No.101/2003-RB Dated Oct. 3, 2003.
3 Word 'or OCBs' deleted  vide Notification No.101/2003-RB Dated Oct. 3, 2003.
4 Substituted vide Notification No.106/2003-RB Dated Oct. 27, 2003.
5  form DSP under Foreign Exchange Regulation Act,1973 (continued).
6  Substituted vide NOTIFICATION NO. G.S.R. 413 [No. FEMA 149/2006-RB], dtd. Jun 09, 2006.
7  Inserted vide NOTIFICATION NO. G.S.R. 712 [No. FEMA 166/2007-RB], dtd. Oct 17, 2007.

 

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