It has been decided in consultation with Government to derecognise with immediate effect Overseas Corporate Bodies (OCBs) in India as an eligible ‘class of investor’ under various routes/schemes available under extant Foreign Exchange Regulations.

This decision is a follow up of the review of investment activities of OCBs in India, carried out by the Reserve Bank on the basis of the recommendations of the Joint Parliamentary Committee on Security Market Scam. In the light of the said review, after taking all relevant aspects into account, it has been decided in consultation with the Government, that henceforth, OCBs shall not be permitted to make fresh investment under FDI scheme (including automatic route) and in other investments / deposits / loans under the various routes / schemes available to the non-residents under the extant Exchange Control Regulations. Further, the facility of opening and maintaining fresh Non-Resident (External) Accounts (NRE) (Savings, Current, Recurring or Fixed), Foreign Currency (Non-Resident) Accounts (Banks) [FCNR(B)] and Non-Resident Ordinary (NRO) Accounts with Authorised Dealers (ADs) in India by OCBs, stands withdrawn with immediate effect.

Besides OCBs, no unincorporated entity shall be permitted to make fresh investment under FDI scheme (including automatic route).

Detailed instructions in regard to existing investments and processing of balances in existing bank accounts, are also being advised to the ADs.

It may be recalled that Reserve Bank has already prohibited OCBs from undertaking fresh purchases under the Portfolio Investment Scheme, since November 2001.

It may be noted that existing facilities available to NRIs other than OCBs are in no way modified / restricted by these instructions.

Alpana Killawala
General Manager

Press Release No. 2003-04/371

A.P.(DIR Series ) Circular No.14