FREQUENTLYASKEDQUESTIONS

ForeignInvestmentsinIndia
(UpdateduptoFebruary10,2015)
Q.1.WhataretheformsinwhichbusinesscanbeconductedbyaforeigncompanyinIndia?
Ans.AforeigncompanyplanningtosetupbusinessoperationsinIndiamay:
IncorporateacompanyundertheCompaniesAct,1956,asaJointVentureoraWhollyOwnedSubsidiary.
Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company
which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of
BranchOfficeorOtherPlaceofBusiness)Regulations,2000.
Q.2.WhatistheprocedureforreceivingForeignDirectInvestmentinanIndiancompany?
Ans.AnIndiancompanymayreceiveForeignDirectInvestmentunderthetworoutesasgivenunder:
i.AutomaticRoute
FDIisallowedundertheautomaticroutewithoutpriorapprovaleitheroftheGovernmentortheReserveBankofIndiain
allactivities/sectorsasspecifiedintheconsolidatedFDIPolicy,issuedbytheGovernmentofIndiafromtimetotime.
ii.GovernmentRoute
FDIinactivitiesnotcoveredundertheautomaticrouterequirespriorapprovaloftheGovernmentwhichareconsideredby
the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. Application can
be made in Form FCIL, which can be downloaded from http://www.dipp.gov.in. Plain paper applications carrying all
relevantdetailsarealsoaccepted.Nofeeispayable.
TheIndiancompanyhavingreceivedFDIeitherundertheAutomaticrouteortheGovernmentrouteisrequiredtocomply
withprovisionsoftheFDIpolicyincludingreportingtheFDItotheReserveBankasstatedinQ4.
Q.3.WhataretheinstrumentsforreceivingForeignDirectInvestmentinanIndiancompany?
Ans. Foreign investment is reckoned as FDI only if the investment is made in equity shares, fully and mandatorily
convertiblepreferencesharesandfullyandmandatorilyconvertibledebentureswiththepricingbeingdecidedupfrontasa
figure or based on the formula that is decided upfront. Partly paid equity shares and warrants issued by an Indian
companyinaccordancewiththeprovisionoftheCompaniesAct,2013andtheSEBIguidelines,asapplicable,shallbe
treatedaseligibleFDIinstrumentsw.e.f.July8,2014subjecttocompliancewithFDIscheme.Thepricingandreceiptof
balanceconsiderationshallbeasstipulatedintermsofA.P.(DIR Series) Circular No.3 dated July 14, 2014 as modified
fromtimetotime.
AnyforeigninvestmentintoaninstrumentissuedbyanIndiancompanywhich:
givesanoptiontotheinvestortoconvertornottoconvertitintoequityor
doesnotinvolveupfrontpricingoftheinstrumentasadatewouldbereckonedasECBandwouldhavetocomply
withtheECBguidelines.
The FDI policy provides that the price/ conversion formula of convertible capital instruments should be determined
upfrontatthetimeofissueoftheinstruments.Thepriceatthetimeofconversionshouldnotinanycasebelowerthan
thefairvalueworkedout,atthetimeofissuanceofsuchinstruments,inaccordancewiththeextantFEMAregulations
[valuationasperanyinternationallyacceptedpricingmethodologyonarmslengthbasisfortheunlistedcompaniesand
valuationintermsofSEBI(ICDR)Regulations,forthelistedcompanies]withoutanyassuredreturn.
Q.4.WhatarethemodesofpaymentallowedforreceivingForeignDirectInvestmentinanIndiancompany?
Ans. An Indian company issuing shares /convertible debentures under FDI Scheme to a person resident outside India
shallreceivetheamountofconsiderationrequiredtobepaidforsuchshares/convertibledebenturesby:
(i)inwardremittancethroughnormalbankingchannels.
(ii)debittoNRE/FCNRaccountofapersonconcernedmaintainedwithanADcategoryIbank.
(iii)conversionofroyalty/lumpsum/technicalknowhowfeedueforpaymentorconversionofECB,shallbetreatedas
considerationforissueofshares.
(iv)conversionofimportpayables/preincorporationexpenses/shareswapcanbetreatedasconsiderationforissueof
shareswiththeapprovalofFIPB.
(v) debit to noninterest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD
Category I bank and is maintained with the AD Category I bank on behalf of residents and nonresidents towards
paymentofsharepurchaseconsideration.
Ifthesharesorconvertibledebenturesarenotissuedwithin180daysfromthedateofreceiptoftheinwardremittanceor
date of debit to NRE / FCNR (B) / Escrow account, the amount shall be refunded. Further, Reserve Bank may on an
application made to it and for sufficient reasons permit an Indian Company to refund / allot shares for the amount of

consideration received towards issue of security if such amount is outstanding beyond the period of 180 days from the
dateofreceipt.
Q.5. Which are the sectors where FDI is not allowed in India, both under the Automatic Route as well as under
theGovernmentRoute?
Ans.FDIisprohibitedundertheGovernmentRouteaswellastheAutomaticRouteinthefollowingsectors:
i)AtomicEnergy
ii)LotteryBusiness
iii)GamblingandBetting
iv)BusinessofChitFund
v)NidhiCompany
vi) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and
cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors)
andPlantationsactivities(otherthanTeaPlantations)(c.f.NotificationNo.FEMA94/2003RBdatedJune18,2003).
vii) Housing and Real Estate business (except development of townships, construction of residen
tial/commercial
premises,roadsorbridgestotheextentspecifiedinNotificationNo.FEMA136/2005RBdatedJuly19,2005).
viii)TradinginTransferableDevelopmentRights(TDRs).
ix)Manufactureofcigars,cheroots,cigarillosandcigarettes,oftobaccooroftobaccosubstitutes.
(PleasealsoseethewebsiteofDepartmentofIndustrialPolicyandPromotion(DIPP),MinistryofCommerce&Industry,
GovernmentofIndiaatwww.dipp.gov.infordetailsregardingsectorsandinvestmentlimitsthereinallowed,underFDI)
Q.6. What is the procedure to be followed after investment is made under the Automatic Route or with
Governmentapproval?
Ans.Atwostagereportingprocedurehastobefollowed:
Onreceiptofshareapplicationmoney:
Within30daysofreceiptofshareapplicationmoney/amountofconsiderationfromthenonresidentinvestor,theIndian
company is required to report to the Foreign Exchange Department, Regional Office concerned of the Reserve Bank of
India, under whose jurisdiction its Registered Office is located, the Advance Reporting Form, containing the following
details:
Nameandaddressoftheforeigninvestor/s
DateofreceiptoffundsandtheRupeeequivalent
Nameandaddressoftheauthoriseddealerthroughwhomthefundshavebeenreceived
DetailsoftheGovernmentapproval,ifanyand
KYCreportonthenonresidentinvestorfromtheoverseasbankremittingtheamountofconsideration.
TheIndiancompanyhastoensurethatthesharesareissuedwithin180daysfromthedateofinwardremittancewhich
otherwisewouldresultinthecontravention/violationoftheFEMAregulations.
Uponissueofsharestononresidentinvestors:
Within 30 days from the date of issue of shares, a report in Form FCGPR PART A together with the following
documents should be filed with the Foreign Exchange Department, Regional Office concerned of the Reserve Bank of
India.
Certificate from the Company Secretary of the company accepting investment from persons resident outside India
certifyingthat:
The company has complied with the procedure for issue of shares as laid down under the FDI scheme as indicated in
theNotificationNo.FEMA20/2000RBdated3rdMay2000,asamendedfromtimetotime.
Theinvestmentiswithinthesectoralcap/statutoryceilingpermissibleundertheAutomaticRouteoftheReserveBank
anditfulfillsalltheconditionslaiddownforinvestmentsundertheAutomaticRoute,
OR
Shares have been issued in terms of SIA/FIPB approval No. dated (enclosing the FIPB
approvalcopy)
CertificatefromStatutoryAuditors/SEBIregisteredMerchantBanker/CharteredAccountantindicatingthemannerof
arrivingatthepriceofthesharesissuedtothepersonsresidentoutsideIndia.
Q.7. What are the guidelines for transfer of existing shares from nonresidents to residents or residents to non
residents?
Ans.ThetermtransferisdefinedunderFEMAasincluding"sale,purchase,acquisition,mortgage,pledge,gift,loanor
anyotherformoftransferofright,possessionorlien{Section2(ze)ofFEMA,1999}.
ThefollowingsharetransfersareallowedwithoutthepriorapprovaloftheReserveBankofIndia
A.TransferofsharesfromaNonResidenttoResidentundertheFDIschemewherethepricingguidelinesunderFEMA,

1999arenotmetprovidedthat:
i.TheoriginalandresultantinvestmentareinlinewiththeextantFDIpolicyandFEMAregulationsintermsofsectoral
caps,conditionalities(suchasminimumcapitalization,etc.),reportingrequirements,documentation,etc.
ii.Thepricingforthetransactioniscompliantwiththespecific/explicit,extantandrelevantSEBIregulations/guidelines
(suchasIPO,Bookbuilding,blockdeals,delisting,exit,openoffer/substantialacquisition/SEBISAST,buyback)and
iii. Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations / guidelines as
indicatedaboveisattachedtotheformFCTRStobefiledwiththeADbank.
B.TransferofsharesfromResidenttoNonResident:
i)wherethetransferofsharesrequiresthepriorapprovaloftheFIPBaspertheextantFDIpolicyprovidedthat:
a)therequisiteapprovaloftheFIPBhasbeenobtainedand
b)thetransferofshareadhereswiththepricingguidelinesanddocumentationrequirementsasspecifiedbytheReserve
BankofIndiafromtimetotime.
ii) where SEBI (SAST) guidelines are attracted subject to the adherence with the pricing guidelines and documentation
requirementsasspecifiedbyReserveBankofIndiafromtimetotime.
iii)wherethepricingguidelinesundertheForeignExchangeManagementAct(FEMA),1999arenotmetprovidedthat:
The resultant FDI is in compliance with the extant FDI policy and FEMA regulations in terms of sectoral caps,
conditionalities(suchasminimumcapitalization,etc.),reportingrequirements,documentationetc.
The pricing for the transaction is compliant with the specific/explicit, extant and relevant SEBI regulations / guidelines
(suchasIPO,Bookbuilding,blockdeals,delisting,exit,openoffer/substantialacquisition/SEBISAST)and
Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations / guidelines as
indicatedaboveisattachedtotheformFCTRStobefiledwiththeADbank
iv)wheretheinvesteecompanyisinthefinancialsectorprovidedthat:
The FDI policy and FEMA regulations in terms of entry route, sectoral caps, conditionalities (such as minimum
capitalization,etc.),reportingrequirements,documentationetc.,arecompliedwith.
Transferofshares/fullyandmandatorilyconvertibledebenturesbywayofGift:
ApersonresidentoutsideIndiacanfreelytransfershares/fullyandmandatorilyconvertibledebenturesbywayofgifttoa
personresidentinIndiaasunder:
AnypersonresidentoutsideIndia,(notbeingaNRIoranerstwhileOCB),cantransferbywayofgifttheshares/fullyand
mandatorilyconvertibledebenturestoanypersonresidentoutsideIndia(includingNRIsbutexcludingOCBs).
Note:TransferofsharesfromorbyerstwhileOCBswouldrequirepriorapprovaloftheReserveBankofIndia.
aNRImaytransferbywayofgift,theshares/convertibledebenturesheldbyhimtoanotherNRIonly,
AnypersonresidentoutsideIndiamaytransfershare/fullyandmandatorilyconvertibledebenturestoapersonresidentin
Indiabywayofgift.
Q.8.CanapersonresidentinIndiatransfersecuritybywayofgifttoapersonresidentoutsideIndia?
Ans.ApersonresidentinIndiawhoproposestotransfersecuritybywayofgifttoapersonresidentoutsideIndia[other
than an erstwhile OCBs] shall make an application to the Central Office of the Foreign Exchange Department, Reserve
BankofIndiafurnishingthefollowinginformation,namely:
Nameandaddressofthetransferorandtheproposedtransferee
Relationshipbetweenthetransferorandtheproposedtransferee
Reasonsformakingthegift.
IncaseofGovernmentdatedsecurities,treasurybillsandbonds,acertificateissuedbyaCharteredAccountantonthe
marketvalueofsuchsecurities.
IncaseofunitsofdomesticmutualfundsandunitsofMoneyMarketMutualFunds,acertificatefromtheissueronthe
NetAssetValueofsuchsecurity.
Incaseofshares/fullyandmandatorilyconvertibledebentures,acertificatefromaCharteredAccountantonthevalue
ofsuchsecuritiesaccordingtotheguidelinesissuedbytheSecurities&ExchangeBoardofIndiaorthevaluationasper
any internationally accepted pricing methodology on arms length basis with regard to listed companies and unlisted
companies,respectively.
CertificatefromtheIndiancompanyconcernedcertifyingthattheproposedtransferofshares/convertibledebentures,by
wayofgift,fromresidenttothenonresidentshallnotbreachtheapplicablesectoralcap/FDIlimitinthecompanyand
thattheproposednumberofshares/convertibledebenturestobeheldbythenonresidenttransfereeshallnotexceed5
percentofthepaidupcapitalofthecompany.
ThetransferofsecuritybywayofgiftmaybepermittedbytheReservebankprovided:
(i) The donee is eligible to hold such security under Schedules 1, 4 and 5 to Notification No. FEMA 20/2000RB dated
May3,2000,asamendedfromtimetotime.

(ii) The gift does not exceed 5 per cent of the paid up capital of the Indian company/ each series of debentures/ each
mutualfundscheme
(iii)Theapplicablesectoralcap/foreigndirectinvestmentlimitintheIndiancompanyisnotbreached
(iv)Thedonorandthedoneearerelativesasdefinedinsection6oftheCompaniesAct,1956.
(v) The value of security to be transferred by the donor together with any security transferred to any person residing
outsideIndiaasgiftinthefinancialyeardoesnotexceedtherupeeequivalentofUSD50000.
(vi)SuchotherconditionsasconsiderednecessaryinpublicinterestbytheReserveBank.
Q.9.Whatifthetransferofsharesfromresidenttononresidentdoesnotfallundertheabovecategories?
Ans.
TransferofSharesbyResidentwhichrequiresGovernmentapproval
The following instances of transfer of shares from residents to nonresidents by way of sale or otherwise requires
Governmentapproval:
(i)TransferofsharesofcompaniesengagedinsectorfallingundertheGovernmentRoute.
(ii)TransferofsharesresultinginforeigninvestmentsintheIndiancompany,breachingthesectoralcapapplicable.
PriorpermissionoftheReserveBankincertaincasesforacquisition/transferofsecurity
i) Transfer of shares or convertible debentures from residents to nonresidents by way of sale requires prior approval of
Reserve Bank in case where the nonresident acquirer proposes deferment of payment of the amount of consideration.
Further,incaseapprovalisgrantedforthetransaction,thesameshouldbereportedinFormFCTRStotheADCategory
Ibank,within60daysfromthedateofreceiptofthefullandfinalamountofconsideration.
(ii)ApersonresidentinIndia,whointendstotransferanysecurity,bywayofgifttoapersonresidentoutsideIndia,has
toobtainpriorapprovalfromtheReserveBank.
AnyothercasenotcoveredbyGeneralPermission.
Q10.Whatarethereportingobligationsincaseoftransferofsharesbetweenresidentandnonresident?
Ans. The transaction should be reported by submission of form FCTRS to the AD Category I bank, within 60 days
from the date of receipt/remittance of the amount of consideration. The onus of submission of the form FCTRS within
thegiventimeframewouldbeontheresidentinIndia,thetransferorortransferee,asthecasemaybe.
Q.11.Whatisthemethodofpaymentandremittance/creditofsaleproceedsincaseoftransferofsharesbetween
residentandnonresident?
Ans. The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to
India through normal banking channels. In case the buyer is a Foreign Institutional Investor (FII), payment should be
made by debit to its Special NonResident Rupee Account. In case the buyer is a NRI, the payment may be made by
way of debit to his NRE/FCNR (B) accounts. However, if the shares are acquired on nonrepatriation basis by NRI, the
considerationshallberemittedtoIndiathroughnormalbankingchannelorpaidoutoffundsheldinNRE/FCNR(B)/NRO
accounts.
The sale proceeds of shares (net of taxes) sold by a person resident outside India) may be remitted outside India. In
caseofFIIthesaleproceedsmaybecreditedtoitsspecialNonResidentRupeeAccount.IncaseofNRI,iftheshares
soldwereheldonrepatriationbasis,thesaleproceeds(netoftaxes)maybecreditedtohisNRE/FCNR(B)accountsand
ifthesharessoldwereheldonnonrepatriationbasis,thesaleproceedsmaybecreditedtohisNROaccountsubjectto
payment of taxes. The sale proceeds of shares (net of taxes) sold by an erstwhile OCB may be remitted outside India
directlyiftheshareswereheldonrepatriationbasisandifthesharessoldwereheldonnonrepatriationbasis,thesale
proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the case of erstwhile
OCBswhoseaccountshavebeenblockedbyReserveBank.
Q.12.AretheinvestmentsandprofitsearnedinIndiarepatriable?
Ans.Allforeigninvestmentsarefreelyrepatriable(netofapplicabletaxes)exceptincaseswhere:
i) the foreign investment is in a sector like Construction and Development Projects and Defence wherein the foreign
investmentissubjecttoalockinperiodand
ii)NRIschoosetoinvestspecificallyundernonrepatriableschemes.
Further,dividends(netofapplicabletaxes)declaredonforeigninvestmentscanberemittedfreelythroughanAuthorised
Dealerbank.
Q.13.Whataretheguidelinesonissueandvaluationofsharesincaseofexistingcompanies?
Ans.
A.ThepriceofsharesissuedtopersonsresidentoutsideIndiaundertheFDISchemeshallnotbelessthan:
(i)thepriceworkedoutinaccordancewiththeSEBIguidelines,asapplicable,wherethesharesofthecompanyislisted
onanyrecognisedstockexchangeinIndia
(ii) the fair valuation of shares done as per SEBI guidelines for listed companies or as per any internationally accepted
pricingmethodologyonarmslengthbasis,forunlistedcompanies
B.Thepriceofsharestransferredfromresidenttoanonresidentandviceversashouldbedeterminedasunder:

i)Transferofsharesfromaresidenttoanonresident:
a)Incaseoflistedshares,atapricewhichisnotlessthanthepriceatwhichapreferentialallotmentofshareswouldbe
madeunderSEBIguidelines.
b)Incaseofunlistedsharesatapricewhichisnotlessthanthefairvaluationasperanyinternationallyacceptedpricing
methodology on arms length basis to be determined by a SEBI registered CategoryI Merchant Banker/Chartered
Accountant.
ii)TransferofsharesfromanonresidenttoaresidentThepriceshouldnotbemorethantheminimumpriceatwhich
thetransferofshareswouldhavebeenmadefromaresidenttoanonresident.
Inanycase,thepricepersharearrivedataspertheabovemethodshouldbecertifiedbyaSEBIregisteredCategoryI
MerchantBanker/CharteredAccountant.
Q.14.WhataretheregulationspertainingtoissueofADRs/GDRsbyIndiancompanies?
Ans. i. In terms of Schedule 10 to Notification No. FEMA.20/2000RB dated May 3, 2000, a person will be eligible to
issueortransfereligiblesecuritiestoaforeigndepository,forthepurposeofconvertingthesecuritiessopurchasedinto
depository receipts in terms of Depository Receipts Scheme, 2014 and guidelines issued by the Government of India
thereunder from time to time. Depository Receipts issued under the Issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 shall be deemed to have been issued under
the corresponding provisions of DR Scheme, 2014 and have to comply with the provisions laid out in Schedule 10 of
Notificationibid.
ii. A company can issue DRs, if it is eligible to issue eligible instruments to person resident outside India under
Schedules1,2,2A,3,5and8ofNotificationNo.FEMA20/2000RBdatedMay3,2000,asamendedfromtimetotime.
iii. The aggregate of eligible securities which may be issued or transferred to foreign depositories, along with eligible
securities already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible
securitiesundertherelevantregulationsframedunderFEMA,1999.
iv.Theeligiblesecuritiesshallnotbeissuedortransferredtoaforeigndepositoryforthepurposeofissuingdepository
receipts at a price less than the price applicable to a corresponding mode of issue or transfer of such securities to
domesticinvestorsundertherelevantregulationsframedunderFEMA,1999.
v.ThedomesticcustodianshallreporttheissueofdepositoryreceiptsasperDRScheme2014totheReserveBankas
perthereportingguidelinesforDRScheme2014.
Q.15.CanIndiancompaniesissueForeignCurrencyConvertibleBonds(FCCBs)?
Ans. FCCBs can be issued by Indian companies in the overseas market in accordance with the Scheme for Issue of
ForeignCurrencyConvertibleBondsandOrdinaryShares(ThroughDepositoryReceiptMechanism)Scheme,1993.
TheFCCBbeingadebtsecurity,theissueneedstoconformtotheExternalCommercialBorrowingguidelines,issuedby
RBIvideNotificationNo.FEMA3/2000RBdatedMay3,2000,asamendedfromtimetotime.
Q.16. Can a foreign investor invest in Preference Shares? What are the regulations applicable in case of such
investments?
Ans.Yes.Foreigninvestmentthroughpreferencesharesistreatedasforeigndirectinvestment.However,thepreference
shares should be fully and mandatorily convertible into equity shares within a specified time to be reckoned as part of
sharecapitalunderFDI.InvestmentinotherformsofpreferencesharesrequirestocomplywiththeECBnorms.
Q.17.CanacompanyissuedebenturesaspartofFDI?
Ans.Yes. Debentures which are fully and mandatorily convertible into equity within a specified time would be reckoned
aspartofsharecapitalundertheFDIPolicy.
Q.18. Can shares be issued against Lumpsum Fee, Royalty, ECB , Import of capital goods/ machineries /
equipments (excluding secondhand machine) and Preoperative/preincorporation expenses (including
paymentsofrent)?
Ans. An Indian company eligible to issue shares under the FDI policy and subject to pricing guidelines as specified by
theReserveBankfromtimetotime,mayissuesharestoapersonresidentoutsideIndia:
a. beingaprovideroftechnology/technicalknowhow,againstRoyalty/Lumpsumfeesdueforpayment
b. againstExternalCommercialBorrowing(ECB)(otherthanimportduesdeemedasECBorTradeCreditasperRBI
Guidelines).
c. WithpriorapprovalfromFIPBforagainstimportofcapitalgoods/machineries/equipmentsandPreoperative/pre
incorporation expenses subject to the compliance with the extant FEMA regulations and AP Dir Series 74 dated
June30,2011.
Provided,thattheforeignequityinthecompany,aftersuchconversion,iswithinthesectoralcap.
Further,onareviewinSeptember2014,ithasbeendecidedthatanIndianinvesteecompanymayissueequityshares
against any other funds payable by them, remittance of which does not require prior permission of the Government of
India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder,
providedthat:

i. The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing
guidelinesetc.asamendedbyReservebankofIndia,fromtimetotime
Explanation:Issueofshares/convertibledebenturesthatrequireGovernmentapprovalintermsofparagraph3of
Schedule1ofFEMA20orimportduesdeemedasECBortradecreditorpayableagainstimportofsecondhand
machineryshallcontinuetobedealtinaccordancewithextantguidelines
ii. heissueofequitysharesunderthisprovisionshallbesubjecttotaxlawsasapplicabletothefundspayableand
theconversiontoequityshouldbenetofapplicabletaxes.
Q.19. What are the other modes of issues of shares for which general permission is available under
RBINotificationNo.FEMA20datedMay3,2000?
Ans.
Issue of shares under ESOP by Indian companies to its employees or employees of its joint venture or wholly
ownedsubsidiaryabroadwhoareresidentoutsideIndiadirectlyorthroughaTrustupto5%ofthepaidupcapital
ofthecompany.
IssueandacquisitionofsharesbynonresidentsaftermergerordemergeroramalgamationofIndiancompanies.
Issue shares or preference shares or convertible debentures on rights basis by an Indian company to a person
residentoutsideIndia.
Q.20.CanaforeigninvestorinvestinsharesissuedbyanunlistedcompanyinIndia?
Ans. Yes. As per the regulations/guidelines issued by the Reserve Bank of India/Government of India, investment can
bemadeinsharesissuedbyanunlistedIndiancompanysubjecttocompliancewithFEMAprovisionssuchaspricing,
reporting,etc.
Q.21.Canaforeignersetupapartnership/proprietorshipconcerninIndia?
Ans.No.OnlyNRIs/PIOsareallowedtosetuppartnership/proprietorshipconcernsinIndiaonnonrepatriationbasis.
Q.22.CanaforeigninvestorinvestinRightssharesissuedbyanIndiancompanyatadiscount?
Ans.TherearenorestrictionsunderFEMAforinvestmentinRightssharesissuedatadiscountbyanIndiancompany,
providedtherightssharessoissuedarebeingofferedatthesamepricetoresidentsandnonresidents.Theofferonright
basistothepersonsresidentoutsideIndiashallbe:
(a)inthecaseofsharesofacompanylistedonarecognizedstockexchangeinIndia,atapriceasdeterminedbythe
companyand
(b)inthecaseofsharesofacompanynotlistedonarecognizedstockexchangeinIndia,atapricewhichisnotless
thanthepriceatwhichtheofferonrightbasisismadetoresidentshareholders.
Q.23.CananADbankallowpledgeofsharesofanIndiancompanyheldbynonresidentinvestorinfavourofan
IndianbankoranOverseasbankorNBFC?
Ans.Yes,thesamehasbeenallowedvidetheinstructionsandsubjecttocompliancewiththetermsandconditionsas
mentionedintheAP(Dir.Series)CircularNo57datedMay2,2011andA.P.(DIRSeries)CircularNo.141datedJune6,
2014.
Q.24.Whatdeclaration/certificateneedstobeobtainedbytheADinrespectofutilizationofloanproceedsforthe
declaredpurpose,consequenttopledgeofshares,tocomplywithpara.2(i)(b)oftheA.P.(DIRSeries)Circular
No.57datedMay2,2011?
Ans.TheADmayobtainaboardresolutionexantepassedbytheBoardofDirectorsoftheinvesteecompany,thatthe
loan proceeds received consequent to pledge of shares, will be utilised by the investee company for the declared
purpose.
TheADmayalsoobtainacertificatefromthestatutoryauditorexpostoftheinvesteecompany,thattheloanproceeds
receivedconsequenttopledgeofshares,havebeenutilisedbytheinvesteecompanyforthedeclaredpurpose.
Q.25.IsanonresidentpermittedtoacquireshareonstockexchangeunderFDIscheme?
Ans: Prior to issuance of A.P (DIR Series) Circular No. 38, dated September 6, 2013, no person resident outside India
exceptaportfolioinvestorwasallowedtoacquiresharesonstockexchange.
Portfolio Investors registered with SEBI namely FII and QFI were eligible to acquire shares on stock exchange in
accordance with the requirements. Further, NRIs were also permitted to acquire shares on stock exchange, on
repatriationandnonrepatriationbasis,inaccordancewithportfolioinvestmentschemeforthem.
WitheffectfromAugust5,2013(dateofpublicationofrelevantnotification),anonresident,otherthanportfolioinvestor,
iseligibletoacquiresharesonstockexchangethrougharegisteredbrokersubjecttotheconditionthatthenonresident
investor has already acquired and continues to hold the control in accordance with SEBI (Substantial Acquisition of
SharesandTakeover)Regulationsi.e.hehascompliedwiththeminimumstakerequirementunderSEBIRegulations.
Q.26.WhatwillbethepricingnormsforanonresidentpermittedtoacquireshareonstockexchangeunderFDI
scheme?

Ans:Heshallacquiresharesattherulingmarketprice.
Q.27.Whetherthenonresident,permittedtoacquiresharesonstockexchangeunderFDIscheme,cansellthose
shares?
Ans: NonResidents were already permitted to sell the shares on the recognised stock exchange in accordance with
Regulation9(2)(iii(b)ofNotificationFEMANo.20datedMay3,2000.
Yes, the nonresident shall be at liberty to sell those shares as applicable under FDI guidelines. The shares acquired
underthepresentschemeshallbetreatedasacquisitionunderFDIschemeandassuchallrequirementnamely,sectoral
cap,entryroute,pricing,reporting,documentationetc.wouldhavetobecompliedwith.
Thus,nonresidenthavingacquiredsharesundertheschemecansubsequentlytransfersharesunderFDIscheme.
Q28.WhatwillbemodeofpaymentforthenonresidentpermittedtoacquireshareonstockexchangeunderFDI
scheme?
Ans:TheNonResidentpermittedtoacquiresharesundertheschemecanusefollowingmodeforpaymentofshares:
bywayofinwardremittancethroughnormalbankingchannels,or
bywayofdebittotheNRE/FCNRaccountofthepersonconcernedmaintainedwithanauthoriseddealer/bank
by debit to noninterest bearing Escrow account (in Indian Rupees) maintained in India with the AD bank in
accordancewithForeignExchangeManagement(Deposit)Regulations,2000
theconsiderationamountmayalsobepaidoutofthedividendpayablebyIndianinvesteecompany,inwhichthe
saidnonresidentholdscontrol,providedtherighttoreceivedividendisestablishedandthedividendamounthas
been credited to specially designated noninterest bearing rupee account for acquisition of shares on the floor of
stockexchange.
Q.29.CananescrowaccountbeopenedwithoutRBIpermissionforthenonresidentpermittedtoacquireshare
onstockexchangeunderFDIscheme?
Ans:Yes,anescrowaccountforthepurposecanbeopenedunderGeneralPermissionunderRegulation5(5)ofForeign
ExchangeManagement(Deposit)Regulations.[c.f.FEMANotificationNo.280datedJuly10,2013]
Q.30.WhatisthemeaningofIndiancompany?
Ans:AnIndianCompanymeansacompanyregisteredundertheCompaniesAct,1956/2013.
Q.31.Whatistheconceptofdownstreaminvestment?
Ans:Incommonunderstanding,downstreaminvestmentwouldmeaninvestmentbyacompanyinanothercompanyby
way of subscription or acquisition of shares or acquisition of control. The investment in another Indian company
(downstream) by an Indian company already having foreign investment is called downstream investment subject to
conditionsofownershipandcontrol.Thus,therewillbetwoIndianCompanies,afirstlevelcompanywhichhasaccepted
foreign investment and in turn has made investment in a second level company i.e. another Indian company. [c.f. A.P.
(DIR Series) Circular Numbers 1, 42 and 44 respectively dated July 4, 2013, September 13, 2013 and September 13,
2013].
Q.32.Whatwillbethecompositionofdirectforeigninvestment?
Ans:The concept direct foreign investment means foreign investment in any Indian company made directly in form of
Foreign Direct Investment (FDI), Portfolio investment from Foreign Institutional Investment (FII), NonResident Indian,
Qualified Foreign Investor (QFI), Registered Foreign Portfolio Investor and Foreign Venture Capital Investor i.e. under
Schedule 1, 2, 2A, 3, 6 and 8 of the Notification No. FEMA.20/2000RB dated May 3, 2000, as amended from time to
time.Thus,theinvestmentintheabovemannerwillbeaggregatedinfirstlevelIndianCompany.SuchfirstlevelIndian
Companyobviouslycannothaveindirectforeigninvestment.
Q.33.WhataboutforeigninvestmentinsecondlevelIndianCompany?
Ans: The second level Indian Company can have direct foreign investment as explained above and also have
investmentfromanotherIndiancompanywhichisnotresidentownedandcontrolledi.e.indirectforeigninvestment.
Further,themethodologyforcalculationoftotalforeigninvestmenti.e.directaswellasindirectforeigninvestmentwould
applyateverystageofinvestmentinIndiancompaniesandthusineachandeveryIndiancompany.
Q.34.WhatisthemeaningofresidentownedIndianCompany?
Ans: An Indian company be treated as Owned by resident Indian citizens if more than 50% of the capital in it is
beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by
resident Indian citizens. Thus, computation of such percentage would require ascertaining shareholding by resident
Indian citizens and if the shareholding of such company is held by another Indian companies each of such Indian
companiesareultimatelyownedandcontrolledbyresidentIndiancitizens.ItisclarifiedthatsuchIndianownersarenot
onlyresidentwithinmeaningofSection2(v)ofFEMA,1999butarealsocitizensofIndia.Theshareholdingofaforeign
citizenwhohasbecomeresidentwithinmeaningofSection2(v)ibidwillnotbeaggregatedforthebenchmarkof50%and
above.
Further, for Information & Broadcasting and defence sector if a declaration is made by persons as per section 187C of
the Indian Companies Act about a beneficial interest being held by a nonresident entity, then even though the

investmentmaybemadebyaresidentIndiancitizen,thesameshallbecountedasforeigninvestment.
Q.35.Whatismeaningofcontrol?
Ans:'Control'shallincludetherighttoappointamajorityofthedirectorsortocontrolthemanagementorpolicydecisions
including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. For
ascertainingcontrolbyresidentIndiancitizenstheabovenormsshallbeapplied.
Q.36.Whatwillbethecompositionofindirectforeigninvestment?
Ans:IndirectforeigninvestmentmeansentireinvestmentinotherIndiancompaniesbyanIndiancompany(IC),having
foreign investment in it provided IC is not owned and controlled by resident Indian citizens and/or Indian Companies
which are owned and controlled by resident Indian citizens or where the IC is owned or controlled by nonresidents.
However, as an exception, the indirect foreign investment in the 100% owned subsidiaries of operatingcum
investing/investing companies will be limited to the foreign investment in the operatingcuminvesting/ investing
company. Thus, if an Indian company A has 60% FDI/ Portfolio investment/FCCB/FVCI/ Depository Receipts (issued
under Schedule 10 of Notification No. FEMA.20/2000RB dated May 3, 2000 with equity shares or compulsorily and
mandatorilyconvertiblepreferencesharesorcompulsoryandmandatorilyconvertibledebenturesorwarrantoranyother
securityinwhichforeigndirectinvestmentcanbemadeintermsofSchedule1oftheNotificationibid,asunderlying)in
it,investsin100%oftheshareholdingofanotherIndiancompanyB,itwillbetakenasBhasindirectforeigninvestment
of60%.But,foreignownedIndiancompanyA,havingforeigninvestmentofmorethan50%butlessthan100%,invests
in20%oftheshareholdingofanotherIndiancompanyB,itwillbetakenasBhasindirectforeigninvestmentof20%.
Q.37.Arethereanyexceptiononapplicationofdownstreaminvestment?
Ans:Thedownstreamrulemaynotbeappliedinfollowingcases:
WherethefirstlevelIndiancompanyisownedandcontrolledbyresidentIndiancitizens
whereforinvestmentinsectorsitisspecifiedinastatuteorarulethereunder.Theabovemethodologyofdetermining
directandindirectforeigninvestmentthereforedoesnotapplytotheinsurancesectorwhichwillcontinuetobegoverned
bytherelevantRegulation
Downstreaminvestment/smadebyabankingcompany,asdefinedinclause(c)ofSection5oftheBankingRegulation
Act, 1949, incorporated in India, which is owned and/or controlled by nonresidents/ a nonresident entity/nonresident
entities, under Corporate Debt Restructuring (CDR), or other loan restructuring mechanism, or in trading books, or for
acquisitionofsharesduetodefaultsinloans,shallnotcounttowardsindirectforeigninvestment.
Q.38.Whatareimplicationsofapplicabilityofdownstreamrule:
Ans: While the norms of foreign investment for first level Indian company were already in place, the downstream
investmentinsecondlevelIndiancompanieswouldnowhavetobeinaccordance/compliancewiththerelevantsectoral
conditionsonentryroute,conditionalitiesandcaps.
SuchacompanyhastonotifySecretariatforIndustrialAssistance,DIPPandFIPBofitsdownstreaminvestmentinthe
formavailableathttp://www.fipbindia.comwithin 30 days of such investment, even if capital instruments have not been
allottedalongwiththemodalityofinvestmentinnew/existingventures(with/withoutexpansionprogramme).
ThedownstreaminvestmentbywayofinductionofforeignequityinanexistingIndianCompanytobedulysupportedby
aresolutionofitsBoardofDirectorsasalsoaShareholdersAgreement,ifany
Theissue/transfer/pricing/valuationofsharesshallcontinuetobeinaccordancewithextantSEBI/RBIguidelines
For the purpose of downstream investment, the Indian companies making the downstream investments would have to
bring in requisite funds from abroad and not use funds borrowed in the domestic market. This would, however, not
preclude downstream operating companies, from raising debt in the domestic market. Downstream investments through
internalaccrualsarepermissible.
Q.39. As portfolio investment may undergo change quite frequently, it will be difficult to monitor downstream
investment?
Ans: To facilitate such computation, for the purpose portfolio investments either by FIIs, NRIs or QFIs holding as on
March 31 of the previous year would be taken into account. e.g. for monitoring foreign investment for the financial year
201112,portfolioinvestmentasonMarch31,2011wouldbetakenintoaccount.
Q.40.Whatistheproceduretoensurecompliancewiththedownstreaminvestmentguidelines?
Ans: The FDI recipient Indian company at the first level which is responsible for ensuring compliance with the FDI
conditionalities like no indirect foreign investment in prohibited sector, entry route, sectoral cap/conditionalities, etc. for
thedownstreaminvestmentmadebyinthesubsidiarycompaniesatsecondlevelandsoonandsoforthwouldobtaina
certificatetothiseffectfromitsstatutoryauditoronanannualbasisasregardsstatusofcompliancewiththeinstructions
on downstream investment and compliance with FEMA provisions. The fact that statutory auditor has certified that the
companyisincompliancewiththeregulationsasregardsdownstreaminvestmentandotherFEMAprescriptionswillbe
dulymentionedintheDirectorsreportintheAnnualReportoftheIndiancompany.Incasestatutoryauditorhasgivena
qualified report, the same shall be immediately brought to the notice of the Reserve Bank of India, Foreign Exchange
Department(FED),RegionalOffice(RO)oftheReserveBankinwhosejurisdictiontheRegisteredOfficeofthecompany
islocated.
Q.41.WhatwillbetheroleofRegionalOfficeofRBI?
Ans: Where the statutory auditor has given qualified report about the downstream investment, RO shall take action to

ensurecomplianceinconsultationwiththeCentralOffice.
Q.42.SincetheinstructionswereissuedbyRBIin2013fortheperiodcommencingfromFebruary13,2009,how
toensurecomplianceretrospectively?
Ans:AsregardsinvestmentsmadebetweenFebruary13,2009andthedateofpublicationoftheFEMAnotificationi.e.
June 21, 2013, Indian companies shall be required to intimate, within 90 days from the date of this circular, through an
ADCategoryIbanktotheconcernedRegionalOfficeoftheReserveBank,inwhosejurisdictiontheRegisteredOfficeof
the company is located, detailed position where the issue/transfer of shares or downstream investment is not in
conformity with the regulatory framework now being prescribed. Reserve Bank shall consider treating such cases as
compliantwiththeseguidelineswithinaperiodofsixmonthsorsuchextendedtimeasconsideredappropriatebyRBIin
consultationwithGovernmentofIndia.
ROs shall forward such consolidated statement to the Central Office with their comments for ensuring compliance with
theinstructions.
Q.43.IsfirstlevelIndianinvesteecompanymakingdownstreaminvestmentrequiredtofileFCGPR?
Ans: No, it is not required. FCGPR is not to be filed by the first level Indian Investee Company at the time of making
downstreaminvestmentinsecondlevelIndianInvesteeCompany.However,compliancehastobeensuredasexplained
underQ41.
Q.44.WhataretheextantpricingguidelinesforFDIinstruments?
Ans:IntermsofextantFEMAregulations,foreigninvestmentinanIndianinvesteecompanyshouldbesubjecttopricing
guidelinesasstipulatedbyRBI/SEBIfromtimetotime.Earlier,thepricingguidelinesforFDIinstrumentswithoptionality
clauseswasdecidedintermsofA.P.(DIRSeries)CircularNo.86datedJanuary9,2014.
The extant pricing guidelines for FDI investment has since been reviewed vide A. P. (DIR Series) Circular No. 4 dated
July15,2014asunder:
(i)Incaseoflistedcompaniestheissueandtransferofsharesincludingcompulsorilyconvertiblepreferencesharesand
compulsorilyconvertibledebenturesshallbeaspertheSEBIguidelinesandforFDIinstrumentswithoptionalityclauses
shall continue to be in accordance with A.P. (DIR Series) Circular No. 86 dated January 9, 2014, i.e., the nonresident
investorshallbeeligibletoexitatthemarketpriceprevailingontherecognisedstockexchangessubjecttolockinperiod
asstipulated,withoutanyassuredreturn.
(ii)Incaseofunlistedcompanies,theissueandtransferofsharesincludingcompulsorilyconvertiblepreferenceshares
and compulsorily convertible debentures with or without optionality clauses shall be at a price worked out as per any
internationallyacceptedpricingmethodologyonarmslengthbasis.
Q.45. The instructions prescribe that in case of a listed company, the nonresident investor shall be eligible to
exit at the market price obtaining on recognised stock exchanges. Does it mean that all exit from investment in
caseofalistedcompanyhavingFDIwithoptionalityaretohappenonthefloorofstockexchange?
Ans: The optionality clause creates an obligation for the investee to buy the shares from the investor at the price
prevailingonthestockmarketattherelevanttime.
II.ForeignTechnologyCollaborationAgreement
Q.46. Whether the payment in terms of foreign technology collaboration agreement' can be made by an
AuthorisedDealer(AD)bank?
Ans. Yes, RBI has delegated the powers, to make payments for royalty, lumpsum fee for transfer of technology and
payment for use of trademark/brand name in terms of the foreign technology collaboration agreement entered by the
Indiancompanywithitsforeignpartners,totheADbankssubjecttocompliancewiththeprovisionsofForeignExchange
Management(CurrentAccountTransactions)Rules,2000.Further,therequirementofregistrationoftheagreementwith
theRegionalOfficeofReserveBankofIndiahasalsobeendoneawaywith.
III.ForeignPortfolioInvestment
Q.1.WhataretheregulationsregardingPortfolioInvestmentsbyregisteredForeignPortfolioInvestors(RFPIs)?
Ans. Investment by RFPI registered in accordance with SEBI guidelines including deemed RFPI [erstwhile FII, QFI) is
permitted.RFPImayincludeAssetManagementCompanies,PensionFunds,MutualFunds,andInvestmentTrustsas
NomineeCompanies,Incorporated/InstitutionalPortfolioManagersortheirPowerofAttorneyholders,UniversityFunds,
EndowmentFoundations,CharitableTrustsandCharitableSocieties.
Investment by RFPIs cannot exceed 10 per cent of the paid up capital of the Indian company. All RFPI/FII/QFI taken
togethercannotacquiremorethan24percentofthepaidupcapitalofanIndianCompany.
RFPIcaninvestinprimaryissuesofNonConvertibleDebentures(NCDs)/bondsonlyiflistingofsuchbonds/NCDsis
committed to be done within 15 days of such investment. In case the NCDs/bonds issued to the SEBI RFPI are not
listedwithin15daysofissuance,foranyreason,thentheRFPIshallimmediatelydisposeofthesebonds/NCDseither
bywayofsaletoathirdpartyortotheissuerandthetermsofoffertoRFPIshouldcontainaclausethattheissuerof
suchdebtsecuritiesshallimmediatelyredeem/buybackthesaidsecuritiesfromtheRFPIinsuchaneventuality.
Q.2.IsanIndianInvesteeCompanyeligibletoraisetheaggregatecapof24%forRFPI?
Ans. An Indian company can raise the 24 per cent ceiling to the sectoral cap / statutory ceiling, as applicable, by
passing a resolution by its Board of Directors followed by passing a Special Resolution to that effect by their General

Body.IndiancompanyraisingtheaggregateRFPIinvestmentlimitof24percenttothesectoralcap/statutorylimit,as
applicable to the respective Indian company, should necessarily intimate the same to the Reserve Bank of India,
immediately, as hitherto, along with a Certificate from the Company Secretary stating that all the relevant provisions of
theextantForeignExchangeManagementAct,1999regulationsandtheForeignDirectPolicy,asamendedfromtimeto
time,havebeencompliedwith.
The Indian Company thus raising the aggregate cap for RFPI investment should inform Reserve Bank of India, Foreign
Exchange Department, Central Office, Shahid Bhagat Singh Marg, Fort, and Mumbai 400001. The intimation should
necessarily be accompanied by (a) a resolution passed by Board of Directors of the Company enhancing the FII
aggregate cap, (b) A special Resolution to the effect passed by the shareholders of the Company (c) a certificate from
the Company Secretary stating that all the relevant provisions of the extant Foreign Exchange Management Act, 1999
regulationsandtheForeignDirectPolicy,asamendedfromtimetotime,havebeencompliedwith,(d)acertificatefrom
theCompanySecretarystatingthatalltheresidentshareholdersoftheinvesteecompanyareownedandcontrolledby
residents.
ToavoidinconveniencetotheRFPIinvestors/Indiancompany,suchintimationshouldbewellinadvanceelseRBIshall
caution list the company on FII investment in the company reaching 22% of paid up capital or paid up capital of each
seriesofconvertibledebenturesissuedbythecompany.
Q.3.WhataretheregulationsregardingPortfolioInvestmentsbyNRIs/PIOs?
Ans.NonResidentIndian(NRIs)andPersonsofIndianOrigin(PIOs)canpurchaseorsellshares/fullyandmandatorily
convertible debentures of Indian companies on the Stock Exchanges under the Portfolio Investment Scheme. For this
purpose, the NRI/ PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment. All sale/
purchasetransactionsaretoberoutedthroughthedesignatedbranch.
AnNRIoraPIOcanpurchasesharesupto5percentofthepaidupcapitalofanIndiancompany.AllNRIs/PIOstaken
togethercannotpurchasemorethan10percentofthepaidupvalueofthecompany.
The sale proceeds of the repatriable investments can be credited to the NRE/ NRO, etc. accounts of the NRI/ PIO,
whereasthesaleproceedsofnonrepatriableinvestmentcanbecreditedonlytoNROaccounts.
Thesaleofshareswillbesubjecttopaymentofapplicabletaxes.
Q.4. Is Indian Investee Company eligible to raise the aggregate cap of 10% for Portfolio Investments by SEBI
registeredNRI/PIO?
Ans.This limit for investment by NRI/PIO under Portfolio investment scheme can be increased by the Indian company
from 10 per cent to 24 per cent by passing a General Body resolution. Indian company raising the aggregate NRI
investment limit of 10 per cent to 24 per cent, should necessarily intimate the same immediately to Reserve Bank of
India, Foreign Exchange Department, Central Office, Shahid Bhagat Singh Marg, Fort, Mumbai 400001. The intimation
shouldnecessarilybeaccompaniedby(a)aresolutionpassedbyBoardofDirectorsoftheCompanyenhancingtheFII
aggregate cap, (b) A special Resolution to the effect passed by the shareholders of the Company (c) a certificate from
the Company Secretary stating that all the relevant provisions of the extant Foreign Exchange Management Act, 1999
regulationsandtheForeignDirectPolicy,asamendedfromtimetotime,havebeencompliedwith,(d)acertificatefrom
theCompanySecretarystatingthatalltheresidentshareholdersoftheinvesteecompanyareownedandcontrolledby
residents
To avoid inconvenience to the company such intimation should be well in advance else RBI shall caution list the
companyonFIIinvestmentinthecompanyreaching8%ofpaidupcapitalorpaidupcapitalofeachseriesofconvertible
debenturesissuedbythecompany.
Q.5. With Reference to instructions issued for NRI PIS Scheme in Para. 2 (i) and (ii) of the A. P. (DIR Series)
CircularNo.29datedAugust20,2013whetherRBIwillallotseparate/newUniqueCodeNo.totheLinkOffice
oftheADbankorwilltheCurrentCodeNo.allocatedwillcontinuetobetheUniqueCodeNo.?
Ans.IftheADbanksLinkOfficealreadyhasaCodeNo.allottedbyRBI,itwillcontinuetobetheUniqueCodeNumber
forreportingthetransactionsofNRIPIStoRBIandthebankneednotapplyfornewcode.
Q.6.CananADbankdebitinvestmentadvisoryfees,charteredaccountantsfeesforissueof15CA/CBcertificates
toNRE/NROPISaccount,asthepermissibledebitundertheheadAnychargesonaccountofsale/purchase
ofsharesorconvertibledebenturesunderPIS?
Ans.Thechargestowardsinvestmentadvisoryfees,charteredaccountantfeesforissueof15CA/CBcertificates,etc.
related to the transactions of sale/purchase of shares / debentures under PIS, may be debited to the NRE / NRO PIS
accounts.
Q.7. Under FERA 1973, in terms of para. 2 of the A.D.(M.A. Series) Cir. No. 32 dated November 1, 1999, powers
were delegated to the ADs, to grant permissions to the NRIs/OCBs who made portfolio investments through a
designatedbranchofanAD,onrepatriationornonrepatriationbasis.Theinvestmentcouldbemadeinshares,
debentures,Govt.securities(otherthanbearersecurities),treasurybills,unitsofMFs,etc.Hence,theprescribed
formatforpermissionletterforinvestmentonrepatriationbasisviz.RBIRPConrepatriationbasis[availableat
page nos. 37 to 40 of the A.P. (DIR Series) Circular No. 29, dated August 20, 2013 on RBI website] includes a
referencetoallsuchinvestmentsbesidesequitysharesandconvertibledebentures.Whetherthesameformatis
applicableunderFEMAalso?
Ans.Under FEMA, the PIS includes investment only in equity shares and convertible debentures of Indian companies,
on repatriation or nonrepatriation basis. Hence, while issuing the approval letter to their NRI clients for undertaking

investments under PIS, the relevant paragraphs in the format of permission letter viz. RBIRPC on repatriation basis,
willberequiredtobesuitablymodifiedbytheADs.Inthisconnection,attentionoftheADisalsoinvitedtopara.2(iii)of
theA.P.(DIRSeries)CircularNo.29,datedAugust20,2013.
Q.8. Whether the transfer of funds from NRE PIS and NRO PIS accounts to NRE /NRO accounts of the NRI
(openedunderprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000amendedfromtimetotime),is
allowed on account of sale/maturity proceeds of equity shares and convertible debentures purchased and sold
underPortfolioInvestmentScheme(PIS)throughNREPISandNROPISaccounts?
Ans.ItisclarifiedthatNREPISandNROPISareessentiallyNREandNROaccountsrespectivelyandsodesignatedto
keep the portfolio investment related operations of the account holder segregated for facilitating identification and
compliance.Assuch,thereisnoprohibitionontransferofanybalancesheldinaNREPISaccounttoaNREaccountor
inaNROPISaccounttoaNROaccount,subjectofcoursetopaymentoftaxes,ifandasapplicable.
Q.9.WhethertransferoffundsisallowedfromNREPISaccountoftheNRItohisNROaccountopenedunder
theprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000,amendedfromtimetotime?
Ans.Itisclarifiedthatthetransferoffundsonaccountofnetsale/maturityproceedsofshares/debentures(netofall
applicabletaxes),maybeallowedbytheADBankfromNREPISaccountofaNRItothesaidNRIsNROaccount.
Q.10.WhethertransferoffundsisallowedfromNROPISaccountoftheNRItohisNREaccountopenedunder
theprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000,amendedfromtimetotime?
Ans. It is clarified that the transfer of funds on account of net sale / maturity proceeds (net of all applicable taxes), of
shares/debenturesmaybeallowedbytheADBankfromNROPISaccountofaNRItothesaidNRIsNREaccount,
subjecttothefollowingconditions:
suchtransferoffundsshouldbewithintheoverallceilingofUSDonemillionperfinancialyear
subjecttopaymentoftax,asapplicable(i.e.asapplicableiffundswereremittedabroad)and
TheADshouldensurethecompliancewiththelimitofUSDonemillionfortransferoffundsbytheNRI.
IV.Investmentinothersecurities
Q.1.CanaNonresidentIndian(NRI)andSEBIregisteredForeignInstitutionalInvestor(FII)investinGovernment
Securities/TreasurybillsandCorporatedebt?
Ans. Under the FEMA Regulations, only NRIs and SEBI registered FIIs are permitted to purchase Government
Securities/TreasurybillsandCorporatedebt.Thedetailsareasunder:
A.ANonresidentIndiancanpurchasewithoutlimit,
(1)onrepatriationbasis
i)DatedGovernmentsecurities(otherthanbearersecurities)ortreasurybillsorunitsofdomesticmutualfunds
ii)Bondsissuedbyapublicsectorundertaking(PSU)inIndiaand
iii)SharesinPublicSectorEnterprisesbeingdisinvestedbytheGovernmentofIndia.
(2)onnonrepatriationbasis
i)DatedGovernmentsecurities(otherthanbearersecurities)ortreasurybillsorunitsofdomesticmutualfunds
ii)UnitsofMoneyMarketMutualFundsinIndiaand
iii)NationalPlan/SavingsCertificates.
B. A SEBI registered FII may purchase, on repatriation basis, dated Government securities/ treasury bills, listed non
convertibledebentures/bondsissuedbyanIndiancompanyandunitsofdomesticmutualfundseitherdirectlyfromthe
issuerofsuchsecuritiesorinanymanneraspertheprevalent/approvedmarketpractice.
Purchase of debt instruments including Upper Tier II instruments issued by banks in India and denominated in Indian
Rupees by FIIs are subject to limits notified by SEBI and the Reserve Bank from time to time. The present limit for
investment in Corporate Debt Instruments like nonconvertible debentures / bonds by RFPI/FII/QFI and long term
investorsisUSD51billion.FPIsshallnotbeallowedtomakeanyfurtherinvestmentinCPs.
The present limit for investment by SEBI registered Foreign Institutional Investors (FIIs), SEBI registered Qualified
ForeignInvestors(QFIs)andlongterminvestorsregisteredwithSEBIandRegisteredForeignPortfolioInvestor(RFPI)in
GovernmentSecuritiesisUSD30billion.
Q.2.CanaNRIandSEBIregisteredFIIinvestinTierIandTierIIinstrumentsissuedbybanksinIndia?
Ans.RFPIandNRIshavebeenpermittedtosubscribetothePerpetualDebtinstruments(eligibleforinclusionasTierI
capital) and Debt Capital instruments (eligible for inclusion as upper Tier II capital), issued by banks in India and
denominatedinIndianRupees,subjecttothefollowingconditions:
InvestmentbyallRFPIinRupeedenominatedPerpetualDebtinstruments(TierI)shouldnotexceedanaggregate
ceilingof49percentofeachissueandinvestmentbyindividualFIIshouldnotexceedthelimitof10percentof
eachissue.
Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an
aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of

eachissue.
InvestmentbyRFPIsinRupeedenominatedDebtCapitalinstruments(TierII)shallbewithinthelimitsstipulated
bySEBIforRFPI/FII/QFIinvestmentincorporatedebtinstruments.
Investment by NRIs in Rupee denominated Debt Capital instruments (Tier II) shall be in accordance with the
extantpolicyforinvestmentbyNRIsinotherdebtinstruments.
Investment by RFPIs in Rupee denominated Upper Tier II Instruments raised in Indian Rupees will be within the
limitprescribedbytheSEBIforinvestmentincorporatedebtinstruments.
The details of the secondary market sales / purchases by RFPIs and the NRIs in these instruments on the floor of the
stock exchange are to be reported by the custodians and designated Authorised Dealer banks respectively, to the
ReserveBankthroughthesoftcopyoftheFormsLEC(FII)andLEC(NRI).
Q.3.CanaNRIandRFPIinvestinIndianDepositoryReceipts(IDRs)?
Ans. NRI and RFPIs have been permitted to invest, purchase, hold and transfer IDRs of eligible companies resident
outsideIndiaandissuedintheIndiancapitalmarket,subjecttothefollowingconditions:
(i)Thepurchase,holdandtransferofIDRsisinaccordancewiththeForeignExchangeManagement(TransferorIssue
of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA 20 / 2000RB
datedMay3,2000,asamendedfromtimetotime.
AlimitedtwowayfungibilityforIDRssubjecttothefollowingtermsandconditions:
The conversion of IDRs into underlying equity shares would be governed by the conditions mentioned in paras 6
and7ofA.P.(DIRSeries)CircularNo.5datedJuly22,2009.
FreshIDRswouldcontinuetobeissuedintermsoftheprovisionsofA.P.(DIRSeries)CircularNo.5datedJuly
22,2009.
The reissuance of IDRs would be allowed only to the extent of IDRs that have been redeemed /converted into
underlyingsharesandsold.
There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs by eligible foreign
companies in Indian markets. This cap would be akin to the caps imposed for FII investment in debt securities
andwouldbemonitoredbySEBI.
IDRsshallnotberedeemableintounderlyingequitysharesbeforetheexpiryofoneyearperiodfromthedateof
issueoftheIDRs.
Atthetimeofredemption/conversionofIDRsintotheunderlyingshares,theIndianholders(personsresidentin
India) of IDRs shall comply with the provisions of the Foreign Exchange Management (Transfer or Issue of Any
Foreign Security) Regulations, 2004 notified vide Notification No. FEMA 120 / RB2004 dated July 7 2004, as
amendedfromtimetotime.
TheFEMAprovisionsshallnotapplytotheholdingoftheunderlyingshares,onredemptionofIDRsbytheFIIsincluding
SEBI approved subaccounts of the FIIs and NRIs. The issuance, redemption and fungibility of IDRs would also be
subjecttotheSEBI(IssueofCapitalandDisclosureRequirements)Regulations,2009,asamendedfromtimetotimeas
wellasotherrelevantguidelinesissuedinthisregardbytheGovernment,theSEBIandtheRBIfromtimetotime.
Q.4. Can a person resident in India invest in Indian Depository Receipts (IDRs)? What is the procedure for
redemptionofIDRsheldbypersonsresidentinIndia?
Ans. A person resident in India may purchase, hold and transfer IDRs of eligible companies resident outside India and
issuedintheIndiancapitalmarket.TheFEMARegulationsshallnotbeapplicabletopersonsresidentinIndiaasdefined
under section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of a transaction on a
recognizedStockExchangeinIndia.However,atthetimeofredemption/conversionofIDRsintounderlyingshares,the
Indianholders(personsresidentinIndia)ofIDRsshallcomplywiththeprovisionsoftheForeignExchangeManagement
(Transfer or Issue of Any Foreign Security) Regulations, 2004 notified vide Notification No. FEMA 120 / RB2004 dated
July72004,asamendedfromtimetotime.ThefollowingguidelinesshallbefollowedonredemptionofIDRsbypersons
residentinIndia:
i.ListedIndiancompaniesmayeithersellorcontinuetoholdtheunderlyingsharessubjecttothetermsandconditions
asperRegulations6Band7ofNotificationNo.FEMA120/RB2004datedJuly7,2004,asamendedfromtimetotime.
ii. Indian Mutual Funds, registered with SEBI may either sell or continue to hold the underlying shares subject to the
termsandconditionsasperRegulation6CofNotificationNo.FEMA120/RB2004datedJuly7,2004,asamendedfrom
timetotime.
iii. Other persons resident in India including resident individuals are allowed to hold the underlying shares only for the
purposeofsalewithinaperiodof30daysfromthedateofconversionoftheIDRsintounderlyingshares.
V.ForeignVentureCapitalInvestment
WhataretheregulationsforForeignVentureCapitalInvestment?
Ans.

ASEBIregisteredForeignVentureCapitalInvestorhasgeneralpermissionfromtheReserveBankofIndiatoinvestina
VentureCapitalFund(VCF)oranIndianVentureCapitalUndertaking(IVCU),inthemannerandsubjecttothetermsand
conditionsspecifiedinSchedule6ofRBINotificationNo.FEMA20/2000RBdatedMay3,2000,asamendedfromtime
totime.TheseinvestmentsbySEBIregisteredFVCI,wouldbesubjecttotheSEBIregulationandsectorspecificcaps
ofFDI.
FVCIs can purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCU or of a VCF
through initial public offer or private placement in units of schemes / funds set up by a VCF. At the time of granting
approval, the Reserve Bank permits the FVCI to open a Foreign Currency Account and/ or a Rupee Account with a
designatedbranchofanADCategoryIbank.
FVCIsallowedtoinvestintheeligiblesecurities(equity,equitylinkedinstruments,debt,debtinstruments,debenturesof
anIVCUorVCF,unitsofschemes/fundssetupbyaVCF)bywayofprivatearrangement/purchasefromathirdparty
also.FVCIsarealsoallowedtoinvestinsecuritiesonarecognizedstockexchange.
Thepurchase/saleofshares,debenturesandunitscanbeatapricethatismutuallyacceptabletothebuyerandthe
seller.
ADCategoryIbankscanofferforwardcovertoFVCIstotheextentoftotalinwardremittance.IncasetheFVCIhas
made any remittance by liquidating some investments, original cost of the investments has to be deducted from the
eligiblecovertoarriveattheactualcoverthatcanbeoffered.
VI.InvestmentbyQFIs
Q.1.WhatareQFIsandwhataretheinvestmentstheycanundertake?
Ans:QFIsmeanapersonwhofulfilsthefollowingcriteria:
(a) Resident in a country that is a member of Financial Action task Force (FATF) or a member of a group which is a
memberofFATFand
(b)ResidentinacountrythatisasignatorytoIOSCOsMMoU(AppendixASignatories)orasignatoryofabilateralMoU
withSEBI
PROVIDEDthatthepersonisnotresidentinacountrylistedinthepublicstatementsissuedbyFATFfromtimetotime
on jurisdictions having a strategic AML/CFT deficiencies to which counter measures apply or that have not made
sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to
addressthedeficiencies
Further such person is not resident in India and is not registered with SEBI as a Foreign Institutional Investor (FII) or
SubAccountofanFIIorForeignVentureCapitalInvestor(FVCI).
Explanation:
bilateralMoUwithSEBIshallmeanabilateralMoUbetweenSEBIandtheoverseasregulatorthat,interalia,provides
forinformationsharingarrangements.
MemberofFATFshallnotmeananassociatememberofFATF.
Q.2.WhataretheinvestmentsQFIscanundertakeandwhataretheapplicablecapsforsuchinvestment?
Ans:QFIsarenowbeingtreatedasdeemedRFPIandrulesasapplicabletoRFPIsshallbeapplicable.
Q.3. What are the reporting requirements for acquisition/transfer of shares by nonresidents under respective
schedulestoFEMA20:
Ans:Followingarethereportingrequirements
(A)ReportingofFDIforfreshissuanceofshares
(i)Reportingofinflow
(a)TheactualinflowsonaccountofsuchissuanceofsharesshallbereportedbytheADbranchintheRreturnsinthe
normalcourse.
(b) An Indian company receiving investment from outside India for issuing shares / convertible debentures / preference
sharesundertheFDIScheme,shouldreportthedetailsoftheamountofconsiderationtotheRegionalOfficeconcerned
of the Reserve Bank through its AD Category I bank, not later than 30 days from the date of receipt in the Advance
Reporting Form enclosed in Annex 6. Noncompliance with the above provision would be reckoned as a contravention
underFEMA,1999andcouldattractpenalprovisions.
TheFormcanalsobedownloadedfromtheReserveBank'swebsite
http://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx
(c)Indiancompaniesarerequiredtoreportthedetailsofthereceiptoftheamountofconsiderationforissueofshares/
convertibledebentures,throughanADCategoryIbank,togetherwithacopy/iesoftheFIRC/sevidencingthereceiptof
theremittancealongwiththeKYCreportonthenonresidentinvestorfromtheoverseasbankremittingtheamount.The
reportwouldbeacknowledgedbytheRegionalOfficeconcerned,whichwillallotaUniqueIdentificationNumber(UIN)for
theamountreported.
(ii)Timeframewithinwhichshareshavetobeissued
Theequityinstrumentsshouldbeissuedwithin180daysfromthedateofreceiptoftheinwardremittanceorbydebitto
the NRE/FCNR (B) /Escrow account of the nonresident investor. In case, the equity instruments are not issued within

180daysfromthedateofreceiptoftheinwardremittanceordateofdebittotheNRE/FCNR(B)account,theamountof
consideration so received should be refunded immediately to the nonresident investor by outward remittance through
normalbankingchannelsorbycredittotheNRE/FCNR(B)/Escrowaccount,asthecasemaybe.Noncompliancewith
theaboveprovisionwouldbereckonedasacontraventionunderFEMAandcouldattractpenalprovisions.Inexceptional
cases, refund / allotment of shares for the amount of consideration outstanding beyond a period of 180 days from the
dateofreceiptmaybeconsideredbytheReserveBank,onthemeritsofthecase.
(iii)Reportingofissueofshares
(a) After issue of shares (including bonus and shares issued on rights basis and shares issued on conversion of stock
option under ESOP scheme)/ convertible debentures / convertible preference shares, the Indian company has to file
Form FCGPR, through its AD Category I bank, not later than 30 days from the date of issue of shares. The Form can
alsobedownloadedfromtheReserveBank'swebsitehttp://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx
Noncompliance with the above provision would be reckoned as a contravention under FEMA and could attract penal
provisions.
(b) Form FCGPR has to be duly filled up and signed by Managing Director/Director/Secretary of the Company and
submittedtotheAuthorisedDealerofthecompany,whowillforwardittotheconcernedRegionalOfficeoftheReserve
Bank.ThefollowingdocumentshavetobesubmittedalongwithFormFCGPR:
(i)AcertificatefromtheCompanySecretaryofthecompanycertifyingthat:
a)alltherequirementsoftheCompaniesAct,1956havebeencompliedwith
b)termsandconditionsoftheGovernmentsapproval,ifany,havebeencompliedwith
c)thecompanyiseligibletoissuesharesundertheseRegulationsand
d)thecompanyhasalloriginalcertificatesissuedbyADbanksinIndiaevidencingreceiptofamountofconsideration.
(ii)AcertificatefromSEBIregisteredMerchantBankerorCharteredAccountantindicatingthemannerofarrivingatthe
priceofthesharesissuedtothepersonsresidentoutsideIndia.
(c)ThereportofreceiptofconsiderationaswellasFormFCGPRhavetobesubmittedbytheADbanktotheRegional
OfficeconcernedoftheReserveBankunderwhosejurisdictiontheregisteredofficeofthecompanyissituated.
d)Issueofbonus/rightssharesorsharesonconversionofstockoptionsissuedunderESOPtopersonsresidentoutside
Indiadirectlyoronamalgamation/mergerwithanexistingIndiancompany,aswellasissueofsharesonconversionof
ECB/royalty/lumpsumtechnicalknowhowfee/importofcapitalgoodsbyunitsinSEZshastobereportedinForm
FCGPR.
B.ReportingofFDIforTransferofsharesroute
(i) The actual inflows and outflows on account of such transfer of shares shall be reported by the AD branch in the R
returnsinthenormalcourse.
(ii)ReportingoftransferofsharesbetweenresidentsandnonresidentsandviceversaistobemadeinFormFCTRS.
The Form FCTRS should be submitted to the AD Category I bank, within 60 days from the date of receipt of the
amount of consideration. The onus of submission of the Form FCTRS within the given timeframe would be on the
transferor/transferee,residentinIndia.
(iii) The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into
India through normal banking channels, shall be subjected to a KYC check (Annex 9ii) by the remittance receiving AD
CategoryIbankatthetimeofreceiptoffunds.Incase,theremittancereceivingADCategoryIbankisdifferentfrom
the AD Category I bank handling the transfer transaction, the KYC check should be carried out by the remittance
receiving bank and the KYC report be submitted by the customer to the AD Category I bank carrying out the
transactionalongwiththeFormFCTRS.
(iv)TheADbankshouldscrutinisethetransactionsandonbeingsatisfiedaboutthetransactionsshouldcertifytheform
FCTRSasbeinginorder.
(v) The AD bank branch should submit two copies of the Form FCTRS received from their constituents/customers
together with the statement of inflows/outflows on account of remittances received/made in connection with transfer of
shares,bywayofsale,toIBD/FED/orthenodalofficedesignatedforthepurposebythebankintheproforma(whichis
tobepreparedinMSExcelformat).TheIBD/FEDorthenodalofficeofthebankwillconsolidatereportinginrespectof
all the transactions reported by their branches into two statements inflow and outflow statement. These statements
(inflow and outflow) should be forwarded on a monthly basis to Foreign Exchange Department, Reserve Bank, Foreign
InvestmentDivision,CentralOffice,Mumbaiinsoftcopy(inMSExcel)byemail.ThebankshouldmaintaintheFCTRS
formswithitandshouldnotforwardthesametotheReserveBankofIndia.
(vi)Thetransferee/hisdulyappointedagentshouldapproachtheinvesteecompanytorecordthetransferintheirbooks
along with the certificate in the Form FCTRS from the AD branch that the remittances have been received by the
transferor/paymenthasbeenmadebythetransferee.OnreceiptofthecertificatefromtheAD,thecompanymayrecord
thetransferinitsbooks.
(vii) On receipt of statements from the AD bank , the Reserve Bank may call for such additional details or give such
directionsasrequiredfromthetransferor/transfereeortheiragents,ifneedbe.
C.ReportingofconversionofECBintoequity
Details of issue of shares against conversion of ECB have to be reported to the Regional Office concerned of the

ReserveBank,asindicatedbelow:
IncaseoffullconversionofECBintoequity,thecompanyshallreporttheconversioninFormFCGPRtotheRegional
Office concerned of the Reserve Bank as well as in Form ECB2 to the Department of Statistics and Information
Management(DSIM),ReserveBankofIndia,BandraKurlaComplex,Mumbai400051,withinsevenworkingdaysfrom
thecloseofmonthtowhichitrelates.Thewords"ECBwhollyconvertedtoequity"shallbeclearlyindicatedontopofthe
FormECB2.Oncereported,filingofFormECB2inthesubsequentmonthsisnotnecessary.
In case of partial conversion of ECB, the company shall report the converted portion in Form FCGPR to the Regional
Office concerned as well as in Form ECB2 clearly differentiating the converted portion from the nonconverted portion.
Thewords"ECBpartiallyconvertedtoequity"shallbeindicatedontopoftheFormECB2.Inthesubsequentmonths,
theoutstandingbalanceofECBshallbereportedinFormECB2toDSIM.
The SEZ unit issuing equity as mentioned in para (iii) above, should report the particulars of the shares issued in the
FormFCGPR.
D.ReportingofESOPsforallotmentofequityshares
The issuing company is required to report the details of issuance of ESOPs to its employees to the Regional Office
concernedoftheReserveBank,inplainpaperreporting,within30daysfromthedateofissueofESOPs.Further,atthe
timeofconversionofoptionsintosharestheIndiancompanyhastoensurereportingtotheRegionalOfficeconcernedof
the Reserve Bank in form FCGPR, within 30 days of allotment of such shares. However, provision with regard to
advancereportingwouldnotbeapplicableforsuchissuances.
E.Reportingofissue/transferofDRs
Thedomesticcustodianhastofurnish,fulldetailsofsuchissue/transferofdepositoryreceiptsasperDRScheme2014
inFormDRRwithin30daysofcloseoftheissue/program.
F.ReportingofRFPIinvestmentsunderPISscheme
(i) RFPI reporting: The AD Category I banks have to ensure that the RFPI who are purchasing various securities
(except derivative and IDRs) by debit to the Special NonResident Rupee Account should report all such transactions
details (except derivative and IDRs) in the Form LEC to Foreign Exchange Department, Reserve Bank of India, Central
OfficebyuploadingthesametotheORFSwebsite(https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp).Itwouldbethe
banksresponsibilitytoensurethatthedatasubmittedtoRBIisreconciledbyperiodicallytakingaFIIholdingreportfor
theirbank.
(iii) The Indian company which has issued shares to FIIs under the FDI Scheme (for which the payment has been
received directly into companys account) and the Portfolio Investment Scheme (for which the payment has been
received from FIIs' account maintained with an AD Category I bank in India) should report these figures separately
under item no. 5 of Form FCGPR (Annex 8) (Postissue pattern of shareholding) so that the details could be suitably
reconciledforstatistical/monitoringpurposes.
G.ReportingofNRIinvestmentsunderPISscheme
ThelinkofficeofthedesignatedbranchofanADCategoryIbankshallfurnishtotheReserveBank18,areportona
daily basis on PIS transactions undertaken by it, on behalf of NRIs. This report can be furnished on a floppy to the
Reserve Bank and also uploaded directly on the ORFS web site (https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp). It
would be the banks responsibility to ensure that the data submitted to RBI is reconciled by periodically taking a NRI
holdingreportfortheirbank.
H.Reportingofforeigninvestmentbywayofissue/transferofparticipatinginterest/rightinoilfields:
Foreign investment by way of issue / transfer of participating interest/right in oil fields by Indian companies to a non
resident would be treated as an FDI transaction under the extant FDI policy and the FEMA regulations. Accordingly,
transfer of participating interest/ rights will be reported as other category under Para 7 of revised Form FCTRS and
issuanceofparticipatinginterest/rightswillbereportedasothercategoryofinstrumentsunderPara4ofFormFCGPR.