Foreign Exchange Management Act Rules PDF

TH E FORE I GN E XCH AN GE MAN AGE ME N T (PE RMI SS I B L E CAPITAL
ACCOU N T TRAN SAC TI ON S) REGU L ATI ON S, 2000
FEMA 1/2000-RB, dated 3rd May, 2000, dated 3-5-2000, Notification No. FEMA
110/2004-RB dated 5-2-2004, Notification No. FEMA 165/2007-RB dated 10-10-2007,
Notification No. FEMA 282/2013-RB dated 14-8-2013.
In exercise of the powers conferred by sub-section (2) of section 6, sub-section (2) of section
47 of the Foreign Exchange Management Act 1999 (42 of 1999), the Reserve Bank of India
makes, in consultation with the Central Government, following regulations relating to capital
account transactions, namely :
1. Short title and commencement
(i) These Regulations may be called the “Foreign Exchange Management Permissible
Capital Account Transactions) Regulations, 2000”.
(ii) They shall come into force on the 1st day of June, 2000.
2. Definitions
In these Regulations, unless the context requires otherwise, —
(a) ‘Act’ means, the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) “Drawal” means drawal of foreign exchange from an authorised person and includes
opening of Letter of Credit or use of International Credit Card or International Debit
Card or ATM card or any other thing by whatever name called which has the effect of
creating foreign exchange liability.
(c) ‘Schedule’ means a schedule to these Regulations;
(d) ‘Transferable Development Rights’ means certificates issued in respect of category of
land acquired for public purpose either by Central or State Government in
consideration of surrender of land by the owner without monetary compensation,
which are transferable in part or whole;
(e) The words and expressions used but not defined in these Regulations shall have
the same meanings respectively assigned to them in the Act.
3. Permissible Capital Account Transactions

(1) Capital account transactions of a person may be classified under the following heads,
namely:—
(a) Transactions, specified in Schedule I, of a person resident in India;
(b) Transactions, specified in Schedule II, of a person resident outside India.
(2) Subject to the provisions of the Act or the rules or regulations or direction or orders made
or issued thereunder, any person may sell or draw foreign exchange to or from an authorised
person for a capital account transaction specified in the Schedules :
Provided that the transaction is within the limit, if any, specified in the regulations relevant
to the transaction.
4. Prohibition
Save as otherwise provided in the Act, rules or regulations made thereunder,—
(a) No person shall undertake or sell or draw foreign exchange to or from an authorised
person for any capital account transaction:
Provided that –
(a) subject to the provisions of the Act or the rules or regulations or directions or
orders made or issued thereunder, a resident individual may, draw from an
authorized person foreign exchange not exceeding USD 75000 per financial year or
such amount as decided by Reserve Bank from time to time for a capital account
transaction specified in Schedule I. Further, any remittances for acquisition of
immovable property outside India under the Scheme shall not be permitted.
Explanation: Drawal of foreign exchange by resident individuals towards remittances
of gift or donations as per item No. 3 and 4 of Schedule III to Foreign Exchange
Management (Current Account Transactions) Rules, 2000 dated 3rd May 2000 as
amended from time to time, shall be subsumed within the limit under proviso (a)
above;
(b) where the drawal of foreign exchange by a resident individual for any capital
account transaction specified in Schedule I exceeds USD 75000 or as decided by
Reserve Bank from time to time as the case may be, per financial year, the limit
specified in the regulations relevant to the transaction shall apply with respect to
such drawal.
Provided further that no part of the foreign exchange of USD 75000 or as
decided by Reserve Bank from time to time as the case may be, drawn under
proviso (a) shall be used for remittance directly or indirectly to countries notified
as non-co-operative countries and territories by Financial Action Task Force (FATF)
from time to time and communicated by the Reserve Bank of India to all
concerned.
(b) no person resident outside India shall make investment in India, in any form, in any
company oor partnership firm or proprietary concern or any entity, whether incorporated or
not, which is engaged or proposes to engage –
(i) in the business of chit fund, or
(ii) as Nidhi Company, or
(iii) in agricultural or plantation activities, or
(iv) in real estate business, or construction of farm houses, or
(v) in trading in Transferable Development Rights (TDRs).
Explanation: For the purpose of this regulation, “real estate business” shall not include
development of townships, construction of residential/commercial premises, roads or
bridges.
5. Method of payment for investment

The payment for investment shall be made by remittance from abroad through normal
banking channels or by debit to an account of the investor maintained with an authorised
person in India in accordance with the regulations made by the Reserve Bank under the Act.
6. Declaration to be furnished
Every person selling or drawing foreign exchange to or from an authorised person for a capital
account transaction shall furnish to the Reserve Bank, a declaration in the form and within the
time specified in the regulations relevant to the transaction.
Schedule I
[See Regulation 3(1)(A)]
Classes of capital account transactions of Persons resident in India
(a) Investment by a person resident in India in foreign securities.

(b) Foreign currency loans raised in India and abroad by a person resident in India.
(c) Transfer of immovable property outside India by a person resident in India.
(d) Guarantees issued by a person resident in India in favour of a person resident outside India.
(e) Export, import and holding of currency/currency notes.
(f) Loans and overdrafts (borrowings) by a person resident in India from a person r e sident
outside India.
(g) Maintenance of foreign currency accounts in India and outside India by a person resident in
India.
(h) Taking out of insurance policy by a person resident in India from an insurance company
outside India.
(i) Loans and overdrafts by a person resident in India to a person resident outside India.
(j) Remittance outside India of capital assets of a person resident in India.
(k) Sale and purchase of foreign exchange derivatives in India and abroad and commodity
derivatives abroad by a person resident in India.
Schedule II
[See Regulation 3(1)(B)]
Classes of capital account transactions of persons resident outside India
(a) Investment in India by a person resident outside India, that is to say,—

(i) issue of security by a body corporate or an entity in India and investment therein by a
person resident outside India; and
(ii) investment by way of contribution by a person resident outside India to the capital of a
firm or a proprietorship concern or an association of persons in India.
(b) Acquisition and transfer of immovable property in India by a person resident outside India.
(c) Guarantee by a person resident outside India in favour of, or on behalf of, a person resident in
India.
(d) Import and export of currency/currency notes into/from India by a person resident
outside India.
(e) Deposits between a person resident in India and a person resident outside India.
(f) Foreign currency accounts in India of a person resident outside India.
(g) Remittance outside India of capital assets in India of a person resident outside India.
THE FOREIGN EXCHANGE MANAGEMENT (ISSUE OF SECURITY IN
INDIA BY A BRANCH, OFFICE OR AGENCY OF A PERSON RESIDENT
OUTSIDE INDIA) REGULATIONS, 2000
FEMA 2/2000-RB, dated 3rd M ay, 2000
G.S.R. 385(E), dated 3-5-2000.—In exercise of the powers conferred by clause (c) of sub-
section (3) of section 6 and sub-section (2) of section 47 of the Foreign Exchange Management
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations, namely:

(i) These Regulations may be called the Foreign Exchange Management (Issue of Security
in India by a Branch, Office or Agency of a Person Resident Outside India) Regulations,
2000.
(ii) They shall come into force on 1st day of June, 2000.
2. Definitions
(i) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) The words and expressions used but not defined in these Regulations shall have
the same meanings respectively assigned to them in the Act.
3. Prohibition on transfer or issue of security

Save as otherwise provided in the Act or rules or regulations made or issued thereunder, or
with the general or special permission of the Reserve Bank, no branch, office or agency
in India of a person resident outside India shall transfer or issue any security or foreign
security in India.
4. Transfer or Issue of Security with the permission of Reserve Bank

The Reserve Bank, on application made to it and being satisfied that it is necessary to do
so, may, subject to such terms and conditions as are considered necessary, permit a branch,
office or agency in India of a person resident outside India to transfer or issue any security
or foreign security in India.
THE FOREIGN EXCHANGE MANAGEMENT (BORROWING AND LENDING IN
FOREIGN EXCHANGE) REGULATIONS, 2000
FEMA 3/2000-RB dated 3rd May, 2000 as amended by Notification No. FEMA 26/2000-RB
dated 14th August, 2000 and Notification No. FEMA 60/2002-RB dated 29-4-2002 and
FEMA Notification No. FEMA.75/2002/RB dated 1st November, 2002 and Notification No.
FEMA 80/2003-RB dated 8.1.2003 and Notification No. FEMA 82/2003-RB dated 10.1.2003,
Notification FEMA No. 112/2004-RB dated 6-3-2004 and Notification No. EMA.126/2004/RB
dated 13.12.2004 and Notification No. FEMA.127/2005/RB dated 5.1.2005, Notification No.
FEMA.142/2005/RB dated 6.12.2005, Notification No. FEMA 157/2007-RB] dated 30-08-
2007, Notification No. FEMA 182/2009-RB] dated 12-01-2009, Notification No.
FEMA.194/2009-RB dated 17th June 2009, Notification No. FEMA.197/2009-RB dated 22nd
September 2009, Notification No. FEMA. 232/2012-RB dated 30.05.2012, Notification No.
FEMA 245/2012-RB dated 12.11.2012, Notification No.FEMA.246/2012-RB dated 27.11.2012,
Notification No.FEMA.250/2012/RB dated 6.12.2012, Notification No.FEMA.256/2013/RB
dated 6.2.2013, Notification No. FEMA.270/2013-RB dated 19.03.2013, Notification No.
FEMA. 281/2013-RB dated 19.07.2013, Notification No. FEMA. 286/2013-RB dated
05.09.2013, Notification No. FEMA. 288/2013-RB dated 26.09.2013.
G.S.R. 386(E), dated 3-5-2000.— In exercise of the powers conferred by clause (d) of Sub-
section (3) of section 6, sub-section (2) of section 47 of the Foreign Exchange Management
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations for borrowing or
lending in foreign exchange by a person resident in India; namely:—
1. Short Title and Commencement

(i) These Regulations may be called the Foreign Exchange Management (Borrowing or
Lending in Foreign Exchange) Regulations, 2000.
2. Definitions
In these regulations, unless the context otherwise requires —
(a) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) ‘authorised dealer’ means a person authorised as an authorised dealer under sub-
section (1) of section 10 of the Act;
(c) ‘EEFC account’, ‘RFC account’ mean the accounts referred to in the Foreign Exchange
Management (Foreign Currency Accounts by a Person Resident in India) Regulations,
2000;
(d) ‘FCNR (B) account’, ‘NRE account’ mean the accounts referred to in the Foreign
Exchange Management (Deposit) Regulations, 2000;
(e) ‘Indian entity’ means a company or a body corporate or a firm in India;
(f) ‘Joint Venture abroad’ means a foreign concern formed, registered or incorporated in a
foreign country in accordance with the laws and regulations of that country and in which
investment has been made by an Indian entity;
(g) ‘Schedule’ means the Schedule to these Regulations;
(h) ‘Wholly owned subsidiary abroad’ means a foreign concern formed, registered or
incorporated in a foreign country in accordance with the laws and regulations of that
country and whose entire capital is owned by an Indian entity;
(i) the words and expressions used but not defined in these Regulations shall have the same
meaning respectively assigned to them in the Act.
3. Prohibition to Borrow or Lend in Foreign Exchange

Save as otherwise provided in the Act, Rules or Regulations made thereunder, no person
resident in India shall borrow or lend in foreign exchange from or to a person resident in
or outside India:
Provided that the Reserve Bank may, for sufficient reasons, permit a person to borrow
or lend in foreign exchange from or to a person resident outside India.
4. Borrowing and Lending in Foreign Exchange by an Authorised dealer

(1) An authorised dealer in India or his branch outside India may lend in foreign currency
in the circumstances and subject to the conditions mentioned below, namely:
(i) A branch outside India of an authorised dealer being a bank incorporated or constituted
in India, may extend foreign currency loans in the normal course of its banking
business outside India;
(ii) An authorised dealer may grant loans to his constituents in India for meeting their
foreign exchange requirements or for their rupee working capital requirements or capital
expenditure subject to compliance with prudential norms, interest rate directives and
guidelines, if any, issued by Reserve Bank in this regard;
(iii) An authorised dealer may extend credit facilities to a wholly owned subsidiary abroad
or a joint venture abroad of an Indian entity:
Provided that not less than 51 per cent of equity in such subsidiary or joint venture is
held by the Indian entity subject to compliance with the Foreign Exchange Management
(Transfer and Issue of Foreign Security) Regulations, 2000;
(iv) An authorised dealer may, in his commercial judgment and in compliance with the
prudential norms, grant loans in foreign exchange to his constituent maintaining [* *
*] RFC Account, against the security of funds held in such account.
(v) A branch outside India of an authorised dealer may extend foreign currency loans
against the security of funds held in NRE/FCNR deposit accounts maintained in
accordance with the Foreign Exchange Management (Deposit) Regulations, 2000.
(vi) Subject to the directions or guidelines issued by the Reserve Bank from time to time,
an authorised dealer in India may extend foreign currency loans to another authorised
dealer in India.
(vii) An authorized dealer may grant foreign currency loans in India against the security of
funds held in FCNR(B)account to the account holder only, subject to the guidelines issued
by the Reserve Bank in this regard.
(2) An authorised dealer in India may borrow in foreign currency in the circumstances
and subject to the conditions mentioned below, namely:
(i) An Authorised dealer may borrow from his Head Office or branch or correspondent
outside India or any other entity as permitted by Reserve Bank upto one hundred per
cent of its unimpaired Tier I Capital or USD 10 million, whichever is more, subject to
such conditions as the Reserve Bank may direct.
(ii) A branch outside India of an authorised dealer being a bank incorporated or constituted
in India, may borrow in foreign currency in the normal course of its banking business
outside India, subject to the directions or guidelines issued by the Reserve Bank from
time to time, and the Regulatory Authority of the country where the branch is located.
(iii) An authorised dealer may borrow in foreign currency from a bank or a financial
institution outside India, for the purpose of granting pre-shipment or post-shipment credit
in foreign currency to his exporter constituent, subject to compliance with the guidelines
issued by the Reserve Bank in this regard.
5. Borrowing and Lending in Foreign Exchange by persons other than authorised dealer
(1) An Indian entity may lend in foreign exchange to its wholly owned subsidiary or
joint venture abroad constituted in accordance with the provisions of Foreign Exchange
Management (Transfer or Issue of Foreign Security) Regulations, 2000.
(2) A person resident in India may borrow, whether by way of loan or overdraft or any other
credit facility, from a bank situated outside India, for execution outside India of a turnkey
project or civil construction contract or in connection with exports on deferred payment terms,
provided the terms and conditions stipulated by the authority which has granted the approval
to the project or contract or export in accordance with the Foreign Exchange Management
(Export of Goods and Services) Regulations, 2000.
(3) An importer in India may, for import of goods into India, avail of foreign currency
credit for a period not exceeding six months extended by the overseas supplies of goods,
provided the import is in compliance with the Export Import Policy of the Government of
India in force.
(4) A person resident in India may lend in foreign currency out of funds held in his
EEFC account, for trade related purposes to his overseas importer customer:
Provided that where the amount of loan exceeds US $ 100,000, a guarantee of a bank of
international repute situated outside India is provided by the overseas borrower in favour of
the lender.
(5) Foreign currency loans may be extended by Export Import Bank of India, Industrial
Development Bank of India, Industrial Finance Corporation of India, Industrial Credit and
Investment Corporation of India Limited, Small Industries Development Bank of India
Limited or any other institution in India to their constituents in India out of foreign
currency borrowings raised by them with the approval of the Central Government for the
purpose of onward lending.
(6) An individual resident in India may borrow a sum not exceeding US$ 2,50,000 or its
equivalent from his close relatives outside India subject to the conditions that —
(a) the minimum maturity period of the loan is one year;
(b) the loan is free of interest; and
(c) the amount of loan is received by inward remittance in free foreign exchange through
normal banking channels or by debit to the NRE/FCNR account of the non-resident
lender;
Explanation.— “Close relative means relative as defined in section 6 of the
Companies Act, 1956”.
(7) Indian companies in India may grant loans in foreign currency to the employees of
their branches outside India for personal purposes provided that the loan shall be granted for
personal purposes in accordance with the lender’s Staff Welfare Scheme/Loan Rules and
other terms and conditions as applicable to its staff resident in India and abroad.
6. Other borrowings in foreign exchange under Automatic Route or with prior approval
of Reserve Bank of India under the Approval Route or as Trade Credit
(1) A person resident in India, other than a branch or office in India owned or controlled
by a person resident outside India, may raise in accordance with the provisions of the
Automatic Route Scheme specified in Schedule I, foreign currency loans of the nature and
for the purposes as specified in that Schedule; provided that this shall be deemed to have
come into force with effect from February 1, 2004 except in relation to item 1(iv)(A)(c) of
Schedule I which shall be deemed to have come into force with effect from February 23,
2004.
(2) A person resident in India who desires to raise foreign currency loans of the nature or
for the purposes as specified in Schedule II and who satisfies the eligibility and other
conditions specified in that Schedule, may apply to the Reserve Bank for prior approval to
raise such loans; provided that this shall be deemed to have come into force with effect from
February 1, 2004 except in relation to item 3(iii)(A)(c) of Schedule II which shall be
deemed to have come into force with effect from February 23, 2004.
(3) Trade Credit not exceeding USD 20 million per import transaction shall be raised by
borrowings subject to the terms specified in Schedule III hereto; provided that this shall be
deemed to have come into force with effect from April 17, 2004.
(4) Where prior approval is required] the Reserve Bank may grant its approval subject
to such terms and conditions as it may consider necessary :
Provided that while considering the grant of approval, the Reserve Bank shall take
into account the overall limit stipulated by it, in consultation with the Central Government,
for availment of such loans by the persons resident in India.
(5) The Reserve Bank may grant its approval to any other foreign currency loan
proposed to be raised by a person resident in India, which falls outside the scope of
Schedules I, II and III, subject to such terms and conditions as it may consider necessary.
Schedule I
Borrowings in Foreign Exchange under the
Automatic Route
[See Regulation 6(1)]
(1) Borrowing in Foreign Exchange upto US$ 500 Million or its equivalent
The borrowing in foreign exchange by a person resident in India under the Automatic Route
is subject to the terms and conditions set out in this schedule.
(i) Eligibility —
(a) Any company registered under the Companies Act, 1956, other than a financial
intermediary (such as a bank, financial institution, housing finance company and a
non-banking finance company) is eligible to borrow under this Schedule:
provided in case the entity is under investigation / adjudications / appeals by the law
enforcing agencies, for violation of any of the provision of the regulations under
the Act, it shall indicate to the Authorized Dealers (ADs) about pendency of
investigations / adjudications / appeals, while availing foreign currency borrowing.
(b) Effective 19.12.2011, Non Government Organisations and Micro Finance Institutions
engaged in micro- finance activities may borrow in foreign exchange under this
Schedule under such terms and conditions as specified by the Reserve Bank from
time to time.
(c) Any other entity as specified by the Reserve Bank:
(ii) Amount —
(a) The borrowing in foreign exchange by an entity as specified in paragraph (i)
(a) of section I of Schedule I, under the Automatic Route whether raised in tranches
or otherwise, shall not exceed USD 500 million or equivalent in any one financial year
(April – March).
(b) Effective 19.12.2011, the borrowings in foreign currency under as specified in
paragraph (i) (b) of section I of Schedule I, by a non-government organisation and
Micro Finance Institution engaged in micro-finance activities shall not exceed USD
10 million or equivalent during a financial year (April-March).”
(iii) Lenders — The borrowings in foreign currency by way of issue of bonds, floating
rate notes or other debt instruments by whatever name called may be made from—
(a) International bank or export credit agency or international capital market, or
(b) Multilateral financial institutions, namely, IFC, ADB, CDC etc., or
(c) Foreign collaborator or foreign equity holder as specified by the Reserve Bank, or
(d) Supplier of equipments provided the amount of loan raised does not exceed the total
cost of the equipment being supplied by the lender or
(e) Any other eligible entity as prescribed by the Reserve Bank in consultation with
Government of India.
(iv) Purpose (End-use)

(A) Borrowing in foreign exchange in terms of this Schedule may be for any of the
following purposes, namely:—
(a) for investment (such as import of capital goods, new projects,
modernisation/expansion of existing production units) in real sector - industrial
sector including Small and Medium Enterprises (SME) and infrastructure sector
in India.
Explanation.— The following sectors will qualify as infrastructure sectors,
namely :
(a) Energy which will include (i) electricity generation, (ii) electricity
transmission, (iii) electricity distribution, (iv) oil pipelines, (v)
oil/gas/liquefied natural gas (LNG) storage facility (includes strategic
storage of crude oil) and (vi) gas pipelines (includes city gas distribution
network);
(b) Communication which will include (i) mobile telephony services /
companies providing cellular services, (ii) fixed network
telecommunication (includes optic fibre / cable networks which provide
broadband / internet) and (iii) telecommunication towers;
(c) Transport which will include (i) railways (railway track, tunnel, viaduct,
bridges and includes supporting terminal infrastructure such as loading /
unloading terminals, stations and buildings), (ii) roads and bridges, (iii)
ports, (iv) inland waterways, (v) airport and (vi) urban public transport
(except rolling stock in case of urban road transport);
(d) Water and sanitation which will include (i) water supply pipelines, (ii) solid
waste management, (iii) water treatment plants, (iv) sewage projects
(sewage collection, treatment and disposal system), (v) irrigation (dams,
channels, embankments, etc.) and (vi) storm water drainage system;
(e) (i) mining, (ii) exploration and (iii) refining;
(f) Social and commercial infrastructure which will include (i) hospitals (capital
stock and includes medical colleges and para medical training institutes), (ii)
Hotel Sector which will include hotels with fixed capital investment of
Rs.200 crore and above, convention centres with fixed capital investment
of Rs.300 core and above and three star or higher category classified hotels
located outside cities with population of more than 1 million (fixed
capital investment is excluding of land value), (iii) common
infrastructure for industrial parks, SEZs, tourism facilities, (iv) fertilizer
(capital investment), (v) post harvest storage infrastructure for agriculture
and horticulture produce including cold storage, (vi) soil testing
laboratories and (vii) cold chain (includes cold room facility for farm level
pre-cooling, for preservation or storage or agriculture and allied produce,
marine products and meat.
(g) Any other sectors as prescribed by the Reserve Bank in consultation with
(b) for first stage acquisition of shares in the disinvestment process and also in the
mandatory second stage offer to the public under the Government’s
disinvestment programme of PSU shares,
(c) for direct investment in overseas Joint Ventures (JV)/Wholly Owned
Subsidiaries (WOS) subject to the existing guidelines on Indian Direct
Investment in JV/WOS abroad.
(d) any other eligible purpose as specified by the Reserve Bank.
(AA) Borrowings in foreign exchange per borrower company per financial year up
to such amounts not exceeding US Dollars 500 million or its equivalent as
directed by the Reserve Bank from time to time shall be permitted for such
permissible end-uses as indicated by Reserve Bank from time to time.
(B) Other than the purposes specified hereinabove, the borrowings shall not be utilised
for any other purpose including the following purposes, namely:
On-lending, investment in capital (stock) market, investment in real estate
business, working capital requirements, general corporate purpose, and repayment
of Rupee loans.
[***]
(v) Maturity —
The maturity of the borrowings in foreign exchange shall be as under :
Amount Minimum Average Maturity
(i) Up to USD 20 Million or equivalent Not less than 3 years.
(ii) Exceeding USD 20 Million or equivalent Not less than 5 years.
and upto USD 750 Million or equivalent
Note : Borrowing up to US$ 20 Million can have call / put option provided the minimum
average maturity of 3 years as prescribed above is complied with before exercising call /
put option.
(vi) All-in-cost ceilings — The all-in-cost ceilings for the borrowing in foreign exchange
shall be specified by the Reserve Bank from time to time.
(vii) Security — The borrower shall be at liberty to provide security to the lender/suppliers,
provided that—
(a) Where the security is in form of immovable property in India or shares of a
company in India, it shall be subject to Regulation 8 of Notification No. FEMA.
21/2000-RB dated May 3, 2000 and Regulation 3 of Notification No.
FEMA.20/2000-RB dated May 3, 2000, respectively.
(b) Guarantee — Banks, Financial Institutions and Non-Banking Finance Companies
shall not provide (issue) guarantee or Letter of Comfort or Standby Letter of Credit
in favour of overseas lender on behalf of their constituents for their borrowings in
foreign exchange.
(viii) Prepayment — Notwithstanding the provisions of clause (v) above, prepayment of
outstanding foreign currency loan may be made as per the directives issued by the
Reserve Bank from time to time.
(ix) Parking of loan amount — The proceeds of borrowings in foreign exchange availed
under the schedule may, pending utilisation for permissible end-uses, be parked
abroad or in India as directed by the Reserve Bank from time to time.
(x) Loan Agreement — The loan agreement entered into by the borrower with the
overseas lender shall strictly conform with these Regulations. The procedure for
obtaining loan registration number would be prescribed by the Reserve Bank.
(xi) Drawal of Loan — Draw-downs of borrowing in foreign exchange shall be made
strictly in accordance with the terms of the loan agreement only after obtaining the loan
registration number from the Reserve Bank.
(xii) Reporting — The borrower shall adhere to the reporting procedure as specified by the
(xiii) Debt Servicing — The designated Authorised Dealer(AD) shall have the general
permission to make remittances of principal, interest and other charges in conformity
with the guidelines on borrowing in foreign exchange from overseas, issued by Central
Government/the Reserve Bank from time to time.
2. Refinancing of existing borrowing in foreign exchange

(i) Refinancing of outstanding amounts of loans raised in foreign exchange in accordance
with the Act or the Rules and Regulations made thereunder, may be made by making
fresh borrowing in foreign exchange in accordance with this Schedule provided that
there is reduction in cost of borrowing and the outstanding maturity of the original
borrowing is not reduced.
(ii) Provisions of sub-paragraphs (ii) and (v) of paragraph 1 shall not apply to the
borrowings made under clause 2(i).
Schedule II
Borrowings in Foreign Exchange under the Approval Route
(1) The borrowing in foreign currency (other than the borrowings under Schedule I) by a
person resident in India may be made under any of the types set out in this Schedule.
(2) The application for the approval of the Reserve Bank under Regulation 6(2) for
borrowing under any of the types where its approval is required shall be made in the
Form as specified by the Reserve Bank from time to time.
(3) The borrowing in foreign exchange by a person resident in India under the Approval
Route is subject to the terms and conditions set out in this schedule.
(i) Eligibility — The following entities shall be eligible to apply for foreign currency
borrowings under the Approval Route—
(a) Any corporate registered under the Companies Act, 1956.
(b) Financial institutions dealing exclusively with infrastructure or export finance
such as IDFC, IL & FS, Power Finance Corporation, Power Trading Corporation,
IRCON and Exim Bank.
(c) Banks and financial institutions which had participated in the textile or steel
sector restructuring package as approved by the Central Government.
(d) Entities falling outside the purview of the Automatic Route as per Schedule I.
(e) Any other entity as specified by the Reserve Bank.
(ii) Lenders — The borrowings in foreign currency by way of issue of bonds,

floating rate notes or other debt instruments by whatever name called may be made
from—
(a) International bank or export credit agency or international capital market, or
(b) Multilateral financial institutions, namely, IFC, ADB, CDC etc., or
(c) Foreign collaborator or foreign equity holder as specified by the Reserve Bank, or
(d) Supplier of equipments provided the amount of loan raised does not exceed the
total cost of the equipment being supplied by the lender, or
(e) Any other eligible entity as prescribed by the Reserve Bank in consultation
with Government of India.
(iii) Purpose (End-use).-

(A) Borrowings in foreign exchange in terms of this Schedule may be for any of the
following purposes, namely:—
(a) for investment (such as import of capital goods, new projects,
modernisation/expansion of existing production units) in real sector - industrial
sector including small and medium enterprises (SME) and infrastructure sector
in India.
Explanation.— The following sectors will qualify as infrastructure sectors,
namely :
(a) Energy which will include (i) electricity generation, (ii) electricity
transmission, (iii) electricity distribution, (iv) oil pipelines, (v)
oil/gas/liquefied natural gas (LNG) storage facility (includes strategic
storage of crude oil) and (vi) gas pipelines (includes city gas distribution
network);
(b) Communication which will include (i) mobile telephony services /
companies providing cellular services, (ii) fixed network
telecommunication (includes optic fibre / cable networks which provide
broadband / internet) and (iii) telecommunication towers;
(c) Transport which will include (i) railways (railway track, tunnel, viaduct,
bridges and includes supporting terminal infrastructure such as loading /
unloading terminals, stations and buildings), (ii) roads and bridges, (iii)
ports, (iv) inland waterways, (v) airport and (vi) urban public transport
(except rolling stock in case of urban road transport);
(d) Water and sanitation which will include (i) water supply pipelines, (ii) solid
waste management, (iii) water treatment plants, (iv) sewage projects
(sewage collection, treatment and disposal system), (v) irrigation (dams,
channels, embankments, etc.) and (vi) storm water drainage system;
(e) (i) mining, (ii) exploration and (iii) refining;
(f) Social and commercial infrastructure which will include (i) hospitals (capital
stock and includes medical colleges and para medical training institutes), (ii)
Hotel Sector which will include hotels with fixed capital investment of
Rs.200 crore and above, convention centres with fixed capital investment
of Rs.300 core and above and three star or higher category classified hotels
located outside cities with population of more than 1 million (fixed
capital investment is excluding of land value), (iii) common
infrastructure for industrial parks, SEZs, tourism facilities, (iv) fertilizer
(capital investment), (v) post harvest storage infrastructure for agriculture
and horticulture produce including cold storage, (vi) soil testing
laboratories and (vii) cold chain (includes cold room facility for farm level
pre-cooling, for preservation or storage or agriculture and allied produce,
marine products and meat.
(g) Any other sectors as prescribed by the Reserve Bank in consultation with
(b) for first stage acquisition of shares in the disinvestment process and also in the
mandatory second stage offer to the public under the Government’s
disinvestment programme of PSU shares.
(c) for direct investment in overseas Joint Ventures (JV)/Wholly Owned
Subsidiaries (WOS) subject to the existing guidelines on Indian Direct
Investment in JV/WOS abroad.
(AA) Borrowings in foreign exchange per borrower company per financial year up to
such amounts as directed by the Reserve Bank from time to time shall be permitted
for such permissible end-uses as indicated by Reserve Bank from time to time.
(B) Other than the purposes specified hereinabove, the borrowings shall not be utilised
for any other purpose including the following purposes, namely:—
On-lending, investment in capital (stock) market, investment in real estate
business, working capital requirements, general corporate purpose and repayment
of Rupee loans.
(iv) Maturity—
(a) Effective 23.09.2011, the maturity of borrowings in foreign exchange shall be as
under:
Amount Average Maturity
(i) Upto USD 20 million or equivalent Not less than 3 years
(ii) Exceeding USD 20 million or equivalent Not less than 5 years
(b) Borrowings upto USD 20 million can have call/put option provided the
minimum average maturity of 3 years as prescribed in clause (a) is complied with
before exercising call/put option.
(v) All-in-cost ceilings — The all-in-cost ceilings for the borrowing in foreign exchange
shall be specified by the Reserve Bank from time to time.
(vi) Security — The borrower shall be at liberty to provide security to
the lender/suppliers: Provided that—
(a) Where the security is in form of immovable property in India or shares of a
company in India, it shall be subject to Regulation 8 of Notification No.
FEMA.21/2000-RB, dated May 3, 2000, and Regulation 3 of Notification No.
FEMA.20/2000-RB, dated May 3, 2000, respectively.
(b) Guarantee — Banks, Financial Institutions and Non-Banking Finance Companies
shall not provide (issue) guarantee or Letter of Comfort or Standby Letter of Credit
in favour of overseas lender on behalf of their constituents for their borrowings in
foreign exchange.
Exception 1. — Banks, Financial Institutions and Non-Banking Finance Companies
shall be permitted to provide Bank Guarantee, or Letter of Comfort or Standby Letter
of Credit in favour of Small and Medium Enterprises (SMEs) with the approval of
the Reserve Bank.
Exception 2. — Banks may provide Bank Guarantee, Standby Letter of Credit, Letter
of Undertaking or Letter of Comfort in respect of ECB by textile companies for
modernisation or expansion of their textile units, with the approval of the Reserve
Bank.
(vii) Prepayment — Notwithstanding the provisions of clause (iv) above, prepayment of
outstanding foreign currency loan may be made as per the directives issued by the
(viii) Parking of loan amount — The proceeds of borrowings in foreign exchange availed
under the schedule may, pending utilisation for permissible end-uses, be parked
abroad or in India as directed by the Reserve Bank from time to time.
(ix) Loan Agreement — The loan agreement entered into by the borrower with the overseas
lender shall strictly conform with these Regulations. The procedure for obtaining loan
registration number would be as specified by the Reserve Bank.
(x) Drawal of loan — Draw-downs of borrowing in foreign exchange shall be made strictly
in accordance with the terms of the loan agreement only after obtaining the loan
registration number from the Reserve Bank.
(xi) Reporting — The borrower shall adhere to the reporting procedure as specified by the
(xii) Debt Servicing — The designated Authorised Dealer (AD) shall have the general
permission to make remittance of principal, interest and other charges in conformity
with the guidelines on borrowing in foreign exchange from overseas issued by Central
Government/the Reserve Bank from time to time.
(xiii) Foreign currency borrowings for low cost affordable housing projects —
"Developers/builders, Housing Finance Companies (HFCs) and National Housing Bank
(NHB) shall avail of foreign currency loans in accordance with the Act or the Rules
and Regulations made thereunder in accordance with this Schedule, for financing
developers / prospective owners of low cost affordable housing projects / units
subject to the terms and conditions as may be specified by the Reserve Bank, from
time to time in this regard.
(4) Refinancing of existing borrowing in foreign exchange:
(i) “Refinancing of outstanding amounts of loans raised in foreign exchange in
accordance with the Act or the Rules and Regulations made thereunder, may be
made by making fresh borrowing in foreign exchange in accordance with this
Schedule at a higher cost of borrowing within the all-in-cost ceiling prescribed by
the Reserve Bank from time to time, under sub-paragraph (v) of paragraph (3) and
the outstanding maturity of the original borrowing is not reduced.
(ii) Provisions of sub-paragraph (iv) of paragraph 3 shall not apply to the borrowings
made under clause 4(i).
(5) Deleted
Schedule III
Trade Credit
(1) Foreign currency credit / loan extended for imports into India by the overseas supplier,
bank and financial institution for original maturity of less than three years is hereinafter
referred to as 'Trade Credit' for imports.Depending upon the source of finance, such trade
credit includes suppliers’ credit or buyers' credit.
(2) Authorised Dealers (ADs) in foreign exchange are permitted to approve trade credits up
to USD 20 million per import transaction for import of all items permissible under the
Foreign Trade Policy (except Gold) with a maturity period (from the date of shipment) up to
one year. For import of capital goods, ADs are permitted to approve trade credits up to
USD 20 million per import transaction with a maturity period of more than one year and
up to five years in respect of a company resident in India engaged exclusively in the
development of infrastructure and less than three years in respect of other resident entities.
No roll-over / extension will be permitted by the AD beyond the permissible period.
(3) Trade Credit exceeding USD 20 million per import transaction will require the prior
approval of the Reserve Bank of India.
TH E FORE I GN E XCH AN GE MAN AGE ME N T
(B ORROWI N G AN D L E N DI N G I N RU PE ES) REGU L ATI ON S, 2000
FEMA 4/2000-RB dated 3rd May 2000 as amended by Notification No. FEMA. 31/2000-RB dated
27th November,2000, FEMA Notification No. FEMA. 67/2002/RB dated 27th July 2002 and
Notification FEMA No. 115/2004-RB dated 25th March, 2004, Notification FEMA No.117/2004-
RB dated 25th May, 2004, Notification No. FEMA 160/2007- RB dated 18-9-2007 and
Notification No. FEMA.183/2009-RB dated 20th January 2009,
Notification No. FEMA. 238/2012-RB dated 25.09.2012, Notification No. FEMA. 287/2013-RB
dated 17.09.2013.
G.S.R. 387(E), dated 3-5-2000.— In exercise of the powers conferred by clause (e) of sub-
Act, 1999 (42 of 1999), the Reserve Bank of India makes the regulations relating to
borrowing and lending in rupees between a person resident in India and a person resident
outside India as under, namely:—

(1) These Regulations may be called the Foreign Exchange Management (Borrowing
and Lending in Rupees) Regulations, 2000.
(2) They shall come into force on 1st day of June, 2000.
2. Definitions
(b) ‘authorised dealer’, ‘authorised bank’, ‘Non-resident Indian (NRI)’, ‘Person of Indian
Origin’, ‘Overseas Corporate Body (OCB)’, ‘NRE account’, ‘NRO account’, ‘NRNR
account’, ‘NRSR account’, and ‘FCNR account’ shall have the same meanings as
assigned to them respectively in Foreign Exchange Management (Deposits) Regulations,
2000 made by Reserve Bank under clause (f) of sub-section (3) of section 6 of the Act;
(c) ‘housing finance institution’ and ‘National Housing Bank’ shall have the meaning
assigned to them in the National Housing Bank Act, 1987 (53 of 1987);
(ca) ‘Liberalised Remittance Scheme’ means the scheme formulated in terms of circular A.P.
(DIR Series) Circular No. 64 dated February 4, 2004 and as amended from time to time.
(cb) ‘relative’ means a ‘relative’ as defined in section 6 of the Companies Act, 1956.
(d) ‘Transferable Development Rights (TDR)’ shall have the meaning as assigned to it in
the Foreign Exchange Management (Permissible Capital Account Transactions)
Regulations, 2000.
(e) The words and expressions not defined in these regulations but defined in the Act
shall have the same meanings respectively assigned to them in the Act.
3. Prohibition on borrowing and lending in rupees
Save as otherwise provided in the Act, rules or regulations made thereunder, no person
resident in India shall borrow in rupees from, or lend in rupees to, a person resident outside
India:
Provided that the Reserve Bank may, for sufficient reasons, permit a person resident in
India to borrow in rupees from, or lend in rupees to, a person resident outside India.
Explanation.— For the removal of doubt, it is clarified that use of Credit Card in India by a
person resident outside India shall not be deemed as borrowing or lending in rupees.
4. Borrowing in rupees by persons other than companies in India

A person resident in India, not being a company incorporated in India, may borrow in
rupees on non-repatriation basis from a non-resident Indian or a person of Indian origin
resident outside India, subject to the following conditions:
(i) the amount of loan shall be received by way of inward remittance from outside India
or out of Non-resident External (NRE)/Non-resident Ordinary (NRO)/Foreign
Currency Non-resident (FCNR)/Non-resident Non- repatriable (NRNR)/Non-resident
Special Rupee (NRSR) account of the lender maintained with an authorised dealer or
an authorised bank in India;
(ii) the period of loan shall not exceed three years;
(iii) the rate of interest on the loan shall not exceed two percentage points over the Bank
rate prevailing on the date of availment of loan;
(iv) where the loan is made out of funds held in Non-resident Special Rupee (NRSR) account
of the lender, payment of interest and repayment of loan shall be made by credit to
that account; and in other cases, payment of interest and repayment of loan shall be
made by credit to the lender’s Non-resident Ordinary (NRO) or Non- resident Special
Rupee (NRSR) account as desired by the lender; and
(v) the amount borrowed shall not be allowed to be repatriated outside India.
5. Borrowing in rupees by Indian companies

(1) Subject to the provisions of sub-regulations (2) and (3), a company incorporated in India
may borrow in rupees on repatriation or non-repatriation basis, from a non-resident Indian or a
person of Indian origin resident outside India or [* * *], by way of investment in Non-
convertible Debentures (NCDs) subject to the following conditions:
(i) the issue of Non-convertible Debentures (NCDs) is made by public offer;
(ii) the rate of interest on such Non-convertible Debentures (NCDs) does not exceed the
prime lending rate of the State Bank of India as on the date on which the resolution
approving the issue is passed in the borrowing company’s General Body Meeting, plus
300 basis points,
(iii) the period for redemption of such Non-convertible Debentures (NCDs) is not less than
three years;
(iv) the borrowing company does not and shall not carry on agricultural/plantation/real
estate business/Trading in Transferable Development Rights (TDRs) or does not and shall
not act as Nidhi or Chit Fund company;
(v) the borrowing company files with the nearest office of the Reserve Bank, not later
than 30 days from the
date —
(A) of receipt of remittance for investment in Non-convertible Debentures (NCDs),
full details of the remittances received, namely: (a) a list containing names and
addresses of Non-resident Indians (NRIs)/ Overseas Corporate Bodies (OCBs) who
have remitted funds for investment in Non-convertible Debentures (NCDs) on
repatriation and/or non-repatriation basis, (b) amount and date of receipt of
remittance and its rupee equivalent; and (c) names and addresses of authorised
dealers through whom the remittance has been received;
(B) of issue of Non-convertible Debentures (NCDs), full details of the investment,
namely: (a) a list containing names and addresses of Non-resident Indians (NRIs)/
Overseas Corporate Bodies (OCBs) and number of Non-convertible Debentures
(NCDs) issued to each of them on repatriation and/or non-repatriation basis and
(b) a certificate from the Company Secretary of the borrowing company that all
provisions of the Act, rules and regulations in regard to issue of Non-convertible
Debentures (NCDs) have been duly complied with.
(2) The borrowing by issue of non-convertible debentures on repatriation basis shall be
subject to the following additional conditions, namely:
(a) the percentage of Non-convertible Debentures (NCDs) issued to Non-resident Indians
(NRIs)/ Overseas Corporate Bodies (OCBs) to the total paid-up value of each series of
Non-convertible Debentures (NCDs) issued shall not exceed the ceiling prescribed for
issue of equity shares/convertible debentures for foreign direct investment in India as
specified by the Reserve Bank from time to time, under the relevant regulations, and
(b) the amount of investment is received by remittance from outside India through normal
banking channels or by transfer of funds held in the investor’s Non-resident External
(NRE)/Foreign Currency Non-resident (FCNR) account maintained with an authorised
dealer or an authorised bank in India;
(3) The borrowing by issue of non-convertible debentures (NCDs) on non-repatriation basis
shall be subject to the following additional conditions, namely:
(a) the amount of investment is received either by remittance from outside India through
normal banking channels or by transfer of funds held in the investor’s Non-resident
External (NRE)/Non-resident Ordinary (NRO)/Foreign Currency Non-resident
(FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Special Rupee (NRSR)
account maintained with an authorised dealer or an authorised bank in India,
(b) where the investment is made out of funds held in Non-resident Special Rupee (NRSR)
account, the interest on such Non-convertible Debentures (NCDs) shall also not be
repatriable outside India; and the maturity proceeds and interest on such debentures are
credited only to the Non-resident Special Rupee (NRSR) account of the investor.
(4) The borrowing by way of issue of preference shares on or after 30th day of April 2007
other than those which are fully and mandatorily convertible into equity within a specified
time and issue of convertible debentures on or after 7th day of June 2007, other than those
which are fully and mandatorily convertible into equity within a specified time, to a person
resident outside India, shall be considered as debt and shall accordingly conform to Regulation
6 of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
Regulations, 2000 (Notification No. FEMA. 3/2000- RB dated 3rd May, 2000) including the
limits to such borrowings as specified in the said regulations.
6. Restriction on use of borrowed funds

No person resident in India who has borrowed in rupees from a person resident outside
India,–
(1) shall use such borrowed funds for any purpose except in his own business other than –
(i) the business of chit fund, or
(ii) as Nidhi Company, or
(iii) agricultural or plantation activities or real estate business; or construction of farm
houses or
(iv) trading in Transferable Development Rights (TDRs).
(2) shall use such borrowed funds for any investment, whether by way of capital or
otherwise, in any company or partnership firm or proprietorship concern or any entity,
whether incorporated or not, or for relending.
Explanation.— For the purpose of sub-clause (iii) of clause (1), real estate
business shall not include development of townships, construction of
residential/commercial premises, roads or bridges.
7. Loans in rupees to non-residents

Subject to the directions issued by the Reserve Bank from time to time in this regard, an
authorised dealer in India may grant loan to a non-resident Indian,—
(A) against the security of shares or other securities held in the name of the borrower, or
(B) against the security of immovable property (other than agricultural or plantation
property or farm house), held by him in accordance with the Foreign Exchange
Management (Acquisition and Transfer of Immovable Property in India) Regulations,
2000:
Provided that —
(a) the loan shall be utilised for meeting the borrower’s personal requirements or for his
own business purposes; and
(b) the loan shall not be utilised, either singly or in association with other person, for any
of the activities in which investment by persons resident outside India is prohibited,
namely:
(i) the business of chit fund, or
(ii) Nidhi Company, or
(iii) agricultural or plantation activities or in real estate business, or construction of
farm houses; or
(iv) trading in Transferable Development Rights (TDRs).
Explanation.— For the purpose of item (iii) of proviso, real estate business shall not
include development of townships, construction of residential/ commercial premises,
roads or bridges.
(c) the Reserve Bank’s directives on advances against shares/securities/immovable
property shall be duly complied with;
(d) the loan amount shall not be credited to Non-resident External (NRE)/3[* * *]
Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR) account of
the borrower;
(e) the loan amount shall not be remitted outside India;
(f) repayment of loan shall be made from out of remittances from outside India
through normal banking channels or by debit to the Non-resident Ordinary
(NRO)/Non-resident Special Rupee (NRSR)/Non-resident Non-repatriable
(NRNR)/Non-resident External (NRE)/Foreign Currency Non-resident (FCNR) account
of the borrower or out of the sale proceeds of the shares or securities or immovable
property against which such loan was granted.
(C) for any purpose as per the loan policy laid down by the Board of Directors of
the Authorised Dealer : Provided that :
(a) the loan shall not be utilised either singly or in association with other person for
— (i) the business of chit fund, or
(ii) Nidhi Company, or
(iii) agricultural or plantation activities or in real estate business or construction of
farm houses, or
(iv) trading in Transferable Development Rights (TDRs), or
(v) investment in capital market including margin trading and derivatives.
(b) the Reserve Bank’s directives on such advances shall be duly complied with;
(c) the loan amount shall not be credited to NRE/FCNR(B) accounts;
(d) the loan amount shall not be remitted outside India;
(e) repayment of loan shall be made from out of remittances from outside India
through normal banking channels or by debit to NRE/FCNR(B)/NRO accounts.
(D) An Authorised Dealer in India may grant Rupee loans to NRI employees of Indian
companies for acquiring shares of the companies under the Employees Stock Option
Plan (ESOP) Scheme subject to the following conditions :
(i) The ESOP Scheme should be as per the policy approved by the bank’s Board.
(ii) The loan amount should not exceed 90% of the purchase price of the shares or
Rupees 20 lakhs per NRI employee, whichever is lower.
(iii) The rate of interest and margin on such loans may be decided by the banks,
subject to directives issued by the Reserve Bank from time to time.
(iv) The amount shall be paid directly to the company and should not be credited to
the borrowers’ non- resident accounts in India.
(v) The loan amount would have to be repaid by the borrower by way of inward
remittances or by debit to his/her NRO/NRE/FCNR(B) account.
(vi) The loans will be included for reckoning capital market exposures and the bank
will ensure compliance with prudential limits, prescribed by the Reserve Bank
from time to time, for such exposure to capital market.
7A. loan granted to a non-resident by an authorised dealer, in accordance with Regulation 7
above, may be repaid by any relative of the borrower in India by crediting the borrower's
loan account through the bank account of such relative.
8. Providing housing loan in rupees to a non-resident

An authorised dealer or a housing finance institution in India approved by the National
Housing Bank may provide housing loan to a Non-resident Indian or a person of Indian
origin resident outside India, for acquisition of a residential accommodation in India, subject
to the following conditions, namely:
(a) the quantum of loans, margin money and the period of repayment shall be at par with
those applicable to housing finance provided to a person resident in India;
(b) the loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency
Non-resident (FCNR)/ Non-resident Non-repatriable (NRNR) account of the borrower;
(c) the loan shall be fully secured by equitable mortgage of the property proposed to be
acquired, and if necessary, also by lien on the borrower’s other assets in India;
(d) the instalment of loan, interest and other charges, if any, shall be paid by the borrower
by remittances from outside India through normal banking channels or out of funds in
his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident
Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/Non-resident Special Rupee
(NRSR) account in India, or out of rental income derived from renting out the property
acquired by utilisation of the loan 1[or by any relative of the borrower in India by
crediting the borrower’s loan account through the bank account of such relative.
Explanation.— The word ‘relative’ means ‘relative’ as defined in section 6 of the
Companies Act, 1956;
(e) the rate of interest on the loan shall conform to the directives issued by the Reserve
Bank or, as the case may be, by the National Housing Bank.
8A. Rupee Loans to NRI/PIO employees of India body corporate

A body corporate registered or incorporated in India may grant rupee loan to its employees
who is a non-resident Indian or a Person of Indian Origin, subject to the following
conditions, namely:—
(i) The loan shall be granted only for personal purposes including purchase of housing
property in India;
(ii) The loan shall be granted in accordance with the Lender’s Staff Welfare Scheme/Staff
Housing Loan Scheme and other terms and conditions applicable to its staff resident in
India;
(iii) The lender shall ensure that the loan amount is not used for the purposes specified in
sub-clauses (i) to (iv) of clause (1) and in clause (2) of Regulation 6.
(iv) The lender shall credit the loan amount to the borrower’s NRO Account in India or shall
ensure credit to such account by specific indication on the payment instrument.
(v) It shall be a term of the loan agreement that the repayment of loan shall be made by
way of remittance from outside India or from NRE/FCNR/NRO Account of the
borrower and the lender shall not accept payment from any other source.
8B. Rupee loans to non-resident Indian by Resident

A resident individual may grant loan to a NRI relative by way of crossed cheque/ electronic
transfer:
Provided that:
(i) the loan is free of interest and the minimum maturity of the loan is one year;
(ii) the loan amount should be within the overall limit under the Liberalised Remittance Scheme
per financial year available for a resident individual. It would be the responsibility of
the lender to ensure that the amount of loan is within the limits prescribed under
Liberalised Remittance Scheme during the financial year;
(iii) the loan shall be utilised for meeting the borrower's personal requirements or for his
own business purposes in India;
(iv) the loan shall not be utilised, either singly or in association with other person, for any of
the activities in which investment by persons resident outside India is prohibited,
namely;
(a) the business of chit fund, or
(b) Nidhi Company, or
(c) agricultural or plantation activities or in real estate business, or construction
of farm houses, or
(d) trading in Transferable Development Rights (TDRs).
Explanation: For the purpose of item (c) above, real estate business shall not include
development of townships, construction of residential / commercial premises, roads or
bridges.
(v) The loan amount should be credited to the NRO a/c of the NRI /PIO. Credit of such
loan amount may be treated as an eligible credit to NRO a/c;
(vi) the loan amount shall not be remitted outside India; and
(vii) repayment of loan shall be made by way of inward remittances through normal
banking channels or by debit to the Non-resident Ordinary (NRO) / Non-resident
External (NRE) / Foreign Currency Non-resident (FCNR) account of the borrower or
out of the sale proceeds of the shares or securities or immovable property against
which such loan was granted.
9. Continuance of rupee loan/overdraft to resident who becomes a person resident outside

India
An authorised dealer or, as the case may be, an authorised bank, may allow continuance of
loan/overdraft granted to a person resident in India who subsequently becomes a person resident
outside India, subject to following terms and conditions:
(a) the authorised dealer or the authorised bank is satisfied, according to his/its commercial
judgement, about the reasons to continue the loan or overdraft;
(b) the period of loan or overdraft shall not exceed the period originally fixed at the time
of granting the loan or overdraft;
(c) so long as the borrower continues to remain a person resident outside India, the
repayment shall be made either by inward remittance from outside India through
normal banking channels or from the funds held in Non-resident External
(NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/
Non-resident Ordinary (NRO)/Non-resident Special Rupee (NRSR) account of the
borrower.
10. Continuance of rupee loan in the event of change in the residential status of the
lender
In case a rupee loan was granted by a person resident in India to another person resident in
India and the lender subsequently becomes a non-resident, the repayment of the loan by the
resident borrower should be made by credit to the Non-resident Ordinary (NRO) or Non-
resident Special Rupee (NRSR) account of the lender maintained with a bank in India, at the
option of the lender.
11. Overdraft in rupee account maintained with authorised dealer in India by a bank
outside India
An authorised dealer may permit a temporary overdraft, for value not exceeding Rs. five
hundred lakhs, in rupee accounts maintained with him by his overseas branch or correspondent or
Head Office outside India, subject to such terms and conditions as the Reserve Bank may direct
from time to time.
Explanation.— For the purpose of calculating the ceiling of Rupees five hundred lakhs under
this Regulation, the aggregate amount of overdrafts permitted by the authorised dealer to all his
branches, correspondents and Head Office outside India outstanding in the books of all his
branches in India, shall be taken into account.
TH E FORE I GN E XCH AN GE MAN AGE ME N T (DE POS I T) REGU L ATI ON S,
2000
Notification No. FEMA 5/2000-RB, dated 3rd May, 2000 as amended by Notification
No. FEMA. 52/2002,dated 1st March, 2002, Notification No. FEMA. 64/2002/RB,
dated 29th June 2002, Notification No. FEMA. 78/2002- RB, dated November 27,
2002, Notification No. FEMA.101 dated October 3, 2003 and Notification FEMA No.
121/2004- RB dated July 10, 2004 and Notification No. FEMA.133/2005/RB dated
1.4.2005 and Notification No.FEMA.140/2005/ RB dated 31.10.2005, Notification
No.FEMA.144/2006/RB dated 6.1.2006 and Notification No. FEMA 156/2007-RB
dated 13-06-2007, Notification No. FEMA 158/2007-RB dated 03-09-2007 and
Notification No. FEMA 168/2007-RB dated 23-10-2007, Notification No.
FEMA.162/2007-RB Dated 18.9.2007 and Notification No. FEMA.193/2009-RB dated
2nd June 2009, Notification No.FEMA.228 /2012-RB dated 11.04.2012, Notification
No. FEMA. 235/2012-RB dated 25.09.2012, Notification No. FEMA 243/2012-RB
dated 19.10.2012, Notification No.FEMA.253/2013-RB
dated 2.1.2013, Notification No. FEMA. 280/2013-RB
Dated 10.07.2013
G.S.R. 388(E), dated 3-5-2000.— In exercise of the powers conferred by clause (f) of sub-
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations relating to deposits
between a person resident in India and a person resident outside India, namely:

(i) These regulations may be called the Foreign Exchange Management (Deposit)
Regulations, 2000.
2. Definitions
In these Regulations, unless the context otherwise requires, —
(ii) ‘authorised bank’ means a bank including a co-operative bank (other than an authorised
dealer) authorised by the Reserve Bank to maintain an account of a person resident
outside India;
(iii) ‘authorised dealer’ means a person authorised as an authorised dealer under sub-
(iv) ‘Deposit’ includes deposit of money with a bank, company, proprietory concern,
partnership firm, corporate body, trust or any other person;
(v) ‘FCNR(B) account’ means a Foreign Currency Non-Resident (Bank) account referred
to in clause (ii) of sub- regulation (1) of Regulation 5;
(vi) ‘Non-Resident Indian (NRI)’ means a person resident outside India who is a citizen of
India or is a person of Indian origin;
(vii) ‘NRE account’ means a Non-Resident External account referred to in clause (i) of
sub-regulation (1) of Regulation 5;
(viii) ‘NRO account’ means a Non-Resident Ordinary account referred to in clause (iii)
of sub-regulation (1) of Regulation 5;
(ix) ‘NRNR account’ means a Non-Resident Non-Repatriable account referred to in clause
(iv) of sub-regulation (1) of Regulation 5;
(x) ‘NRSR account’ means a Non-Resident (Special) Rupee account referred to in clause
(v) of sub-regulation (1) of Regulation 5;
(xi) ‘Overseas Corporate Body (OCB)’ means a company, partnership firm, society and
other corporate body owned directly or indirectly to the extent of at least sixty per
cent by Non-Resident Indians and includes overseas trust in which not less than sixty
per cent beneficial interest is held by Non-resident Indians directly or indirectly but
irrevocably;
(xii) ‘Person of Indian Origin’ means a citizen of any country other than
Bangladesh or Pakistan, if —
(a) he at any time held Indian passport; or
(b) he or either of his parents or any of his grandparents was a citizen of India by
virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
(c) the person is a spouse of an Indian citizen or a person referred to in sub-clause (a)
or (b);
(xiiA) 'Qualified Foreign Investor (QFI)' shall have the same meaning as assigned under
the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2000;
(xiii) ‘Schedule’ means schedule to these Regulations;
(xiv) the words and expressions used but not defined in these Regulations shall have the same
meanings respectively assigned to them in the Act.
3. Restrictions on deposits between a person resident in India and a person resident

outside India
Save as otherwise provided in the Act or Regulations or in rules, directions and orders
made or issued under the Act, no person resident in India shall accept any deposit from, or
make any deposit with, a person resident outside India:
Provided that the Reserve Bank may, on an application made to it and on being
satisfied that it is necessary so to do, allow a person resident in India to accept or make
deposit from or with a person resident outside India.
4. Exemptions
Nothing contained in these Regulations shall apply to the following:
(1) Deposits held in rupee accounts maintained by foreign diplomatic missions and
diplomatic personnel and their family members in India with an authorised dealer.
(2) Deposits held by diplomatic missions and diplomatic personnel in special rupee
accounts namely Diplomatic Bond Stores Account to facilitate purchases of bonded
stocks from firms and companies who have been granted special facilities by customs
authorities for import of stores into bond, subject to following conditions:
(a) Credits to the account shall be only by way of proceeds of inward remittances
received from outside India through normal banking channels or by a transfer from a
foreign currency account in India of the account holder maintained with an authorised
dealer in accordance with clause 3 of this Regulation;
(b) All cheque leaves issued to the account holder shall be superscribed as “Diplomatic
Bond Stores Account No.”;
(c) Debits to the accounts shall be for local disbursements, or for payments for
purchases of bonded stocks to firms and companies who have been granted special
facilities by customs authorities for import of stores into bond;
(d) The funds in the account may be repatriated outside India without the approval of
Reserve Bank.
(3) Deposits held in accounts maintained in foreign currency by 1[diplomatic missions,
diplomatic personnel and non-diplomatic staff, who are the nationals of the concerned
foreign countries and hold official passport of foreign embassies] in India subject to
the following conditions :
(a) credits to the account shall be only by way of:—
(i) proceeds of inward remittances received from outside India through normal
banking channels; and
(ii) transfer of funds, from the rupee account of the diplomatic mission in India,
which are collected in India as visa fees and credited to such account;
(b) Funds held in such account if converted in rupees shall not be converted back into
foreign currency;
(c) The account may be held in the form of current or term deposit account and in
the case of diplomatic personnel 3[and non-diplomatic staff], may also be held in
the form of savings account;
(d) The rate of interest on savings or term deposits shall be such as may be
determined by the authorised dealer maintaining the account;
(e) The funds in the account may be repatriated outside India without the approval of
Reserve Bank.
(4) Deposits held in accounts maintained in rupees with an authorised dealer by persons resident
in Nepal and Bhutan;
(5) Deposits held in accounts maintained with an authorised dealer by the United Nations
Organisation and its subsidiary/affiliate bodies in India, and its or their officials in
India.
5. Acceptance of deposits by an authorised dealer/authorised bank from persons resident
outside India
(1) An Authorised dealer in India may accept deposit —
(i) Under the Non-Resident (Exernal) Account Scheme (NRE accountr), specified in
Schedule 1, from a non- resident Indian [* * *];
(ii) Under the Foreign Currency (Non-Resident) Account Banks Scheme, (FCNR-B
account), specified in Schedule 2, from a non-resident Indian [* * *];
(iii) Under the Non-Resident (Ordinary) Account Scheme (NRO account), specified in
Schedule 3, from any person resident outside India.
(iv) [* * *]
(v) [* * *]
(2) Without prejudice to sub-regulation (1), deposits under NRE, NRO and NRSR Account
Schemes referred to in clauses (i) and (iii)] of that sub-regulation, may also be accepted
by an authorised bank, in accordance with the provisions contained in the respective
Schedules.
(2A) Non-resident acquirers may, subject to the terms and conditions specified in
Schedule 8, open, hold and maintain Escrow Account and Special Account with
Authorised Dealers in India without prior approval of the Reserve Bank, for
acquisition/transfer of shares/convertible debentures through open offers/delisting/exit
offers, subject to the relevant *Security and Exchange Board of India (SAST)
Regulations or any other applicable Securities and Exchange Board of India
Regulations/provisions of the Companies Act, 1956.
(2B) Resident or Non-resident acquirers may, subject to the terms and conditions specified in
Schedule 9, open, hold and maintain Escrow Account with Authorised Dealers in India
without prior approval of the Reserve Bank, towards payment of share purchase
consideration. Resident or Non-resident acquirers may, subject to the terms and conditions
specified in Schedule 9, open and maintain, without prior approval of the Reserve Bank,
Escrow accounts for securities with SEBI authorised Depository Participants. These
facilities will be applicable for both issue of fresh shares to the non-residents as well as
transfer of shares from/to the non-residents.
(3) (a) On and from 1st April 2002, —
(i) no deposit, whether by way of renewal of existing deposit or otherwise, shall be
accepted under the Non- Resident (Non-Repatriable) Rupee Account Scheme
(NRNR Account) or the Non-Resident Special Rupee Account Scheme (NRSR
Account);
(ii) existing deposits under the NRNR Account Scheme may be continued only
upto the date of maturity;
(iii) on maturity of the existing deposit under the NRNR Account Scheme, the
maturity proceeds shall be credited to the accountholder’s Non-Resident
(External) Account (NRE Account), after giving notice to the account holder.
(b) (i) the existing account in the form of a term deposit of the NRSR Account
Scheme may be continued till the date of maturity.
(ii) on maturity of the existing term deposit under the NRSR Account Scheme,
the maturity proceeds shall be credited to the accountholder’s Non-Resident
(Ordinary) Account (NRO Account).
(iii) existing NRSR account, other than a term deposit, shall not be continued after 30th
September 2002 and may at the option of the account holder, be closed or the
balance therein credited to his NRO account on or before that date.
Explanation: For the purpose of this sub-regulation, “existing deposit” or
“existing account” means a deposit or an account held on 31st March 2002.
(4) A Qualified Foreign Investor (QFI) may open a single non-interest bearing Rupee
Account with Authorised Dealer in India without the prior approval of the Reserve
Bank, for the limited purpose of routing the receipt and payment for transactions relating
to purchase and sale of eligible securities as stipulated by the Reserve Bank, from time
to time, subject to the following conditions:
(a) The account shall be funded by inward remittance through normal banking
channel and by credit of the sale/redemption/buyback proceeds (net of taxes) and on
account of interest payment/dividend on the eligible securities for QFIs.
(b) The funds in this account shall be utilized for purchase of eligible securities for
QFIs or for remittance (net of taxes) outside India.
(c) The Qualified Depository Participants (as per the extant SEBI regulations) will
operate such non-interest bearing. Rupee Accounts on behalf of the QFIs and at the
instructions of the QFIs.
(5) A non-resident including a Non Resident Indian (NRI) may open a single non-interest
bearing Rupee Account with the Authorised Dealers in India without the prior
approval of Reserve Bank of India, for the limited purpose of purchase of shares on
the recognized stock exchanges in accordance with Regulation 10D of Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000 (Notification No.FEMA.20/2000-RB dated 3rd May 2000).
6. Other deposits made or held by authorised dealer

A deposit made by an authorised dealer with his branch, head office or correspondent
outside India, and a deposit made by a branch or correspondent outside India of an authorised
dealer, and held in his books in India, shall be governed by the directions issued by the
Reserve Bank in this regard from time to time.
7. Acceptance of deposits by persons other than authorised dealer/authorised bank

(1) A company registered under Companies Act, 1956 or a body corporate created under an
Act of Parliament or State Legislature shall not accept deposits on repatriation basis from a
non-resident Indian.
(2) A company registered under Companies Act, 1956 or a body corporate created under
the Act of Parliament or State Legislature may renew the deposits which had been accepted
on repatriation basis from a non-resident Indian subject to terms and conditions mentioned
in Schedule 6.
(3) A company registered under Companies Act, 1956 or a body corporate or a proprietary
concern or a firm in India may accept deposits from a non-resident Indian on non-
repatriation basis, subject to the terms and conditions mentioned in Schedule 7.
8. Deposits in certain other cases

(1) Subject to compliance with the conditions in regard to raising of external commercial
borrowings or raising of resources through American Depository Receipts (ADRs) or Global
Depository Receipts (GDRs), the funds so raised may, pending their utilisation or
repatriation to India, be held in deposits in foreign currency accounts with a bank outside
India.
(2) Deposits accepted by an Indian company by issue of Commercial Paper to a Non-
Resident Indian or a Foreign Institutional Investor registered with the Securities and
Exchange Board of India [* * *] shall be subject to the following conditions, namely:
(a) the issue is in due compliance with the Non-Banking Companies (Acceptance of
Deposits through Commercial Paper) Directions, 1989 issued by the Reserve Bank as
also any other law, rule, directions, orders issued by the Government or any other
regulatory authority, in regard to acceptance of deposits by issue of Commercial Paper;
(b) payment for issue of Commercial Paper is received by the issuing company by inward
remittance from outside India through normal banking channels or out of funds held in a
deposit account maintained by a Non-Resident Indian [* * *] in accordance with the
Regulations made by Reserve Bank in that regard;
(c) the amount invested in Commercial Paper shall not be eligible for repatriation outside
India; and
(d) the Commercial Paper shall not be transferable.
9. Acceptance of deposits by authorised dealer with the prior approval of Reserve Bank
With the prior approval of Reserve Bank, an authorised dealer may open an account expressed
in foreign currency in the name of a person resident outside India for the purpose of
adjustment of value of goods imported into India against the value of goods exported from
India in terms of an arrangement voluntarily entered into by such person with a person
resident in India.
10. Nomination
Authorised dealers may provide nomination facility in respect of the following deposit
accounts:
(a) accounts maintained by individual account holders under the NRE, FCNR(B), NRO,
NRNR and NRSR Account Schemes; and
(b) accounts maintained by diplomatic personnel under sub-regulations (1), (2) and (3) of
Regulation 4.
SCHEDULE 1
Non-Resident (External) Rupee Account Scheme
[See Regulation 5(1)(i)]
1. Eligibility
The Non-resident Indians (NRIs) 1[* * *] are permitted to open and maintain these accounts
with authorised dealers, and with banks (including co-operative banks) authorised by the
Reserve Bank to maintain such accounts.
The account should be opened by the non-resident account holder himself and not by the
holder of the power of attorney in India.
Note: Opening of NRE accounts in the names of individuals/entities of Bangladesh/Pakistan
nationality/ownership requires approval of Reserve Bank.
2. Types of accounts
The accounts may be maintained in any form, e.g. savings, current, recurring or fixed
deposit account etc.
3. Permitted Credits
(a) Proceeds of remittances to India in any permitted currency.
(b) Proceeds of personal cheques drawn by the account holder on his foreign currency
account and of travellers cheques, bank drafts payable in any permitted currency including
instruments expressed in Indian rupees for which reimbursement will be received in
foreign currency, deposited by the account holder in person during his temporary visit to
India, provided the authorised dealer/bank is satisfied that the account holder is still resident
outside India, the travellers’ cheques/drafts are standing/endorsed in the name of the account
holder and in the case of travellers’ cheques, they were issued outside India.
(c) Proceeds of foreign currency/bank notes tendered by account holder during his
temporary visit to India, provided (i) the amount was declared on a Currency Declaration
Form (CDF), where applicable, and (ii) the notes are tendered to the authorised dealer in
person by the account holder himself and the authorised dealer is satisfied that account
holder is a person resident outside India.
(d) Transfers from other NRE/FCNR accounts.
(e) Interest accruing on the funds held in the account.
(f) Interest on Government securities and dividend on units of mutual funds, provided the
securities/units were purchased by debit to the account holder’s NRE/FCNR account or out of
inward remittance through normal banking channels.
(g) Maturity proceeds of Government securities including National Plan/Savings
Certificates as well as proceeds of Government securities and units of mutual funds sold on
a recognised stock exchange in India and sale proceeds of units received from mutual
funds, provided the securities/units were originally purchased by debit to the account holder’s
NRE/FCNR account or out of remittances received from outside India in free foreign
exchange.
(h) Refund of share/debenture subscriptions to new issues of Indian companies or portion
thereof, if the amount of subscription was paid from the same account or from other
NRE/FCNR account of the account holder or by remittance from outside India through
normal banking channels.
(i) Refund of application/earnest money/purchase consideration made by the house
building agencies/seller on account of non-allotment of flat/plot/cancellation of
bookings/deals for purchase of residential/ commercial property, together with interest, if any
(net of income tax payable thereon), provided the original payment was made out of
NRE/FCNR account of the account holder or remittance from outside India through
normal banking channels and the authorised dealer is satisfied about the genuineness of the
transaction.
(j) Any other credit if covered under general or special permission granted by Reserve
Bank.
4. Permitted Debits
(a) Local disbursements.
(b) Remittances outside India.
(c) Transfer to NRE/FCNR accounts of the account holder or any other person eligible to
maintain such account.
(d) Investment in shares/securities/commercial paper of an Indian company or for purchase
of immovable property in India provided such investment/purchase is covered by the
regulations made, or the general/special permission granted, by the Reserve Bank.
(e) Any other transaction if covered under general or special permission granted by the
Reserve Bank.
5. Rate of Interest
Rate of interest applicable to these accounts shall be in accordance with the
directions/instructions issued by Reserve Bank from time to time.
6. Loans against security of funds held in the account

(a) To Account holder: Authorised dealers and banks maintaining such accounts are
permitted to grant loans in India to the account holder for—
(i) personal purposes or for carrying on business activities except for the purpose of
relending or carrying on agricultural/plantation activities or for investment in real estate
business. The authorised dealer/bank should ensure that the advances are fully secured
by the fixed deposits and regulations relating to normal margin, interest rate, etc. are
complied with. Repayment shall be made either by adjustment of the deposit or by fresh
inward remittances from outside India through normal banking channels. The loan can
also be repaid out of local rupee resources in the NRO account of the borrower. The
interest on such loans shall be in accordance with directives issued by Reserve Bank
from time to time;
(ii) the purpose of making direct investment in India on non-repatriation basis by way of
contribution to the capital of Indian firms/companies subject to compliance with the
provisions of the Foreign Exchange Management (Transfer of Indian security by a
Person Resident outside India) Regulations, 2000 and Foreign Exchange Management
(Investment in Proprietary or a Partnership Firm) Regulations, 2000;
(iii) the purpose of acquisition of flat/house in India for his own residential use subject to
the provisions of the relevant Regulations made under the Act.
(b) To Third Parties: Authorised dealers and authorised banks may grant any type of fund
based and/or non-fund based facilities to resident individuals/firms/ companies in India
against the collateral of fixed deposits held in NRE account subject to the following
conditions:
(i) There should be no direct or indirect foreign exchange consideration for the non-resident
depositor agreeing to pledge his deposits to enable the resident individual/firm/company to
obtain such facilities.
(ii) Regulations relating to margin, interest rate, purpose of loan, etc., as stipulated by
Reserve Bank from time to time should be complied with.
(iii) The loan should be utilised for personal purposes or for carrying on business activities
other than agricultural/ plantation activities or real estate business. The loan should not
be utilised for relending.
(iv) The usual norms and considerations as applicable in the case of advances to
trade/industry shall be applicable to such credit facilities.
(c) Loans outside India: Authorised dealers may allow their branches/correspondents
outside India to grant any type of fund based and/or non-fund based facilities to or in
favour of non-resident depositor or to third parties at the request of depositor for bona fide
purpose against the security of funds held in the NRE accounts in India and also agree to
remittance of the funds from India, if necessary, for liquidation of the outstandings.
(d) The loans and facilities granted under this paragraph shall be subject to such directions
as may be issued by the Reserve Bank from time to time.
7. Change of resident status of the account holder

NRE accounts should be redesignated as resident accounts or the funds held in these accounts
may be transferred to the RFC accounts (if the account holder is eligible for maintaining
RFC account) at the option of the account holder immediately upon the return of the
account holder to India for taking up employment or for carrying on business or vocation
or for any other purpose indicating intention to stay in India for an uncertain period. Where
the account holder is only on a short visit to India, the account may continue to be treated
as NRE account even during his stay in India.
8. Repatriation of funds to non-resident nominee

Authorised dealers/authorised banks may allow remittance of funds lying in the NRE account
of the deceased account holder to his non-resident nominee.
9. Miscellaneous
(a) Joint accounts : Joint accounts in the names of two or more non-resident individuals may
be opened provided all the account holders are persons of Indian nationality or origin.
Opening of these accounts by a non-resident jointly with a resident is also permissible.
Opening of these accounts by non-resident may be permitted jointly with the resident close
relative(s) on
‘former or survivor’ basis. However, the said resident close relative shall be eligible to
operate the account as a Power of Attorney holder in accordance with the extant instructions
during the life time of the NRI account holder.”
Explanation – For the purpose of this regulation, ‘close relative’ means relative as
defined in section 6 of the Companies Act, 1956.
(b) Opening of account during temporary visit : An account may be opened in the name of
an eligible NRI during his temporary visit to India against tender of foreign currency
travellers cheques or foreign currency notes and coins tendered, provided the authorised
dealer is satisfied that the person has not ceased to be a non-resident.
(c) Operations by Power of Attorney : Authorised dealers/authorised banks may allow
operations on an NRE account in terms of Power of Attorney or other authority granted in
favour of a resident by the non-resident account holder, provided such operations are
restricted to withdrawals for local payments or remittance to the account holder himself
through normal banking channels. In cases where the account holder or a bank designated
by him is eligible to make investments in India, the Power of Attorney holder may be
permitted by the authorized dealers/banks to operate the account to facilitate such
investment. The resident Power of Attorney holder shall not, however, be allowed to
repatriate outside India funds held in the account under any circumstances other than to the
account holder himself, nor to make payment by way of gift to a resident on behalf of the
account holder or to transfer funds from the account to another NRE account.
(d) Special Series of Cheques : For easy identification and quicker processing of cheques
drawn on NRE accounts, authorised dealers/banks shall issue cheque books containing a
special series of cheques to their constituents holding NRE accounts.
(e) Temporary overdrawings : Authorised dealers/authorised banks may at their
discretion/commercial judgement allow for a period of not more than two weeks,
overdrawings in NRE savings bank accounts, upto a limit of Rs. 50,000 subject to the
condition that such overdrawings together with the interest payable thereon are cleared/repaid
within the said period of two weeks, out of inward remittances through normal banking
channels or by transfer of funds from other NRE/FCNR accounts.
(f) Remittances abroad by Resident nominee : Application from a resident nominee for
remittance of funds outside India for meeting the liabilities, if any, of the deceased account
holder or for similar other purposes, should be forwarded to the Reserve Bank for
consideration.
(g) Tax Exemption : Income from interest on balances standing to the credit of NRE
Accounts is exempt from Income Tax. Likewise balances held in such accounts are exempt
from wealth tax.
(h) Reporting : The transactions in these accounts shall be reported to the Reserve Bank in
accordance with the directions issued by it from time to time.
SCHEDULE 2
Foreign Currency (Non-Resident) Account (Banks) Scheme — FCNR(B)
[See Regulation 5(1)(ii)]
1. Eligibility
(a) NRIs [* * *] are eligible to open and maintain these accounts with an authorised dealer.
Note : Opening of FCNR(B) accounts in the names of NRIs/[* * *] of
Bangladesh/Pakistan nationality/ownership requires approval of Reserve Bank.
(b) These accounts may be opened with funds remitted from outside India through normal
banking channels or funds received in rupees by debit to the account of a non-resident bank
maintained with an authorised dealer in India or funds which are of repatriable nature in
terms of the regulations made by Reserve Bank. Accounts may also be opened by transfer
of funds from existing NRE/FCNR accounts.
(c) Remittances from outside India for opening of or crediting to these accounts should be
made in the designated currency in which the account is desired to be opened/maintained.
Without prejudice to this, if the remittance is received in a currency other than the
designated currency (including funds received in rupees by debit to the account of the non-
resident bank), it should be converted into the latter currency by the authorised dealer at the
risk and cost of the remitter and account should be opened/credited in only the designated
currency.
(d) In case the depositor with any convertible currency other than designated currency
desires to place a deposit in these accounts, authorised dealers may undertake with the
depositor a fully covered swap in that currency against the desired designated currency.
Such a swap may also be done between two designated currencies.
2. Designated Currencies
Deposit of funds in the accounts may be accepted in such permissible currencies as may
be designated by the Reserve Bank from time to time.
3. Type of accounts
These accounts may be opened only in the form of term deposit with maturity of such
period as may be specified by the Reserve Bank from time to time.
4. Rate of Interest
The rate of interest on funds held in these deposit accounts will be in accordance with the
directives issued by the Reserve Bank from time to time.
5. Permissible Debits/Credits
All debits/credits permissible in respect of NRE accounts as specified in Schedule 1 shall be
permissible in respect of these accounts also.
6. Rate for Conversion of Rupees into Designated Currencies and vice versa
(i) Remittances received in Indian rupees for opening these accounts shall be converted by
the authorised dealer into the designated foreign currency at the clean T.T. selling rate for
that currency ruling on the date of conversion.
(ii) For the purpose of payment in rupees, funds held in these accounts shall be
converted into rupees at the authorised dealer’s clean T.T. buying rate for the concerned
currency ruling on the date of withdrawal.
7. Inland Movement of Funds

Any inland movement of funds for the purpose of opening these accounts as well as for
repatriation outside India of balances held in these accounts will be free of inland
exchange or commission for the non-resident depositors. The Authorised dealer receiving
foreign currency remittances in these accounts will also, on request, pass on the foreign
currency to another authorised dealer if the account has to be opened with the latter, at no
extra cost to the remitter.
8. Manner of Payment of Interest

(i) Interest on balances held in these accounts may be paid half-yearly or on an annual
basis as desired by the depositor.
(ii) Interest may be credited to a new FCNR(B) account or an existing/new NRE/ NRO/
NRNR/ NRSR account in the name of the account holder, at his option.
9. Loans/overdrafts against security of funds held in the account

(1) The terms and conditions as applicable to NRE deposits (cf. Schedule 1) in respect of
loans and overdrafts in India to depositor and to third parties as also loans outside India
against security of deposits, shall apply mutatis mutandis to FCNR(B) deposits.
(2) The margin requirement shall be notionally calculated on the rupee equivalent of the
deposits.

When an account holder becomes a person resident in India, deposits may be allowed to
continue till maturity at the contracted rate of interest, if so desired by him. However,
except the provisions relating to rate of interest and reserve requirements as applicable to
FCNR(B) deposits, for all other purposes such deposits shall be treated as resident deposits
from the date of return of the account holder to India. Authorised dealers should convert the
FCNR(B) deposits on maturity into resident rupee deposit accounts or RFC account (if the
depositor is eligible to open RFC account), at the option of the account holder and interest
on the new deposit (rupee account or RFC account) shall be payable at the relevant rates
applicable for such deposits.
11. Joint account, repatriation of balances, etc.

(1) Terms and conditions as applicable to NRE accounts (cf. Schedule 1) in respect of joint
accounts, repatriation of funds, opening account during temporary visit, operation by power of
attorney, loans/overdrafts against security of funds held in accounts, shall apply mutatis
mutandis to FCNR (B) accounts.
(2) Authorised dealer may permit remittance of the maturity proceeds of FCNR (B) deposits
to third parties outside India, provided the transaction is specifically authorised by the account
holder and the authorised dealer is satisfied about the bona fides of the transaction.]
12. Reporting
The transactions in these accounts shall be reported to Reserve Bank in accordance with
the directions issued by it from time to time.
13. Other features

(a) Reserve Bank will not provide exchange rate guarantee to authorised dealers for
deposits of any maturity in these accounts.
(b) Lending of resources mobilised by authorised dealers under these accounts are not
subject to any interest rate stipulations.
Note : Premature withdrawal of FCNR(B) deposits for the purpose of opening NRNR Rupee
Deposit accounts with an authorised dealer other than the one with whom the account
FCNR(B) is maintained will attract penalty as per the directions issued by Reserve Bank
from time to time.
SCHEDULE 3
Non-Resident Ordinary (NRO) Rupee Account Scheme
[See Regulation 5(1)(iii)]
1. Eligibility
(a) Any person resident outside India may open NRO account with an authorised dealer or
an authorised bank for the purpose of putting through bona fide transactions in rupees not
involving any violation of the provisions of the Act, rules and regulations made thereunder.
(b) The operations on the accounts should not result in the account holder making
available foreign exchange to any person resident in India against reimbursement in rupees or
in any other manner.
(c) At the time of opening of the account, the account holder should furnish an
undertaking to the authorised dealer/authorised bank with whom the account is maintained
that in cases of debits to the account for the purpose of investment in India and credits
representing sale proceeds of investments, he will ensure that such investments/
disinvestments will be in accordance with the regulations made by Reserve Bank in this regard.
Notes: (A) Opening of accounts by individuals/entities of Bangladesh/Pakistan
nationality/ownership requires approval of Reserve Bank.
(B) Post Offices in India may maintain savings bank accounts in the names of
persons resident outside India and allow operations on these accounts subject to the
same terms and conditions as are applicable to NRO accounts maintained with an
authorised dealer/authorised bank.
2. Types of Accounts
NRO accounts may be opened/maintained in the form of current, savings, recurring or fixed
deposit accounts. The requirements laid down in the directives issued by Reserve Bank in
regard to resident account shall apply to NRO accounts.
3. Permissible Credits/Debits
(A) Credits —
(i) Proceeds of remittances received in any permitted currency from outside India
through normal banking channels or any permitted currency tendered by the
account holder during his temporary visit to India or transfers from rupee accounts
of non-resident banks.
(ii) Legitimate dues in India of the account holder.
(iii) Amount in rupees received subject to compliance with the Regulation 4 of the
Notification No. FEMA 16/ 2000- RB dated May 3, 2000 (Receipt from and
Payment to, a Person Resident Outside India), as amended from time to time,
provided the beneficiary of the account is a NRI as defined in Foreign
Exchange Management (Deposit) Regulations, 2000.
(iv) Amount in rupees received subject to compliance with the Regulation 8B of the
Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations,
2000 (Notification No. FEMA 4/2000-RB dated 3rd May, 2000), as amended from
time to time.
(B) Debits —
(i) All local payments in rupees including payments for investment subject to
compliance with the relevant regulations made by the Reserve Bank.
(ii) Remittance outside India of current income in India of the account holder net of
applicable taxes.
4. Remittance of funds held in NRO accounts

Balances in NRO accounts are not eligible for remittance outside India without the approval
of Reserve Bank. Funds received by way of remittances from outside India in foreign exchange
which have not lost their identity as remittable funds will only be considered by Reserve Bank
for remittance outside India. Where an account (current/savings) is opened by a foreign
tourist visiting India, with funds remitted from outside India in a specified manner or by sale
of foreign exchange brought by him to India, authorised dealers may convert the balance in
the account at the time of departure of the tourist from India to foreign currency for payment
to the account holder provided the account has been maintained for a period not exceeding
six months and the account has not been credited with any local funds, other than interest
accrued thereon.
5. Grant of Loans/Overdrafts
(A) To Account holders —
(i) Loans to non-resident account holders may be granted in rupees against the
security of fixed deposits subject to usual norms as are applicable to resident accounts,
for personal purposes or for carrying on business activities except for the purpose of
relending or carrying on agricultural/plantation activity or for investment in real estate
business.
(ii) Authorised dealer/bank may permit overdraft in the account of the account
holder subject to his commercial judgement and compliance with the interest rate
etc. directives.
(B) To Third parties —
Loans/overdrafts to resident individuals/firms/companies in India may be granted
against the security of deposits held in NRO accounts, subject to the following terms
and conditions:
(i) The loans shall be utilised only for meeting borrower’s personal requirements
and/or business purpose and not for carrying on agricultural/plantation activities or
real estate business, or for relending.
(ii) Regulations relating to margin and rate of interest as stipulated by Reserve Bank
from time to time shall be complied with.
(iii) The usual norms and considerations as applicable in the case of advances to
trade/industry shall be applicable for such loans/facilities.
6. Treatment of Loans/Overdrafts in the event of change in the resident status of the

borrower
In case of person who had availed of loan or overdraft facilities while resident in India and
who subsequently becomes a person resident outside India, the authorised dealer may at
their discretion and commercial judgement allow continuance of the loan/overdraft facilities.
In such cases, payment of interests and repayment of loan may be made by inward
remittance or out of legitimate resources in India of the person concerned.
7. Joint Accounts with Residents

The accounts may be held jointly with residents.
7(A) Operations by Power of Attorney
Authorised dealers/authorized banks may allow operations on an NRO account in terms of a
Power of Attorney, provided such operations are restricted to (i) all local payments in
rupees including payments for eligible investments subject to compliance with relevant
regulations made by the Reserve Bank; and (ii) remittance outside India of current income
in India of the non-resident individual account holder, net of applicable taxes. The
resident Power of Attorney- holder shall not repatriate outside India funds held in the
account under any circumstances other than to the non-resident individual account-holder
himself nor shall make payment by way of gift to a resident on behalf of the non-
resident account holder or transfer funds from the account to another NRO account. Any
remittance outside India shall be within the ceiling as may be prescribed by the bank from
time to time and subject to tax compliance.]
8. Change of Resident Status of Account holder

(a) From Resident to Non-resident —
When a person resident in India leaves India for a country (other than Nepal or
Bhutan) for taking up employment, or for carrying on business or vocation outside
India or for any other purpose indicating his intention to stay outside India for an
uncertain period, his existing account should be designated as a Non- Resident
(Ordinary) Account.
(b) From Non-Resident to Resident —
NRO accounts may be re-designated as resident rupee accounts on the return of the
account holder to India for taking up employment, or for carrying on business or vocation
or for any other purpose indicating his intention to stay in India for an uncertain period.
Where the account holder is only on a temporary visit to India, the account should
continue to be treated as non-resident during such visit.
9. Payment of funds to Non-resident Nominee

The amount due/payable to non-resident nominee from the account of a deceased account
holder, shall be credited to NRO account of the nominee with an authorised
dealer/authorised bank in India.
10. Reporting of transactions

(i) The transaction in the account which may appear to represent reimbursement in
rupees against foreign exchange made available to a person resident in India other than
authorised dealer, as well as any other transaction of suspicious nature, should be reported
to Reserve Bank.
(ii) The transactions in these accounts shall be reported to the Reserve Bank in
accordance with the directions issued by it from time to time.
(iii) The accounts opened by an authorised dealer or an authorised bank in respect of
individual/s of Bangladesh nationality shall be reported by the authorised dealer/ authorised
bank branch to its Head Office and the Head Office of such authorised dealer/ authorised
bank shall forward a quarterly report containing details of Name of the Individual(s),
Passport Number, Issuing Country/State, Name of the FRO/ FRRO, Date of issue of
Residential Permit and validity thereof, to the Ministry of Home Affairs (Foreigners
Division) on Quarterly basis”.
Explanation: ‘Quarterly basis’ means, quarter as at end of March/June/September and
December of every year.
SCHEDULE 4
Non-Resident (Non-Repatriable) Rupee Deposit Scheme
[See Regulation 5(1)(iv)]
1. Eligibility
Any person resident outside India (except individuals/entities of Pakistan/Bangladesh
nationality/ownership) may open NRNR account with an authorised dealer, provided that
no such account shall be opened on and from 1st April 2002, whether by renewal of
existing deposit or otherwise.
Account should be opened in Indian rupees out of the funds remitted from outside India
through normal banking channels (in freely convertible currency). In the case of
NRIs/OCBs, such accounts may also be opened by transfer of funds from their existing
NRE/FCNR deposit accounts. Premature withdrawal of NRE/FCNR deposits for opening
NRNR deposits with an authorised dealer other than the one with whom the NRE/FCNR
account is maintained will attract penalty, if any, as per the directions issued by Reserve
Bank from time to time.
2. Period of deposit
The deposits may be held for periods ranging from 6 months to 3 years.
3. Rate of interest
Banks are free to determine the rate of interest on deposits under this scheme and on advances
against funds held in such deposits.
4. Repatriability
Only Interest accrued on the deposits is repatriable.
5. Renewal/Transfer
The principal amount of deposit together with interest accrued thereon may be renewed for a
further period ranging from 6 months to 3 years. If the interest accrued on an existing
deposit is invested under the Scheme, the amount of interest so invested, will not be
eligible for repatriation. The account can also be shifted from one authorised dealer to
another.
6. Gift
In the case of individual deposit holder, the amount of deposit can be gifted to any
resident/non-resident or to any Charitable Trust in India recognised under the Income Tax
Act, 1961.
7. Joint Accounts with residents

Accounts may be held jointly with residents.
8. Loans/overdrafts
Loans/overdrafts in India, against the security of these deposits may be granted by the
authorised dealer to account holders/third parties for personal purposes or for carrying on
business activities and not for carrying on agricultural/ plantation activities or real estate
business, or for relending, subject to their normal commercial judgement. Repayment of
loans/liquidation of overdraft to the account holder shall be by way of inward remittance
from outside India through normal banking channels or by debit to
NRE/FCNR/NRO/NRNR/NRSR account of the depositor or by adjustment against maturity
proceeds of deposit. Repayment of loans availed by third parties may be made out of their
own resources.
9. Nomination
An authorised dealer may register nomination in favour of either a resident or non-resident.
However, nomination in favour of a non-resident may be registered subject to the condition
that the amount standing to the credit of the depositor, in the event of his death, will be paid
to the non-resident nominee only in Indian rupees by credit to the nominee’s NRO/
NRNR/NRSR account and will not be allowed to be remitted outside India.
10. Reporting
Transactions in these accounts shall be reported to Reserve Bank in accordance with the
directions issued by it from time to time.
SCHEDULE 5
Non-Resident (Special) Rupee (NRSR) Account Scheme
[See Regulation 5(1)(v)]
1. Eligibility
(i) NRIs (other than nationals of Bangladesh/Pakistan) who voluntarily undertake not to
seek remittance of funds held in these accounts as also income earned thereon are eligible to
maintain NRSR accounts with an authorised dealer.
(ii) These accounts shall carry the same facilities and restrictions as are applicable to
domestic accounts of residents in respect of repatriation of funds held in the account
and/or income accrued thereon with an exception of investment in shares/securities or
immovable property or agricultural/plantation activities or real estate business in India which
shall be governed by the regulations applicable to such investments by non-residents.
(iii) The directives issued by Reserve Bank in regard to domestic accounts shall be
applicable to these accounts.
(iv) No account under NRSR Account Scheme shall be opened on and from 1st April 2002,
whether by renewal of existing deposit or otherwise.
2. Application Form
For the purpose of opening of these accounts, an application shall be submitted to an
authorised dealer in Form NRSR appended to this Schedule.
3. Type of accounts
These accounts may be maintained in the form of current, savings, recurring or fixed deposit
account.
4. Joint accounts
These accounts may be held jointly with residents.
5. Rate of interest
The interest rates as applicable to resident accounts shall apply to these accounts.

When a person resident in India becomes a person resident outside India (other than Nepal
and Bhutan) on account of his taking up employment, or carrying on business or vocation
outside India or for any other purpose indicating his intention to stay outside India
permanently or for an uncertain period, the person concerned will have the option of
designating his existing domestic account as NRO account or NRSR account.
7. Nomination facility
An authorised dealer may register nomination in favour of either a resident or a non-
resident. However, a non- resident nominee will not be entitled to any remittance facility out
of funds held in NRSR account of the deceased account holder or income/interest accrued
thereon.
8. Overdrafts in NRSR account

Authorised dealer/authorised bank may permit overdraft in the account of the account
holder subject to his/its commercial judgement.
9. Miscellaneous
(i) The operations on these accounts may be allowed freely as in the case of domestic
accounts maintained by resident individuals.
(ii) The account holders are also permitted to freely transfer funds from RO/NRE/FCNR
accounts to NRSR accounts but not vice versa.
SCHEDULE 6
Acceptance of deposits by a company incorporated in India
(including a non-banking finance company registered with Reserve Bank) on
repatriation basis from a non-resident Indian or a person of Indian origin resident
outside India
A company incorporated in India (including a non-banking finance company registered with

the Reserve Bank) may accept deposits from NRIs, on repatriation basis subject to the
following conditions :
(i) The deposits are received under a public deposit scheme.
(ii) If the deposit accepting company is a non-banking finance company, it should be
registered with the Reserve Bank and should have obtained the required credit rating as
stipulated under the guidelines issued by Reserve Bank for such companies.
(iii) The amount representing the deposit is received by inward remittance from outside
India through normal banking channels or by debit to the Non-Resident (External)
Account or Foreign Currency (Non-Resident) (Bank) Account maintained with an
authorised dealer/authorised bank in India.
(iv) If the deposit accepting company is a non-banking finance company the rate of
interest payable on deposits shall be in conformity with the guidelines/directions issued
by Reserve Bank for such companies. In other cases the rate of interest payable on
deposits shall not exceed the ceiling rate prescribed from time to time under the
Companies (Acceptance of Deposit) Rules, 1975.
(v) The maturity period of deposit shall not exceed 3 years.
(vi) The company accepting the deposits shall comply with the provisions of any other
law, rules, regulations, orders issued by the Government of India or any other competent
authority, as are applicable to it in regard to acceptance of deposits.
(vii) The amount of aggregate deposits accepted by the company shall not exceed 35%
of its net owned funds.
(viii) The payment of interest net of taxes may be made by the company to the depositor by
remittance through an authorised dealer or by credit to the depositor’s
NRE/FCNR(B)/NRNR/NRO/NRSR account as desired by him.
(ix) The amount of deposits so collected shall not be utilised by the company for re-
lending (not applicable to a Non-Banking Finance Company) or for undertaking
agricultural/plantation activities or real estate business or for investing in any other
concern, firm or a company engaged in or proposing to engage in agricultural/
plantation activities or real estate business.
(x) The repayment of the deposit may be made by the company to the depositor by
remittance from India through an authorised dealer or by credit to the depositor’s
NRE/FCNR(B) account maintained with an authorised dealer in India, provided the
depositor continues to be a non-resident at the time of repayment. While applying to the
authorised dealer for remittance of maturity proceeds of deposit or credit thereof to
NRE/FCNR(B) account, the company should certify that the amount of deposit was
received either by inward remittance from outside India through normal banking channels
or by debit to the depositor’s NRE/FCNR(B) account, as the case may be.
(xi) The amount representing repayment of deposit may also be credited to the depositor’s
NRNR/NRO or NRSR account, at the depositor’s option.
SCHEDULE 7
Acceptance of deposits by Indian proprietorship concern/firm or company (including
non-banking finance company registered with Reserve Bank) on non-repatriation basis
from Non-Resident Indians and persons of Indian origin resident outside India
A proprietorship concern or a firm in India, may accept deposits on non-repatriation basis

from NRIs, and a company incorporated in India (including a non-banking finance company
registered with Reserve Bank) may accept deposits on non-repatriation basis from NRIs/[***]
subject to the following conditions :
(i) In the case of a company, the deposits may be accepted either under private
arrangement or under a public deposit scheme.
(ii) If the deposit accepting company is a non-banking finance company, it should be
registered with the Reserve Bank and should have obtained the required credit rating as
stipulated under the guidelines issued by Reserve Bank for such companies.
(iii) The maturity period of deposit shall not exceed 3 years.
(iv) If the deposit accepting company is a non-banking finance company the rate of
interest payable on deposits shall be in conformity with the guidelines/directions issued
by Reserve Bank for such companies. In other cases the rate of interest payable on
deposits shall not exceed the ceiling rate prescribed from time to time under the
Companies (Acceptance of Deposit) Rules, 1975.
(v) The amount of deposit shall be-received by debit to NRO account only, provided that
the amount of the deposit shall not represent inward remittances or transfer of funds from
NRE/FCNR(B) accounts into the NRO account.
(vi) The proprietorship concern/firm/company accepting the deposit should comply with the
provisions of any other law, rules, regulations or orders made by Government or any
other competent authority, as are applicable to it in regard to acceptance of deposits.
(vii) The proprietorship concern, firm or company accepting the deposit shall not utilise
the amount of deposits for relending (not applicable to a Non-Banking Finance
Company) or for undertaking agricultural/plantation activities or real estate business or
for investing in any other concern or firm or company engaged in or proposing to
engage in agricultural/plantation activities or real estate business.
(viii) The amount of deposits accepted shall not be allowed to be repatriated outside India.
Schedule 8
Terms and conditions for opening of Escrow Account and Special Account by non-
resident corporates for open offers/delisting/exit offers
(See Sub-Regulation 2A of Regulation 5)
1. Acquisition/Transfer of shares shall be strictly in accordance with the provisions of

Notification No. FEMA 20/2000-RB dated 3rd May, 2000 as amended from time to time
and *Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 [SEBI (SAST) Regulations] or any other [SEBI
Regulations] as applicable.
2. The accounts shall be non-interest bearing.
3. Escrow Account may be opened in Indian Rupees, jointly and severally for the
purpose, with the following permitted credits and debits:
Permitted credits : Foreign Inward Remittance through normal banking channels.
Permitted debits : as per SEBI (SAST) Regulations or any other SEBI
Regulations, as applicable.
4. Special Account may be opened in Rupees, jointly and severally for the purpose, with
the credit and debits as per SEBI (SAST) Regulations or any other SEBI Regulations,
as applicable.
5. The resident mandatee empowered by the overseas acquirer for this purpose, may operate
the Escrow Account in accordance with SEBI (SAST) Regulations or any other SEBI
Regulations, as applicable and with the specific approval of the Authorised Dealer with
whom the account is opened.
6. No fund based/non-fund based facilities shall be permitted against the balance in the
accounts.
7. Requirement of compliance with KYC guidelines issued by the Reserve Bank shall rest
with the Authorised Dealer.
8. Balance in the Escrow Account, if any, may be repatriated at the then prevailing
exchange rate (i.e. the exchange rate risk will be borne by the overseas company
acquiring the shares), after all the formalities in respect of the said acquisition are
completed.
9. In the event, the proposal under the said acquisition/transfer does not materialize, the
Authorised Dealer may allow repatriation of the entire amount lying to the credit of the
Escrow Account on being satisfied with the bona fides of such remittances.
10. The accounts shall be closed immediately after completing the requirements as outlined
above.
FORE I GN E XCH AN GE MAN AGE ME N T
(E X PORT AN D I MPORT OF CU RRE N CY) REGU L ATI ON S, 2000
Notification No. FEMA 6/2000-RB dated 3rd May 2000 as amended by Notification No.
FEMA.38/2001-RB dated 27th February 2001, Notification No. FEMA.195/2009-RB dated 7th
July 2009, Notification No. FEMA.258/2013-RB dated 15-2-2013.
G.S.R. 389(E), dated 3-5-2000.— In exercise of the powers conferred by clause (g) of
sub-section (3) of section 6, sub-section (2) of section 47 of the Foreign Exchange Management
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations for export from and
import into, India of currency or currency notes, namely :—

(i) These regulations may be called as Foreign Exchange Management (Export and
Import of Currency) Regulations, 2000.
(ii) They shall come into effect on 1st day of June, 2000.
2. Definitions
In these regulations, unless the context requires otherwise, —
(i) ‘Act’ means Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) the words and expressions used and not defined in these regulations but defined in
the Act have meanings respectively assigned to them in the Act.
3. Export and Import of Indian currency and currency notes

(1) Save as otherwise provided in these regulations, any person resident in India,—
(a) may take outside India (other than to Nepal and Bhutan) currency notes of
Government of India and Reserve
Bank of India notes upto an amount not exceeding 1[Rs. 10000 (Rupees ten thousand
only) per person;
(b) may take or send outside India (other than to Nepal and Bhutan) commemorative
coins not exceeding two coins each.
Explanation.— ‘Commemorative Coin’ includes coin issued by Government of India
Mint to commemorate any
specific occasion or event and expressed in Indian currency;
(c) who had gone out of India on a temporary visit, may bring into India at the time of
his return from any place outside India (other than from Nepal and Bhutan), currency
notes of Government of India and Reserve Bank of India notes upto an amount not
exceeding 1[Rs. 10000 (Rupees ten thousand only) per person.
(2) Without prejudice to the provisions of sub-regulation (1), Reserve Bank may, on
application made to it and on being satisfied that it is necessary to do so, allow a person to
take or send out of India or bring into India currency notes of Government of India and/or
Reserve Bank of India subject to such terms and conditions as the Bank may stipulate.
4. Prohibition on Export of Indian coins

No person shall take or send out of India the Indian coins which are covered by the Antique
and Art Treasure Act, 1972.
5. Prohibition on export and import of foreign currency

Except as otherwise provided in these regulations, no person shall, without the general or
special permission of the Reserve Bank, export or send out of India, or import or bring into
India, any foreign currency.
6. Import of foreign exchange into India

A person may —
(a) send into India without limit foreign exchange in any form other than currency
notes, bank notes and traveller’s cheques;
(b) bring into India from any place outside India without limit foreign exchange (other than
unissued notes):
Provided that bringing of foreign exchange into India under clause (b) shall be subject
to the condition that such person makes, on arrival in India, a declaration to the Custom
authorities in Currency Declaration Form (CDF) annexed to these Regulations:
Provided further that it shall not be necessary to make such declaration where the
aggregate value of the foreign exchange in the form of currency notes, bank notes or
traveller’s cheques brought in by such person at any one time does not exceed US$ 10,000
(US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency
notes brought in by such person at any one time does not exceed US$ 5,000 (US Dollars
five thousand) or its equivalent.
7. Export of foreign exchange and currency notes

(1) An authorised person may send out of India foreign currency acquired in normal
course of business,
(2) any person may take or send out of India, —
(i) Cheques drawn on foreign currency account maintained in accordance with Foreign
Exchange Management (Foreign Currency Accounts by a Person Resident in India)
Regulations, 2000;
(ii) foreign exchange obtained by him by drawal from an authorised person in
accordance with the provisions of the Act or the rules or regulations or directions made
or issued thereunder;
(iii) currency in the safes of vessels or aircraft which has been brought into India or which
has been taken on board a vessel or aircraft with the permission of the Reserve Bank;
(3) any person may take out of India, —
(i) foreign exchange possessed by him in accordance with the Foreign Exchange
Management (Possession and Retention of Foreign Currency) Regulations, 2000;
(ii) unspent foreign exchange brought back by him to India while returning from
travel abroad and retained in accordance with the Foreign Exchange Management
(Possession and Retention of Foreign Currency) Regulations, 2000;
(4) any person resident outside India may take out of India unspent foreign exchange not
exceeding the amount brought in by him and declared in accordance with the proviso to clause
(b) of Regulation 6, on his arrival in India.
8. Export and import of currency to or from Nepal and Bhutan

Notwithstanding anything contained in these regulations, a person may —
(i) take or send out of India to Nepal or Bhutan, currency notes of Government of India
and Reserve Bank of India notes (other than notes of denominations of above Rs. 100
in either case);
(ii) bring into India from Nepal or Bhutan, currency notes of Government of India and
Reserve Bank of India notes (other than notes of denominations of above Rs. 100 in
either case);
(iii) take out of India to Nepal or Bhutan, or bring into India from Nepal or Bhutan,
currency notes being the currency of Nepal or Bhutan.
Currency Declaration Form (CDF)
(See Regulation 6)
Instruction for passengers :

1. This form need not be completed in cases where the aggregate value of the foreign
exchange brought in by the passenger in the form of currency notes, bank notes, or travellers
cheques does not exceed U.S. $ 10,000 or its equivalent and/or the value of foreign currency
notes does not exceed U.S. $ 5,000 or its equivalent.
2. Passengers are advised to produce this Form to a bank authorised to deal in
foreign exchange or money changer at the time of conversion of foreign exchange into Indian
rupees or reconversion of rupees into foreign exchange.
3. Visitors to India may please note that in case they do not wish to encash all the
foreign exchange declared above they should retain this Form with them for production to
the Customs at the time of their departure from India to enable them to take with them the
unutilised balance.
4. Details of travellers’ cheques/currency notes need not be furnished.
5. Foreign tourists need not indicate their

address. (To be completed by passenger)
I hereby, declare that the following Foreign exchange is in my possession at the time
of my arrival in India.
(Aggregate value only)
Name of the currency Currency notes Travellers Cheques Total

1
2
3
Signature
Passport No.
Nationality
(To be completed by Customs Officer)
This is to certify that the above named person has brought with him foreign exchange as indicated
above.
Date :
(Stamp and Signature of Customs Officer)

(Space for endorsement)
Date Distinctive Number of Amount changed Stamp and Signature of
Encashment Certificate Bank or Money changer
1 2 3 4
TH E FORE I GN E XCH AN GE MAN AGE ME N T (ACQU I S I TI ON AN D TRAN S FE R
OF I MMOVAB L E PROPE RTY OU T S I DE I N DI A) REGU L ATI ON S, 2000
Notification No. FEMA 7/2000-RB, dated 3rd May, 2000 Amended by Notification FEMA. 103
dated 13th October, 2003 and Notification No. FEMA 155/2007-RB dated 7.6.2007
G.S.R. 390(E), dated 3-5-2000.— In exercise of the powers conferred by clause (h) of
sub-section (3) of section 6, sub-section (2) of section 47 of the Foreign Exchange Management
Act, 1999 (42 of 1999), the Reserve Bank hereby makes the following regulations relating to
acquisition and transfer of immovable property outside India, namely:—

(i) These regulations may be called the Foreign Exchange Management (Acquisition and
Transfer of Immovable Property Outside India) Regulations, 2000.
2. Definitions
(ii) the words and expressions used but not defined in these Regulations shall have the same
3. Restriction on acquisition or transfer of immovable property outside India

Save as otherwise provided in the Act or in these regulations, no person resident in India
shall acquire or transfer any immovable property situated outside India without general or
special permission of the Reserve Bank.
4. Exemptions
Nothing contained in these regulations shall apply to the property —
(a) held by a person resident in India who is a national of a foreign state;
(b) acquired by a person resident in India on or before 8th July 1947 and continued to be
held by him with the permission of the Reserve Bank.
5. Acquisition and Transfer of Immovable Property outside India

(1) A person resident in India may acquire immovable property outside India, —
(a) by way of gift or inheritance from a person referred to in sub-section (4) of section
6 of the Act, or referred to in clause (b) of regulation 4;
(b) by way of purchase out of foreign exchange held in Resident Foreign Currency
(RFC) account maintained in accordance with the Foreign Exchange Management
(Foreign Currency Accounts by a Person Resident in India) Regulations, 2000;
(2) A person resident in India, who has acquired immovable property outside India under
sub-regulation (1) of this regulation, may transfer it by way of gift to his relative who is a
person resident in India:
(3) A company incorporated in India having overseas offices, may acquire immovable
property outside India for its business and for residential purposes of its staff, in accordance
with the direction issued by the Reserve Bank of India from time to time.
TH E FORE I GN E XCH AN GE MAN AGE ME N T (GUARAN TE ES)
REGU L ATI ON S, 2000
Notification No. FEMA 8/2000-RB, dated 3rd May, 2000 as amended by FEMA Notification
No. FEMA.56/2002/RB dated 18th March 2002 Notification No. FEMA.124/2004/RB dated
16.10.2004, Notification No. FEMA.129/2005/RB dated 20.01.2005, Notification No.
FEMA.151/2007-RBI dated 14.1.2007, Notification No. FEMA.187/2009-RB dated February 3,
2009, Notification No. FEMA.189/2009-RB dated February 27, 2009 and
Notification No. FEMA. 206/2010-RB, dated 1.6.2010, Notification
No.FEMA.227/2012-RB dated 30.03.2012, Notification No.FEMA.251/2012-RB dated
06.12.2012, Notification No.FEMA.259/2013-RB Dated 15.2.2013, Notification
No.FEMA.267/2013-RB Dated 05.3.2013, Notification No. FEMA.269/2013-RB Dated
11.03.2013, Notification No.FEMA.276/2013-RB Dated 08.05.2013
G.S.R. 391(E), dated 3-5-2000.—In exercise of the powers conferred by clause (j) of sub-
Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations, namely:—
1. Short title & commencement

(i) These regulations may be called the Foreign Exchange Management (Guarantees)
Regulations, 2000.
2. Definitions
(ii) ‘authorised dealer’ means a person authorised as an authorised dealer under sub-
(iii) the words and expressions used but not defined in these regulations shall have the same
(iv) ‘Irrevocable Payment Commitment (IPC)’ means irrevocable confirmation issued by the
custodian bank in favour of a stock exchange / clearing corporation of a stock exchange
on behalf of its customers, to meet the payment obligation arising out of a 'buy'
transaction.
3. Prohibition
Save as otherwise provided in these regulations, or with the general or special permission of
the Reserve Bank, no person resident in India shall give a guarantee or surety in respect of, or
undertake a transaction, by whatever name called, which has the effect of guaranteeing, a debt,
obligation or other liability owed by a person resident in India to, or incurred by, a person
resident outside India.
3A. Restriction on obtaining overseas guarantee
No corporate registered under the Companies Act, 1956 (1 of 1956) shall avail domestic
rupee denominated structured obligations by obtaining credit enhancement in the form of
guarantee by international banks, international financial institutions or joint venture partners,
except with the prior approval of the Reserve Bank.
Provided howsoever that a person resident in India who is eligible to raise foreign
currency loan under sub- regulation (1) of Regulation 6 of Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000 read with Schedule I thereto,]
may obtain, without the prior approval of the Reserve Bank, credit enhancement in the form of
guarantee from a person resident outside India for the domestic debts raised by such companies
through issue of capital market instrument like bonds and debentures subject to satisfying the
terms and conditions as may be stipulated by the Reserve Bank, from time to time, in this
regard.
4. Guarantees which may be given by an authorised dealer

(1) An authorised dealer may give a guarantee in respect of any debt, obligation or other
liability incurred by a person resident in India and owed to a person resident outside India, in
the following cases, namely:—
where the debt, obligation or other liability is incurred by the person
resident in India, —
(i) as an exporter, on account of exports from India;
(ii) as an importer, in respect of import on deferred payment terms in accordance with the
approval granted by the Reserve Bank for import on such terms.
(1A) An Authorised Dealer may give guarantee, Letter of Undertaking or Letter of Comfort
in respect of any debt, obligation or other liability incurred by a person resident in India and
owed to a person resident outside India (being an overseas supplier of goods, bank or a financial
institution), for import of goods, as permitted under the Foreign Trade Policy announced by
the Government of India from time to time and subject to such terms and conditions as may
be specified by Reserve Bank from time to time.
(1B) An authorised dealer in India may give guarantee or standby Letter of Credit in
respect of an obligation incurred by a person resident in India and owed to a person resident
outside India in connection with payment of margin money in respect of approved commodity
hedging transaction of such person residing in India subject to such terms and conditions as may
be stipulated by the Reserve Bank from time to time.
(2) An authorised dealer may give a guarantee in respect of any debt, obligation or other
liability incurred by a person resident outside India, in the following cases, namely:—
(i) where such debt, obligation or liability is owed to a person resident in India in
connection with a bona fide trade transaction :
Provided that the guarantee given under this clause is covered by a counter-
guarantee of a bank of international repute resident abroad;
(ii) as a counter-guarantee to cover guarantee issued by his branch or correspondent outside
India, on behalf of Indian exporter in cases where guarantees of only resident banks are
acceptable to overseas buyers.
(iii) (a) An authorised dealer in India may give guarantee on behalf of a person resident
outside India acquiring shares or convertible debentures of an Indian company through
open offers/delisting/exit offers, provided—
(i) the transaction is in compliance with the provisions of the Securities and
Exchange Board of India
(Substantial Acquisition of Shares and Takeover) [SEBI (SAST)] Regulations;
(ii) the guarantee is covered by a counter guarantee of a bank of
international repute; and
(b) the guarantee shall be valid for a tenure co-terminus with the offer period as required
under the SEBI (SAST) Regulations.
(3) An authorised dealer may, in the ordinary course of his business, give a guarantee in the
following other cases, namely:
(i) on behalf of his customer or branch or correspondent outside India in respect of missing
or defective documents, or authenticity of signatures;
(ii) in favour of organizations outside India issuing travellers cheques stocked for sale in
India by the authorised dealer or by his constituents who are authorised persons.
(iii) in favour of foreign airlines/International Air Transport Association (IATA), on behalf
of IATA approved travel agents.
(iv) in favour of a non-resident service provider, on behalf of a resident customer who is a
service importer, subject to such terms and conditions as stipulated by the Reserve
Bank from time to time.
Provided that no guarantee for an amount exceeding USD 500,000 or its equivalent shall
be issued on behalf of a service importer other than a Public Sector Company or a
Department/Undertaking of the Government of India/State Government.
Provided further that where the service importer is a Public Sector Company or a
Department/Undertaking of the Government of India/State Government, no guarantee
for an amount exceeding USD 100,000 or its equivalent shall be issued without the
prior approval of the Ministry of Finance, Government of India.
Explanation : For the purpose of this regulation, "Public Sector Company" means a
Government company as
defined in Section 617 of the Companies Act, 1956.
(4) An authorized dealer (custodian bank), subject to the directions issued by the Reserve
Bank, from time to time, may issue Irrevocable Payment Commitments (IPCs) in favour of the
Stock Exchanges / Clearing Corporations of the Stock Exchanges, on behalf of their registered
FII clients for purchase of shares and convertible debentures under the portfolio investment
scheme (PIS) notified vide Schedule 2 to Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident Outside India) Regulations, 2000 (Notification
No.FEMA.20/2000-RB) dated May 3, 2000, as amended from time to time.
Explanation : (i) If the IPC, which is in the nature of a financial guarantee, is issued prior to
receipt of the required funds from the customer, it will be reckoned for the computation of
Capital Market Exposure of the custodian bank.
(ii) Issue of IPC should be in accordance with the regulations on banks' exposure to the
capital market issued by the Reserve Bank from time to time and also comply with the
instructions issued by Department of Banking Operations and Development, Reserve Bank of
India (DBOD), from time to time.
5. Guarantees which may be given by persons other than an authorised dealer

A person other than an authorised dealer may give a guarantee in the following cases,
namely:—
(a) (i) a person resident in India being an exporting company may give a guarantee for
performance of a project outside India, or for availing of credit facilities, whether
fund-based or non-fund based, from a bank or a financial institution outside India
in connection with the execution of such project:
Provided that the previous approval for undertaking the project has been duly
obtained from the approving authority in India;
(ii) a person resident in India being an exporter company may give guarantee in lieu of
Bid Bond Guarantee, for bidding for a contract outside India without the approval
of the Approving Authority provided that the amount of such guarantee shall not
exceed 5% of the contract value.
Explanation.– For the purpose of this regulation, the “approving authority” means the
authority referred to in Regulation 18 of Foreign Exchange Management (Export of
Goods and Services) Regulations, 2000.
(b) (i) a company in India promoting or setting up outside India, a Joint Venture (JV)
or a Wholly Owned Subsidiary (WOS), may give a guarantee to or on behalf of the
latter in connection with its business:
Provided that the terms and conditions stipulated in Foreign Exchange
Management (Transfer and Issue of Foreign Security) (Amendment) Regulations,
2004 for promoting or setting up such company or subsidiary are continued to be
complied with;
Provided further that the guarantee under this clause may also be given by an
authorized dealer in India;
(ii) An Indian Party promoting or setting up outside India, a Joint Venture (JV) or
a Wholly Owned Subsidiary (WOS), may give a guarantee to or on behalf of
the first generation step down operating company in connection with its business:
Provided that the terms and conditions stipulated in Foreign Exchange
Management (Transfer and Issue of Foreign Security) (Amendment) Regulations,
2004 for promoting or setting up such company or subsidiary are continued to be
complied with.
Explanation: 'Indian Party' shall have the same meaning as assigned to it in
Foreign Exchange Management (Transfer or Issue of Any Foreign Security)
(Amendment) Regulations, 2004.
(c) an agent in India of a shipping or airline company incorporated outside India may give a
guarantee on behalf of such company in connection with its obligations or liability owed
to any statutory or Government authority in India.
(d) a bank which is an authorised dealer may, subject to the directions issued by the Reserve
Bank in this behalf, permit a person resident in India or on behalf such person to issue
guarantee in favour of an overseas lender or security trustee to secure an external
commercial borrowing availed under the provisions of the Foreign Exchange
Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000
(Notification No. FEMA 3/2000-RB, dated 3-5-2000).
(e) a bank which is an authorized dealer may, subject to the directions issued by the Reserve
Bank in this behalf, permit a person resident in India to issue corporate guarantee in
favour of an overseas lessor for financing import through operating lease effected in
conformity with the Foreign Trade Policy in force and under the provisions of the
Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed
by Government of India vide Notification No. G.S.R. 381(E), dated May 3, 2000 and
the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999
from time to time.
TH E FORE I GN E XCH AN GE MAN AGE ME N T (REAL I SATI ON, RE PATRI ATI ON
AN D S U RRE N DE R OF FORE I GN E XCH AN GE) REGU L ATI ON S, 2000
Notification No. FEMA 9/2000-RB, dated 3rd May, 2000 and Notification No. FEMA
169/2007-RB, dated 23.10.2007
G.S.R. 392(E), dated 3-5-2000.—In exercise of the powers conferred by section 8, sub-
section (6) of section 10, clause (c) of sub-section (2) of section 47 of the Foreign Exchange
Management Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations relating
to the manner of, and the period for, realisation of foreign exchange, repatriation of realised
foreign exchange to India and its surrender, namely–

(i) These regulations may be called the Foreign Exchange Management (Realisation,
Repatriation and Surrender of Foreign Exchange) Regulations, 2000.
2. Definitions
(i) ‘Act’ means Foreign Exchange Management Act, 1999 (42 of 1999);
(ii) ‘Authorised dealer’ means a person authorised as an authorised dealer under sub-
section (1) of Section 10 of the Act;
(iii) ‘foreign exchange due’ means the amount which a person has a right to receive or
claim in foreign exchange; (iv) ‘surrender’ means the selling of foreign exchange to
an authorised person in India in exchange of rupees;
(v) the words and expressions used but not defined in these regulations shall have the same
3. Duty of persons to realise foreign exchange due

A person resident in India to whom any amount of foreign exchange is due or has accrued shall,
save as otherwise provided under the provisions of the Act, or the rules and regulations made
thereunder, or with the general or special permission of the Reserve Bank, take all reasonable
steps to realise and repatriate to India such foreign exchange, and shall in no case do or refrain
from doing anything, or take or refrain from taking any action, which has the effect of
securing —
(a) that the receipt by him of the whole or part of that foreign exchange is delayed; or
(b) that the foreign exchange ceases in whole or in part to be receivable by him.
4. Manner of Repatriation
(1) On realisation of foreign exchange due, a person shall repatriate the same to India,
namely bring into, or receive in, India and —
(a) sell it to an authorised person in India in exchange for rupees; or
(b) retain or hold it in account with an authorised dealer in India to the extent specified by
the Reserve Bank; or
(c) use it for discharge of a debt or liability denominated in foreign exchange to the
extent and in the manner specified by the Reserve Bank.
(2) A person shall be deemed to have repatriated the realised foreign exchange to India
when he receives in India payment in rupees from the account of a bank or an exchange house
situated in any country outside India, maintained with an authorised dealer.
5. Period for surrender of realised foreign exchange

A person not being an individual resident in India shall sell the realised foreign exchange to an
authorised person under clause (a) of sub-regulation (1) of regulation 4, within the period
specified below :—
(i) foreign exchange due or accrued as remuneration for services rendered, whether in or
outside India, or in settlement of any lawful obligation, or an income on assets held
outside India, or as inheritance, settlement or gift, within seven days from the date of
its receipt;
(ii) in all other cases within a period of ninety days from the date of its receipt.
6. Period for surrender in certain cases

(1) Any person not being an individual resident in India who has acquired or purchased
foreign exchange for any purpose mentioned in the declaration made by him to an
authorised person under sub-section (5) of section 10 of the Act does not use it for such
purpose or for any other purpose for which purchase or acquisition of foreign exchange is
permissible under the provisions of the Act or the rules or regulations or direction or order
made thereunder, shall surrender such foreign exchange or the unused portion thereof to an
authorised person within a period of sixty days from the date of its acquisition or purchase
by him.
(2) Notwithstanding anything contained in sub-regulation (1), where the foreign exchange
acquired or purchased by any person 1[not being an individual resident in India] from an
authorised person is for the purpose of foreign travel, then, the unspent balance of such
foreign exchange shall, save as otherwise provided in the regulations made under the Act, be
surrendered to an authorised person —
(i) within ninety days from the date of return of the traveller to India, when the unspent
foreign exchange is in the form of currency notes and coins; and
(ii) within one hundred eighty days from the date of return of the traveller to India, when
the unspent foreign exchange is in the form of travellers cheques.
6A. Period for surrender of received/realised/unspent/unused foreign exchange by Resident

individuals A person being an individual resident in India shall surrender the received/ realised/
unspent/ unused foreign exchange whether in the form of currency notes, coins and travellers
cheques, etc. to an authorised person within a period of 180 days from the date of such
receipt/realisation/purchase/acquisition or date of his return to India, as the case may be.
7. Exemption
Nothing in these regulations shall apply to foreign exchange in the form of currency of
Nepal or Bhutan.
THE FORE I GN E XCHAN GE MAN AGE ME N T (FORE I GN CURRENCY
ACCOUNTS BY A PE RS ON RESIDENT IN I N DI A) REGU L ATI ON S, 2000
Notification No. FEMA 10/2000-RB dated 3rd May 2000 as amended by Notification
No. FEMA 27/2000-RBdated 14th August, 2000, Notification No. FEMA 30/2000-RB
dated 17th November, 2000, Notification No. FEMA 34/2001-RB dated 22nd January,
2001, Notification No. FEMA 37/2001-RB dated 27th February, 2001, Notification No.
FEMA 47/2001-RB dated 5th December, 2001, Notification No. FEMA 51/2002-RB
dated 27th February, 2002 Notification No. FEMA 58/2002-RB dated 1st April, 2002
and Notification No. FEMA 63/2002-RB dated 21st June, 2002,Notification No.
FEMA.69/2002-RB. dated 26th August 2002, Notification No. FEMA.74/2002-RB. dated
1st November, 2002, Notification No. FEMA.77/2002-RB dated 25.11.2002,Notification
No. 87/2003-RB dated 20.03.2003, Notification No. 89/2003-RB dated 29.4.2003,
Notification FEMA No. 92/2003-RB dated 7-6-2003, Notification FEMA No. 109/2004-
RB dated 1-1-2004, Notification FEMA No. 113/2004-RB dated 6-3-2004, Notification
No. 90/2003-RB dated 22.5.2003, Notification No. FEMA 154/2007-RB dated 7.6.2007,
Notification No. FEMA 171/2007-RB dated 10-12-2007, Notification No. FEMA
174/2008-RB dated 25.1.2008, Notification No. FEMA. 199/2009-RBdated September
30, 2009, Notification No. FEMA. 204/2010-RB dated April 5, 2010, Notification No.
FEMA. 219/2011-RB/G.S.R. 491(E) dated 3-6-2011, Notification No.FEMA.239/2012-RB
dated 25.09.2012, Notification No. FEMA.275/2013-RB DATED 08.05.2013
G.S.R. 393(E), dated 3-5-2000.—In exercise of the powers conferred by section 9 and clause
(e) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of
1999), the Reserve Bank of India makes the following regulations for opening, holding and
maintaining of Foreign Currency Accounts and the limits upto which amounts can be held in
such accounts by a person resident in India, namely:

(i) These Regulations may be called the Foreign Exchange Management (Foreign Currency
Accounts by a Person Resident in India) Regulations, 2000.
(ii) They shall come into force on 1st day of June 2000.
2. Definitions
(ii) ‘Authorised dealer’ means a person authorised as an authorised dealer under sub-
(iii) ‘Foreign Currency Account’ means an account held or maintained in currency other
than the currency of India or Nepal or Bhutan;
(iv) ‘Schedule’ means a schedule to these Regulations;
(v) the words and expressions used but not defined in these Regulations shall have the same
3. Restriction on holding foreign currency account by a person resident in India

Save as otherwise provided in the Act or rules or regulations made thereunder, no person
resident in India shall open or hold or maintain a Foreign Currency Account:
Provided that a Foreign Currency Account held or maintained before the commencement of
these Regulations by a person resident in India with special or general permission of the Reserve
Bank, shall be deemed to be held or maintained under these Regulations :
Provided further that the Reserve Bank, may on an application made to it, permit a person
resident in India to open or hold or maintain a Foreign Currency Account, subject to such terms
and conditions as may be considered necessary.
4. Opening, holding and maintaining an Exchange Earners’ Foreign Currency Account

A person resident in India may open, hold and maintain with an authorised dealer in
India, a Foreign Currency Account to be known as Exchange Earners’ Foreign Currency (EEFC)
Account, subject to the terms and conditions of the Exchange Earners’ Foreign Currency
Account Scheme specified in the Schedule-I.
5. Opening, holding and maintaining a Resident Foreign Currency Account
(1) A person resident in India may open, hold and maintain with an authorised dealer in India
a Foreign Currency Account, to be known as a Resident Foreign Currency (RFC) Account, out of
foreign exchange —
(a) received as pension or any other superannuation or other monetary benefits from his
employer outside India; or
(b) realised on conversion of the assets referred to in sub-section (4) of section 6 of the
Act, and repatriated to India; or
(c) received or acquired as gift or inheritance from a person referred to in sub-section (4) of
section 6 of the Act; or
(d) referred to in clause (c) of section 9 of the Act, or acquired as gift or inheritance
therefrom; or
(e) received as the proceeds of life insurance policy claims/maturity/surrender values
settled in foreign currency from an insurance company in India permitted to undertake
life insurance business by the Insurance Regulatory and Development Authority.
(2) The funds in a Resident Foreign Currency Account opened or held or maintained in
terms of sub-regulation (1) shall be free from all restrictions regarding utilisation of foreign
currency balances including any restriction on investment in any form, by whatever name called,
outside India.
(3) Resident individuals are permitted to include resident close relative(s) as a joint
holder(s) in their Resident Foreign Currency account on ‘former or survivor’ basis. However,
such resident Indian close relative joint account holder shall not be eligible to operate the
account during the life time of the resident account holder.
Explanation – For the purpose of this sub-regulation, ‘close relative’ means 'relative' as
defined in section 6 of the Companies Act, 1956.
5A. Opening, holding and maintaining a Resident Foreign Currency (Domestic) Account
(1) A resident individual] may open, hold and maintain with an Authorised Dealer in
India a foreign currency account, to be known as Resident Foreign Currency (Domestic)
Account, out of foreign exchange acquired in the form of currency notes, bank notes and
travellers cheques :
(a) while on a visit to any place outside India by way of payment for services not arising
from any business in or anything done in India; or
(b) from any person not resident in India and who is on a visit to India, as honorarium
or gift or for services rendered or in settlement of any lawful obligation; or
(c) by way of honorarium or gift while on a visit to any place outside India; or
(d) represents the unspent amount of foreign exchange acquired by him from an
authorised person for travel abroad; or
(e) as gift from a close relative;
Explanation.— For the purpose of this clause, “close relative” means relatives as
defined in section 6 of the Companies Act, 1957; or
(f) by way of earning through export of goods/services, or as royalty, honorarium or by
any other lawful means; or
(g) representing the disinvestments proceeds received by the resident accountholder on
conversion of shares held by him to ADRs/GDRs under the Sponsored ADR/GDR
Scheme approved by the foreign Investment Promotion Boards of Government of India;
or
(h) by way of earnings received as the proceeds of life insurance policy
claims/maturity/surrender values settled in foreign currency from an insurance company
in India permitted to undertake life insurance business by the Insurance Regulatory and
Development Authority.
(2) Debits to the account shall be for payments towards a current account transaction in
accordance with the provisions of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 and towards a capital account transaction permissible under the
Foreign Exchange Management (Permissible Capital Account Transactions) Regulations,
2000.
(3) The account shall be maintained in the form of Current Account and shall not bear
any interest.
(4) There shall be no ceiling on the balances in the account.
6. Opening, holding and maintaining a Foreign Currency Account in India in certain
other cases:
(1) A shipping or airline company incorporated outside India or its agent in India, may
open, hold and maintain a Foreign Currency Account with an authorized dealer in India for
meeting the local expenses in India of such airline or shipping company:
Provided that the credits to such accounts are only by way of freight or passage fare
collections in India or by inward remittances through normal banking channels from its office
outside India and, in the case of agent, from his principal outside India.
(2) An authorized dealer in India may, subject to the directions as may be issued by the
Reserve Bank, allow ship-manning/crew managing agencies in India to open and maintain
non-interest bearing foreign currency accounts in India for the purpose of undertaking
transactions in the ordinary course of their business.
(3) An authorized dealer in India may, subject to the directions as may be issued by the
Reserve Bank, allow Project Offices set up in India by foreign companies in terms of
clause (ii) of Regulation 5 of Foreign Exchange Management (Establishment in India of
Branch or Office or other Place of Business) Regulations, 2000 dated May 3, 2000, as amended
from time to time to open, hold and maintain non-interest bearing 3[one or more foreign
currency accounts] in India for the projects to be executed in India.
(4) An Authorized Dealer Category-I Banks in India may allow firms and companies who
comply with the eligibility criteria stipulated in the Foreign Trade Policy of the Government of
India, in force from time to time and the directions as may be issued by Reserve Bank of India,
from time to time, to open, hold and maintain Diamond Dollar Accounts (DDAs) in India
subject to the terms and conditions of the DDA Scheme specified in Schedule II.
6A. Foreign Currency Account of a Unit in a Special Economic Zone

A unit located in a special Economic Zone may open, hold and maintain a Foreign
Currency Account with an authorized dealer in India provided that,
(a) all foreign exchange funds received by the unit in the Special Economic Zone
(SEZ) are credited to such accounts;
(b) no foreign exchange purchased in India against rupees shall be credited to the account
without prior permission from the Reserve Bank;
(c) the funds held in the account shall be used for bona fide trade transactions of the unit
in the SEZ with the person resident in India or otherwise;
(d) the balances in the accounts shall be exempt from the restrictions imposed under rule 5,
except items 3 and 4 of the Schedule III, of the Government of India Notification No. GSR
381 (E) dated May 3, 2000 :
Provided further that the funds held in these accounts shall not be lent or made available
in any manner to any person or entity resident in India not being a unit in Special Economic
Zones.
7. Opening, holding and maintaining a Foreign Currency Account outside India
(1) An authorised dealer in India may open, hold and maintain with his branch or head
office or correspondent outside India, a Foreign Currency Account for the purpose of
transacting foreign exchange business and other matters incidental thereto, in accordance with
the provisions of the Act or the rules or regulations made or the directions issued thereunder.
(2) A branch outside India of a bank incorporated or constituted in India may open, hold
and maintain with a bank outside India, a Foreign Currency Account for the purpose of
carrying on normal banking business outside India, subject to compliance with the directions or
guidelines issued from time to time by the Reserve Bank, and the regulatory authority in the
country where the branch is located.
(3) A shipping or airline company incorporated in India may open, hold and maintain with
a bank outside India, a Foreign Currency Account for the purpose of undertaking transactions in
the ordinary course of its business.
(4) Life Insurance Corporation of India or General Insurance Corporation of India and its
subsidiaries may open, hold and maintain with a bank outside India, a Foreign Currency
Account for the purpose of meeting the expenditure incidental to the insurance business carried
on by them and for that purpose, credit to such account the insurance premia received by them
outside India.
(4A) A firm or a company or a body corporate registered or incorporated in India
(hereinafter referred to as ‘the Indian entity’) may open, hold and maintain in the name of its
office (trading or non-trading) or its branch set up outside India or its representative posted
outside India, a foreign currency account with a bank outside India by making remittances from
India for the purpose of normal business operations of the office/branch or representative;
Provided that —
(a) the overseas branch/office has been set up or representative is posted overseas for
conducting normal business activities of the Indian entity;
(b) the total remittances made under this sub-Regulation by the Indian entity, to all
such accounts in an accounting year shall not exceed
(i) 15 per cent of the average annual sales/income or turnover of the Indian entity
during the last two financial years or up to 25 per cent of the net worth,
whichever is higher, where the remittances are made to meet initial expenses of
the branch or office or representative; and
(ii) 10 per cent of such average annual sales/income or turnover during the last
financial years where the remittances are made to meet recurring expenses of the branch
or office or representative;
(c) the overseas branch/office/representative shall not enter in any contract or agreement in
contravention of the Act, Rules or Regulations made thereunder;
(d) the account so opened, held or maintained shall be closed, —
(a) if the overseas branch/office is not set up within six months of
opening the account, or
(b) within one month of closure of the overseas branch/office, or
(c) where no representative is posted for six months, and the balance held in the
account shall be repatriated to India;
Provided further that the restriction contained in clause (b) of the first proviso shall
not apply in a case where —
(a) the remittances to the account maintained under this sub-Regulation are made out of
funds held in EEFC account of the Indian entity, or
(b) the overseas branch/office is set up or representative posted by a 100% EOU or a
unit in EPZ or in a Hardware Technology Park or in a Software Technology Park,
within two years of establishment of the Unit.
Explanation.— For the purpose of this sub-Regulation,—
(A) Purchase of acquisition of Office equipments and other assets required for normal
business operations of the overseas branch/office/representative will not be deemed as a
capital account transaction;
(B) Transfer or acquisition of immovable property outside India, other than by way of
lease not exceeding five years, by the overseas branch/office/representative will be
subject to the Foreign Exchange Management (Acquisition and Transfer of Immovable
Property outside India) Regulations, 2000]
(5) A person resident in India, being an exporter who has undertaken a construction contract
or a turnkey project outside India or who is exporting services or engineering goods from India
on deferred payment terms may open, hold and maintain a Foreign Currency Account with a
bank outside India 1[or in] India, provided that —
(a) approval as required under the Foreign Exchange Management (Export of Goods and
Services) Regulations, 2000 has been obtained for undertaking the contract/project/export of
goods or services, and
(b) the terms and conditions stipulated in the letter of approval have been duly complied
with.
(6) A person resident in India who has gone abroad for studies or who is on a visit to a
foreign country may open, hold and maintain a Foreign Currency Account with a bank outside
India during his stay outside India, provided that on his return to India, the balance in the
account is repatriated to India :
Provided that short visits to India by a person who has gone abroad for studies, before
completion of his studies, shall not be treated as his return to India.
(7) A person resident in India who has gone out of India to participate in an
exhibition/trade fair outside India may open, hold and maintain a Foreign Currency Account
with a bank outside India for crediting the sale proceeds of goods on display in the
exhibition/trade fair:
Provided that the balance in the account is repatriated to India through normal
banking channels within a period of one month from the date of closure of the exhibition/trade
fair.
(8) (i) A citizen of a foreign State, resident in India, being an employee of a foreign
company or a citizen of India, employed by a foreign company outside India and in either case
on deputation to the office/branch/subsidiary/joint venture in India of such foreign company may
open, hold and maintain a foreign currency account with a bank outside India and receive the
whole salary payable to him for the services rendered to the office/branch/subsidiary/joint
venture in India of such foreign company, by credit to such account, provided that income-tax
chargeable under the Income-tax Act, 1961 is paid on the entire salary as accrued in India.
(ii) A citizen of a foreign State resident in India being in employment with a company
incorporated in India may open, hold and maintain a foreign currency account with a bank
outside India and remit the whole salary received in India in Indian Rupees, to such account, for
the services rendered to such an Indian company, provided that income- tax chargeable under
the Income-tax Act, 1961 is paid on the entire salary occurred in India.
8. Limit on holding in a Foreign Currency Account

Unless otherwise stipulated by the Reserve Bank, a person resident in India who has opened
and is maintaining a Foreign Currency Account in accordance with the provisions of
Regulations 6 and 7, may hold therein foreign exchange without any limit.
9. Types of accounts
A Foreign Currency Account with an authorised dealer in India under these Regulations
may be opened, held and maintained —
(1) in the form of current or savings or term deposit account in cases where the account
holder is an individual, and in the form of current account or term deposit account in
all other cases:
Provided that the EEFC account referred to in Regulation 4, shall be opened, held or
maintained in the form of an account in terms of such directions as may be issued by
the Reserve Bank from time to time.
(2) singly or jointly in the name of person eligible to open, hold and maintain such account.
10. Remittances out of the accounts after the account holder’s death
On the death of a foreign currency account holder, —
(1) the authorised dealer with whom the account is held or maintained may remit to a
nominee being a person resident outside India, funds to the extent of his share or
entitlement from the account of the deceased account holder;
(2) a nominee being a person resident in India, who is desirous of remitting funds outside
India out of his share for meeting the liabilities abroad of the deceased, may apply to
the Reserve Bank for such remittance.
11. Responsibility of authorised dealers maintaining foreign currency accounts

An authorised dealer maintaining foreign currency accounts shall –
(1) comply with the directions issued by the Reserve Bank from time to time; and
(2) submit periodic return or statement, if any, as may be stipulated by the Reserve Bank.
Schedule-I
(See Regulation 4)
Exchange Earner’s Foreign Currency (EEFC) Account Scheme
1. Limit up to which foreign currency may be credited to EEFC account

(1) A person resident in India may credit to the EEFC Account with an Authorised Dealer in
India 100 per cent**of the foreign exchange earnings as specified in sub-paragraph (1A).
(1A) Following foreign exchange earnings are specified for the purpose of sub-paragraph (1),
namely:—
(i) [inward remittance through normal banking channel, other than the remittance
received pursuant to any undertaking given to the Reserve Bank or which represents
foreign currency loan raised or investment received from outside India or those received
for meeting specific obligations by the account holder;
(ii) payments received in foreign exchange by a 100 per cent Export Oriented Unit or
a unit in (a) Export
Processing Zone or (b) Software Technology Park or (c) Electronic Hardware
Technology Park for supply of goods to similar such unit or to a unit in Domestic
Tariff Area; 1[and also payments received in foreign exchange by a unit in Domestic
Tariff Area for supply of goods to a unit in Special Economic Zone (SEZ);]
(iii) payment received by an exporter from an account maintained with an authorised dealer
for the purpose of counter trade, in accordance with the approval granted in terms of
Regulation 14 of the Foreign Exchange Management (Export of Goods and Services)
Regulations, 2000;
(iv) advance remittance received by an exporter towards export of goods or services;
(v) payment received for export of goods and services from India, out of funds
representing repayment of State Credit in U.S. dollar held in the account of Bank for
Foreign Economic Affairs, Moscow, with an authorised dealer in India:
(vi) Professional earnings including director’s fees, consultancy fees, lecture fees,
honorarium and similar other earnings received by a professional by rendering services
in his individual capacity.[***]
(2) Except to the extent provided in sub-paragraph (1), no payment received in foreign
exchange by the account holder from any other person resident in India, shall be credited to an
EEFC account.
Explanation.— For the purpose of the sub-paragraph (1), payment received through an
international credit card for which reimbursement will be provided in foreign exchange may be
regarded as a remittance through normal banking channels.
2. Permissible credits to EEFC account

Following credits may be made to an EEFC Account, namely —
(i) A portion of inward remittance/payment received by the recipient in foreign exchange
subject to the provisions of paragraph (1);
(ii) Interest earned on the funds held in the account;
(iii) Recredit of unutilised foreign currency earlier withdrawn from the account;
(iv) Amount representing repayment by the account holder’s importer customer, of
loan/advances granted in terms of clause (iv) of Paragraph 3.
(v) Representing the disinvestment proceeds received by the resident account holder on
conversion of shares held by him to ADRs/GDRs under the Sponsored ADR/GDR
Scheme approved by the Foreign Investment Promotion Board of Government of India.
3. Permissible debits to the EEFC account

Following debits may be made to an EEFC Account, namely —
(i) Payment outside India towards a current account transaction in accordance with the
provisions of the Foreign Exchange Management (Current Account Transactions) Rules,
2000 and towards a capital account transaction permissible under the Foreign Exchange
Management (Permissible Capital Account Transactions) Regulations, 2000.
(ii) Payment in foreign exchange towards cost of goods purchased from a 100 per cent
Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology
Park or (c) Electronic Hardware Technology Park.
(iii) Payment of customs duty in accordance with the provisions of Export Import Policy of
Central Government for the time being in force.
(iv) Trade related loans/advances, [***] by an exporter holding such account to his importer
customer outside India, subject to compliance with the Foreign Exchange Management
(Borrowing and Lending in Foreign Exchange) Regulations, 2000.
(v) Payment in foreign exchange to a person resident in India for supply of goods/services
including payments for air fare and hotel expenditure.
4. Miscellaneous
(i) There is no restriction on withdrawal in rupees of funds held in an EEFC account.
However, the amount withdrawn in rupees shall not be eligible for conversion into foreign
currency and for recredit to the account.
(ii) Authorised dealer may issue cheque books of separate series with the superscription
“EEFC Account” to the account holders maintaining such accounts, and also satisfy himself
while honouring the cheques that the payment made by the account holder by issue of a cheque
is permissible under these Regulations.
(iii) Resident individuals are permitted to include resident close relative(s) as a joint
holder(s) in their EEFC account on ‘former or survivor’ basis. However, such resident Indian
close relative(s), shall not be eligible to operate the account during the life time of the resident
account holder.
Explanation – For the purpose of this sub-regulation, ‘close relative’ means relative as
defined in section 6 of the Companies Act, 1956.]
Schedule II
[See sub-regulation (4) of regulation 6]
Diamond Dollar Account (DDA) Scheme
1. Firms and companies may open and maintain DDA with AD Category-1 banks, subject to
the following terms and conditions :—
(a) The exporter should comply with the eligibility criteria stipulated in the Foreign
Trade Policy of the Government of India, issued from time to time.
(b) The DDA shall be opened in the name of the exporter and maintained in US Dollars
only.
(c) The account shall only be in the form of current account and no interest should be
paid on the balance held in the account.
(d) No intra-account transfer should be allowed between the DDAs maintained by the
account holder.
(e) An exporter firm/company shall be permitted to open and maintain not more than 5
DDAs.
(f) The balances held in the accounts shall be subject to Cash Reserve Ratio (CRR) and
Statutory Liquidity Ratio (SLR) requirements.
(g) Exporter firms and companies maintaining foreign currency accounts, excluding EEFC
accounts, with banks in India or abroad, are not eligible to open Diamond Dollar
Accounts.
(h) The transactions in the DDA would be as under:
2. Permissible C redits: —
(i) Amount of pre-shipment and post-shipment finance availed in US Dollars.
(ii) Realisation of export proceeds from shipments of rough, cut, polished diamonds and
diamond studded jewellery.
(iii) Realisation in US Dollars from local sale of rough, cut and polished diamonds.
3. Permissible Debits: —
(i) Payment for import/purchase of rough diamonds from overseas/ local sources.
(ii) Payment for purchase of cut and polished diamonds, coloured gemstones and plain
gold jewellery from local sources.
(iii) Payment for import/purchase of gold from overseas/nominated agencies and
repayment of US Dollars loans availed from the bank.
(iv) Transfer to rupee account of the exporter.
The above transactions are subject to the provisions of the Foreign Trade Policy of
Government of India, issued from time to time.
4. Application procedure :—
The exporter firm/company shall make an application in the format annexed to the AD
Category-I bank for opening of the DDA. AD Category-I banks should assess the track record
of the firm/company at the end of every licensing year (April-March). In case any firm/company
fails to meet the eligibility criteria, the account may be closed immediately.
5. AD Category-I banks shall submit a monthly report to the Chief General Manager-in-
Charge, Foreign Exchange Department, Reserve Bank of India, Trade Division, Amar
Building, Mumbai-400 001, giving details of the name and address of the firm/company in
whose name the Diamond Dollar Account is opened, along with the date of opening/closing the
Diamond. Dollar Account, by the 10th of the following month to which it relates.
Application for Opening Diamond Dollar Accounts
To,
The Branch Manager
(name and address of AD bank/branch)
Dear Sir,
1. We are dealing in purchase/sale of rough or cut and polished diamonds/precious metal

jewellery plain, minakari and/or studded with/without diamond and/or other stones, with a
track record of at least 2 years in import/export of diamonds/coloured gemstones/diamond
and coloured gemstones studded jewellery/plain gold jewellery, and having an average annual
turnover of Rs. 3 crore or above during preceding three licensing years.
2. We wish to open a current account/s under the Diamond Dollar Account Scheme with
your bank in accordance with the provisions of (mention the relevant paragraph) of the
Foreign Trade Policy (period, e.g., 2009-2014) of the Government of India read with the
Handbook of Procedures (mention the relevant Volume No.) issued by Ministry of Commerce
and Industry, Government of India.
3. The relevant particulars are furnished
below : (i) Name of the
Firm/Company :
(ii) Address of the Registered Office :
(iii) Principal business :
(iv) IE Code No.:
(v) Annual Turnover of the last two years (enclose certificate of CA) :
(vi) Details of the EEFC account, if any :
4. We confirm that we are not maintaining any foreign currency account, excluding
EEFC account, with banks in India or abroad.
5. We declare that we are not maintaining more than 5 DDAs including the one proposed
to be opened with your branch.
6. We declare that we are neither on the caution list of exporters of Reserve Bank of India
nor on the defaulters list of Export Credit Guarantee Corporation of India Ltd. (ECGC).
7. We undertake to abide by the rules of the Diamond Dollar Account Scheme framed/to
be framed from time to time and the terms and conditions stipulated for opening and
maintenance of the DDA with your bank and any other foreign exchange/foreign trade
regulation of Reserve Bank of India/Government of India.
We request you to open a Diamond Dollar Account/s in the name of the firm/company.
(Signature of the Authorized Official of the firm/company)

Name :
Designation :
Seal of firm/company:
Date :
Place :
FORE I GN E XCH AN GE MAN AGE ME N T (POS S ES S I ON AN D RETENTION OF
FORE I GN CURRE N CY) REGU L ATI ON S, 2000
Notification No. FEMA 11/2000-RB, dated 3rd May, 2000
G.S.R. 394(E), dated 3-5-2000.— In exercise of the powers conferred by clause (a) and
clause (e) of section 9, clause (d) and clause (g) of sub-section (2) of section 47 of the Foreign
Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following
regulations, namely:—

(i) These regulations may be called as Foreign Exchange Management (Possession and
Retention of Foreign Currency) Regulations, 2000.
2. Definitions
In these Regulations, unless the context requires otherwise —
(i) ‘Act’ means Foreign Exchange Management Act, 1999 (42 of 1999).
(ii) ‘To possess’ or ‘to retain’ means to possess or to retain in physical form and the words
‘possession’ or ‘retention’ shall be construed accordingly.
(iii) The words and expressions used but not defined in these regulations shall have the
same meaning respectively assigned to them in the Act.
3. Limits for possession and retention of foreign currency or foreign coins

For the purpose of clause (a) and clause (e) of Section 9 of the Act, the Reserve Bank
specifies the following limits for possession or retention of foreign currency or foreign coins,
namely:
(i) possession without limit of foreign currency and coins by an authorised person within
the scope of his authority; (ii) possession without limit of foreign coins by any person;
(iii) retention by a person resident in India of foreign currency notes, bank notes and
foreign currency travelles’ cheques not exceeding US$ 2000 or its equivalent in
aggregate, provided that such foreign exchange in the form of currency notes, bank
notes and travellers cheques;
(a) was acquired by him while on a visit to any place outside India by way of
payment for services not arising from any business in or anything done in India;
or
(b) was acquired by him, from any person not resident in India and who is on a visit to
India, as honorarium or gift or for services rendered or in settlement of any lawful
obligation; or
(c) was acquired by him by way of honorarium or gift while on a visit to any place
outside India; or
(d) represents unspent amount of foreign exchange acquired by him from an
authorised person for travel abroad.
4. Possession of foreign exchange by a person resident in India but not permanently

resident therein
Without prejudice to clause (iv) of Regulation 3, a person resident in India but not permanently
resident therein may possess without limit foreign currency in the form of currency notes, bank
notes and travellers cheques, if such foreign currency was acquired, held or owned by him
when he was resident outside India and, has been brought into India in accordance with the
regulations made under the Act.
Explanation.— For the purpose of this clause, ‘not permanently resident’ means a person
resident in India for employment of a specified duration (irrespective of length thereof) or for
a specific job or assignment, the duration of which does not exceed three years.
THE FORE I GN E XCHAN GE MAN AGE ME N T (I N S U RAN CE)
G.S.R. 395(E), dated 3-5-2000.—In exercise of the powers conferred by sub-section (2) of
section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank
makes the following regulations with respect to the holding by a person resident in India of a
general or life insurance policy issued by an insurer outside India, namely:

(i) These Regulations may be called the Foreign Exchange Management (Insurance)
Regulations, 2000.
2. Definitions
(ii) the words and expressions used but not defined in these Regulations shall have the same
meaning respectively assigned to them in the Act.
3. Permission to take or hold a general insurance policy issued by an insurer outside

India
(i) A person resident in India may take or continue to hold a general insurance policy issued
by an insurer outside India, provided that, the policy is held, under a specific or general
permission of the Central Government.
(ii) A person resident India may continue to hold any general insurance policy issued by an
insurer outside India when such person was resident outside India.
Provided further that where the premium due on a general insurance policy has been paid by
making remittance from India, the policy holder shall repatriate to India through normal banking
channels, the maturity proceeds or amount of any claim due on the policy, within a period of
seven days from the receipt thereof.
4. Permission to take or hold a life insurance policy issued by an insurer outside India
(i) A person resident in India may take or continue to hold a life insurance policy issued
by an insurer outside India, provided that, the policy is held, a specific or general permission of
the Reserve Bank of India.
(ii) A person resident in India may continue to hold any life insurance policy issued by an
insurer outside India when such a person was resident outside India.
Provided further that where the premium due on a life insurance policy has been paid by
making remittance from India, the policy holder shall repatriate to India through normal
banking channels, the maturity proceeds or amount of any claim due on the policy, within a
period of seven days from the receipt thereof.
THE FORE I GN E XCHAN GE MAN AGE ME N T (RE MI T TAN CE OF AS S E T S)
Notification No. FEMA 13/2000-RB, dated 3rd May, 2000 as amended by FEMA Notification No.
FEMA. 62/2002/RB dated 13th May, 2002, Notification No. 96/2003-RB dated 2.7.2003,
Notification No. 97/2003-RB dated 8th July, 2003, Notification FEMA No. 119/2004-RB dated
29th June, 2004, Notification No. FEMA.152/2007-RB, dated 15.5.2007, Notification No.
FEMA.161/2007-RB Dated 18.9.2007 and Notification No. FEMA. 198/2009-RB dated September
24, 2009
G.S.R. 396(E), dated 3-5-2000.— In exercise of the powers conferred by section 47 of the
Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the following
regulations in respect of remittance outside India by a person whether resident in India or not,
of assets in India, namely:

(i) These Regulations may be called the Foreign Exchange Management (Remittance of
Assets) Regulations, 2000.
2. Definitions
(iii) ‘Non-Resident Indian (NRI)’ means a person resident outside India who is a citizen of
India;
(iv) ‘Person of Indian Origin (PIO)’ means a citizen of any country other than
Bangladesh or Pakistan, if —
(a) he at any time held Indian passport; or
(b) he or either of his parents or any of his grand-parents was a citizen of India by virtue
of the Constitution of India or the Citizenship Act 1955 (57 of 1955); or
or (b).
(v) ‘Remittance of assets’ means remittance outside India of funds representing a deposit
with a bank or a firm or a company, provident fund balance or superannuation
benefits, amount of claim or maturity proceeds of Insurance policy, sale proceeds of
shares, securities, immovable property or any other asset held in India in accordance
with the provisions of the Act or rules or regulations made thereunder;
(vi) the words and expressions used but not defined in these Regulations shall have the same
3. Prohibition on Remittance outside India of assets held in India
Save as otherwise provided in the Act or rules or regulations made or issued thereunder, no
person whether resident in India or not, shall make remittance of any asset held in India by him
or by any other person:
Provided that the Reserve Bank may, for sufficient reasons, permit any person to make
remittance of any asset held in India by him or by any other person.
4. Permission for remittance of assets in certain cases

(1) A person specified in sub-regulation (2) and (3) may make remittance of assets through
an authorised dealer, to the extent specified in those sub-regulations.
(2) A citizen of foreign state, not being a citizen of Nepal or Bhutan or a person of
Indian origin (PIO), who —
(i) has retired from an employment in India, or
(ii) has inherited the assets from a person referred to in sub-section (5) of section 6 of
the Act; or
(iii) is a widow resident outside India and has inherited assets of her deceased husband
who was an Indian citizen resident in India, may remit an amount, not exceeding US
$ 1,000,000 (US Dollar One million only) per financial year, on production of,—
(a) documentary evidence in support of acquisition, inheritance or legacy of
assets by the remitter; and
(b) an undertaking by the remitter and certificate from a Chartered Accountant in the
format prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India in their Circular No. 10/2002 dated October 9, 2002.
Provided that for the purpose of arriving at annual ceiling of remittance under
sub-regulation (2), the funds representing sale proceeds of shares and immovable
property owned or held by the citizen of foreign State on repatriation basis in
accordance with the Foreign Exchange Management (Acquisition and Transfer of
Immovable Property in India) Regulations, 2000 and Foreign Exchange
Management (Transfer of Indian Security by a Person Resident outside India)
Regulations, 2000 made under the Act, shall not be included:
Provided further that where the remittance is made in more than one instalment,
the remittance of all instalments shall be made through the same authorised dealer.
(iv) had come to India for studies/training and has completed his studies/training,
may remit the balance available in his account, provided such balance represents
funds derived out of remittances received from abroad through normal banking
channels or rupee proceeds of foreign exchange brought by such person and sold to
an authorised dealer or out of stipend/scholarship received from the Government or
any Organisation in India.
(3) A Non-Resident Indian (NRI)/Person of Indian Origin (PIO) may remit an

amount, not exceeding US $ 1,000,000 (US Dollar One million only) per 2[financial]
year,
(i) Out of the balances held in NRO accounts/sale proceeds of assets/the assets in
India acquired by him by way of inheritance/legacy on production of :
(a) documentary evidence in support of acquisition, inheritance or legacy of assets
by the remitter, and
(b) an undertaking by the remitter and certificate from a Chartered Accountant in
the format prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India in their Circular No. 10/2002, dated October 9, 2002.
(ii) Under a deed of settlement made by either of his parents or a close relative (as
defined in section 6 of the Companies Act, 1956) and the settlement taking effect on
the death of the settler, on production of:
(a) the original deed of settlement; and
(b) an undertaking by the remitter and certificate from a Chartered Accountant in
the format prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India in their Circular No. 10/2002 dated October 9, 2002.
[***]
Provided [***] that where the remittance under clauses (i) and (ii) is made in more
than one instalment, the remittance of all instalments shall be made through the
same authorised dealer.
(4) An authorised dealer in India may, without approval from Reserve Bank, effect
remittance of assets made by a person eligible under sub-regulation (2) or sub-regulation (3)
as the case may be and also allow remittance out of the assets of Indian companies under
liquidation under the provisions of the Companies Act, 1956, subject to the following
conditions:
(i) Authorised Dealer shall ensure that the remittance is in compliance with the order
issued by a court in India/ order issued by the official liquidator or the liquidator in the
case of voluntary winding up; and
(ii) no remittance shall be allowed unless the applicant submits :—
(a) No objection or Tax clearance certificate from Income Tax Authority for the
remittance.
(b) Auditor’s certificate confirming that all liabilities in India have been either
fully paid or adequately provided for.
(c) Auditor’s certificate to the effect that the winding up is in accordance
with the provisions of the Companies Act, 1956.
(d) In case of winding up otherwise than by a court, an auditor’s certificate to the
effect that there is no legal proceedings pending in any court in India against the
applicant or the company under liquidation and there is no legal impediment in
permitting the remittance.
5. Permission to an Indian entity to remit funds in certain cases
An entity in India may remit the amount being its contribution towards the provident
fund/superannuation/pension fund in respect of the expatriate staff in its employment who are
resident in India but not permanently resident therein.
Explanation.— For the purpose of this Regulation, —
(a) ‘expatriate staff’ means a person whose provident/superannuation/pension fund is
maintained outside India by his principal employer outside India;
(b) ‘not permanently resident’ means a person resident in India for employment of a specified
duration (irrespective of length thereof) or for a specific job or assignment, the duration of
which does not exceed three years.
6. Reserve Bank’s prior permission in certain cases

(1) A person who desires to make a remittance of assets in the following cases, may apply
to the Reserve Bank, namely:
(i) Remittance exceeding “US $ 1,000,000 (US Dollar one million only)” per financial
year –
(a) on account of legacy, bequest or inheritance to a citizen of foreign state,
permanently resident outside India; and
(b) by a Non-Resident Indian (NRI)/Person of Indian Origin (PIO), out of the balances
held in NRO accounts/sale proceeds of assets/the assets in India acquired by way of
inheritance/legacy.
(ii) remittance to a person resident outside India on the ground that hardship will be
caused to such a person if remittance from India is not made;
(iii) Authorised Dealer shall act as per regulation 7 as regards closure of ranch/Liaisons
office.
(2) On consideration of the application made under sub-regulation (1), the Reserve
Bank may permit the remittance, subject to such terms and conditions as it deem necessary.
7. Permission to remit winding up proceeds of branch/office (Other than Project Office)

(1) A branch or office established in India by a person resident outside India may, for
making remittance of its winding up proceeds, apply to the Authorised Dealer concerned
supported by the following documents, namely :
(A) copy of the Reserve Bank’s permission for establishing the branch/office in
India;
(B) Auditors certificate :—
(i) indicating the manner in which the remittable amount has been arrived and
supported by a statement of assets and liabilities of the applicant, and indicating
the manner of disposal of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other
benefits to employees etc. of the branch/office have been either fully met or
adequately provided for;
(iii) confirming that no income accruing from sources outside India (including
proceeds of exports) has remained unrepatriated to India; and
(iv) confirming that the branch/office has complied with all regulatory requirements
stipulated by the Reserve Bank of India from time to time regarding functioning of
such offices in India.
(C) no-objection or Tax clearance certificate from the Income-tax authority for the
remittance;
(D) confirmation from the applicant that no legal proceedings in any Court in India are
pending and there is no legal impediment to the remittance; and
(E) a report from the Registrar of Companies regarding compliance with the provisions of the
Companies Act, 1956, in case of winding up of the office in India.
(2) On consideration of the application made under sub-regulation (1), the authorised dealer
concerned may permit the remittance subject to the directions issued by the Reserve Bank in
this regard, from time to time.
LEG
[See Regulation 6]
Application for remittance of legacies, bequests or inheritances to beneficiaries
resident outside India
1. Instructions
The application should be completed and submitted through an authorised dealer through
whom the remittance is sought to be made to the office of Reserve Bank under whose
jurisdiction the applicant resides.
2. Documentation
Certified copy of the probate together with a copy of the Will annexed thereto, or letters
of administration or succession certificate, as the case may be, in respect of the Indian
assets of the deceased person.
3. Tax Clearance/No Objection Certificate from the income-tax authorities to show that no
liabilities are outstanding in respect of the estate of the deceased person on account of
income-tax, wealth-tax, capital gains tax, etc.
4. A statement of Indian assets of the deceased person, indicating the form in which they are
held. The number and date of Reserve Bank’s approval for holding or acquiring shares of
Indian companies and immovable property should be indicated, wherever applicable.
5. A certificate from a Chartered Accountant showing how the remittable amount has been
arrived at and that all liabilities of the estate in India have been met or adequately provided
for.
1. Particulars of the deceased person : 1.
(i) Name (i)
(ii) Nationality (ii)
(iii) Country of permanent residence at the time of death (iii)
(iv) Date and place of demise (iv)
(v) Whether the deceased was residing in
India at any time during his life time; if (v)
so, state period
2. Particulars of the beneficiary/ies : 2.
(i) Name/s (i)
(ii) Nationality/ies (ii)
(iii) Country/ies of permanent residence (iii)
3. Whether the deceased person had made any investment in
India, if so, details as under : 3.
(i) Investments made on non-repatriation basis (i)

(ii) Investments made with repatriation benefits (ii)
4. Amount of remittance applied for 4.
I/We hereby declare that the particulars given above and the documents submitted herewith
are true and correct to the best of my/our knowledge and belief. I/We also declare that I/we
have not made any application to any other office of the Reserve Bank of India for the same
purpose.
Place : ..............
Date : ...............
(Signature/s of Applicant)
THE FORE I GN E XCH AN GE MAN AGE ME N T (MAN N E R OF RECE I P T
AN D PAY ME N T) REGU L ATI ON S, 2000
Notification No. FEMA 14/2000-RB, dated 3rd May, 2000, Notification No.98/2003-RB dated
27.8.2003 andNotification No. EMA.128/2005/RB dated 11.01.2005, Notification No.FEMA.274-
2013/RB dated 26.4.2013, Notification No. FEMA.257/2013-RB dated 15.02.2013
G.S.R. 397(E), dated 3-5-2000.—In exercise of the powers conferred by section 47 of the
Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the
following regulations in respect of the manner of receipt and payment in foreign exchange,
namely:—

(i) These Regulations may be called the Foreign Exchange Management (Manner of
Receipt and Payment) Regulations, 2000.
(ii) They shall come into effect on 1st day of June, 2000.
2. Definitions
section (1) of Section 10 of the Act;
(iii) ‘authorised bank’ means a bank, other than an authorised dealer, authorised by the
Reserve Bank to accept deposits from persons resident outside India;
(iv) ‘FCNR/NRE account’ means an FCNR or NRE account opened and maintained in
accordance with the Foreign Exchange Management (Deposits) Regulations, 2000;
(v) ‘Permitted currency’ means a foreign currency which is freely convertible;
(vi) the words and expressions used but not defined in these Regulations shall have the same
3. Manner of Receipt in Foreign Exchange

(1) Every receipt in foreign exchange by an authorised dealer, whether by way of remittance
from a foreign country (other than Nepal and Bhutan) or by way of reimbursement from his
branch or correspondent outside India against payment for export from India, or against any
other payment, shall be as mentioned below:
Group Manner of Receipt of foreign exchange
(1) Member countries in the (a) payment for all eligible current transactions by debit
Asian Clearing Union to the Asian Clearing Union Dollar Account or Asian
(except Nepal) namely, Clearing Union Euro Account in India of a bank of the
Bangladesh, Islamic member country in which the other party to the
Republic of Iran, Myanmar, transaction is resident or by credit to the Asian Clearing
P ak i s tan and S r i Lanka Union Dollar Account or Asian clearing Union Euro
Account of the authorized dealer maintained with the
correspondent bank in the member country; and
(b) Payment
(b) payment ininany
anpermitted currency
y per mitte d currinenallc yother
in cases.
a ll ot her
cases.
(2) All countries other than (a) Payment in rupees from the account of a bank situated in
those mentioned in (1). any country other than a member country of Asian
Clearing Union or Nepal or Bhutan or
ayment
(b) in anyinpermitted
Payment currency]
an y p ermitted cur renc y
(1A) In respect of exports from India to Myanmar, payment may be received in any freely
convertible currency or through ACU mechanism from Myanmar.
(2) In respect of an export from India, payment shall be received in a currency
appropriate to the place of final destination as mentioned in the declaration form irrespective
of the country of residence of the buyer.
4. Payment for export in certain cases

Notwithstanding anything contained in Regulation 3, payment for export may also be
received by the exporter as under, namely:
(i) in the form of a bank draft, cheque, pay order, foreign currency notes/travellers
cheque from a buyer during his visit to India, provided the foreign currency so
received is surrendered within the specified period to the authorised dealer of which
the exporter is a customer;
(ii) by debit to FCNR/NRE account maintained by the buyer with an authorised dealer or
an authorised bank in India;
(iii) in rupees from the credit card servicing bank in India against the charge slip signed by
the buyer where such payment is made by the buyer through a credit card;
(iv) from a rupee account held in the name of an Exchange House with an authorised
dealer if the amount does not exceed two lakh rupees per export transaction;
(v) in accordance with the directions issued by the Reserve Bank to authorised dealers,
where the export is covered by the arrangement between the Central Government and the
Government of a foreign country or by the credit arrangement entered into by the Exim
Bank with a financial institution in a foreign state.
(vi) in the form of precious metals, i.e., gold/silver/platinum equivalent to the value of
jewellery exported by Gem & Jewellery units in Special Economic Zones and Export
Oriented Units on the condition that the sale contract provides for the same and the value
is declared in the relevant GR/SDF/PP forms.
5. Manner of payment in foreign exchange

(1) A payment in foreign exchange by an authorised dealer, whether by way of remittance
from India or by way of reimbursement to his branch or correspondent outside India (other than
Nepal and Bhutan) against payment for import into India, or against any other payment, shall be
as mentioned below:
Group Manner of
1) Member countries in (c) payment for all eligible
paymentcurrent transactions by
the Asian Clearing debit to the Asian Clearing Union Dollar Account or
Union (except Nepal) Asian Clearing Union Euro Account in India of a
namely, Bangladesh, bank of the member country in which the other party
Islamic Republic of to the transaction is resident or by credit to the Asian
Iran, Myanmar, P ak i s Clearing Union Dollar Account or Asian clearing
tan and S r i Lanka. Union Euro Account of the authorized dealer
maintained with the correspondent bank in the
member country; and
(d) Payment
(b) payment in any permitted currency in all other cases.
(2) all countries other than (a) payment in rupees from the account of a bank situated in
those mentioned in (1). any country other than a member country of Asian
Clearing Union or Nepal or Bhutan or
(b) payment in any permitted currency
(1A) In respect of imports into India from Myanmar, payment may be made in any freely
convertible currency or through the ACU mechanism to Myanmar.
(2) In respect of import into India, —
(a) where the goods are shipped from a member country of Asian Clearing Union (other
than Nepal) but the supplier is resident of a country other than a member country of
Asian Clearing Union, payment may be made in a manner specified for countries in
Group (2) of Regulation 5;
(b) in all other cases, payment shall be made in a currency appropriate to the country of
shipment of goods.
6. Manner of Payment in certain cases
Notwithstanding anything contained in Regulation 5 —
(1) where an import is covered by the special arrangement between the Central Government
and the Government of a foreign state, the payment for import shall be made in
accordance with the directions issued by the Reserve Bank to authorised dealer;
(2) subject to the provisions of sub-regulation (1), a person resident in India may make
payment in foreign exchange through an international card held by him:
Provided that —
(a) the transaction for which the payment is so made is in conformity with the
provisions of the Act, rules and regulations made thereunder; and
(b) in the case of import for which the payment is so made, the import is also in
conformity with the provisions of the Export-Import Policy for the time being in
force.
TH E FORE I GN E XCH AN GE MAN AGE ME N T (TRAN S FE R OR I S S U E OF AN Y
FORE I GN S ECU RI TY) REGU L ATI ON S, 2004
Notification No. FEMA 120/2004-RB dated 7-7-2004 as amended by Notification

No. FEMA.132/2005-RB dated 31-3-2005, FEMA 135/2005-RB, dated 17-5-2005,
Notification No. FEMA 139/2005-RB, dated 11-8-2005, Notification No. FEMA
150/2006-RB, dated 21-8-2006, Notification No. FEMA 173/2007-RB, dated 19-12-
2007, Notification No. FEMA 180/2008-RB, dated 5-9-2008, Notification No. FEMA
181/2008-RB, dated 1-10-2008, Notification No. FEMA 184/2009-RB, dated 20-1-
2009, Notification No. FEMA 188/2009-RB, dated 3-2-2009, Notification No. FEMA
192-2009-RB, dated 25-5-2009, Notification No. FEMA.196/2009-RB dated 28-7-
2009, Notification No. FEMA.225/2012- RB dated 07.03.2012, Notification No.
FEMA.231/2012-RB dated 30.05.2012, Notification No. FEMA. 249/2012-RB dated
22.12.2012, Notification No. FEMA.263/2013-RB Dated 05.03.2013, Notification No.
FEMA.271/2013-RB Dated 19.03.2013, Notification No.FEMA.277/2013-RB Dated
08.05.2013, Notification No. FEMA. 283/2013/RB Dated 14.08.2013
In exercise of the powers conferred by clause (a) of sub-section (3) of section 6 and section
47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in supersession of
Notification No. FEMA 19/RB-2000, dated 3rd May, 2000, as amended from time to time the
Reserve Bank of India makes the following regulations relating to transfer or issue of any
foreign security by a person resident in India, namely :—

(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of
any Foreign Security) Regulations, 2004.
(ii) They shall come into force from the date of their publication in the Official
Gazette.
2. Definitions
In these Regulations, unless the context otherwise requires:
(a) “Act” means Foreign Exchange Management Act, 1999 (42 of 1999);
(b) “authorised dealer” means a person authorised as an authorised dealer under sub-
(c) “American Depository Receipt (ADR)” means a security issued by a bank or a
depository in United States of America (USA) against underlying rupee shares of a
company incorporated in India;
(d) “Core Activity” means an activity carried on by an Indian entity turnover wherefrom
constitutes not less than 50% of its total turnover in the previous accounting year;
(e) “Direct investment outside India” means investment by way of contribution to the capital
or subscription to the Memorandum of Association of a foreign entity or by way of
purchase of existing shares of a foreign entity either by market purchase or private
placement or through stock exchange, but does not include portfolio investment;
(ea) 'Domestic Depository' shall have the same meaning as assigned to it in the
Companies (Issue of Indian Depository Receipt) Rules, 2004.
(eb) "Eligible Company" means a Company eligible to issue Indian Depository Receipts
under Rule 4 of the Companies (Issue of Indian Depository Receipts) Rules, 2004
(f) “Financial commitment” means the amount of direct investment by way of contribution
to equity, loan and 100 per cent of the amount of guarantees and 50 per cent of the
performance guarantees issued by an Indian party to or on behalf of its overseas Joint
Venture Company or Wholly Owned Subsidiary;
(g) “Foreign Currency Convertible Bond (FCCB)” means a bond issued by an Indian company
expressed in foreign currency, and the principal and interest in respect of which is
payable in foreign currency;
(h) “Form” means the forms annexed to these Regulations;
(i) “Global Depository Receipt (GDR)” means a security issued by a bank or a depository
outside India against underlying rupee shares of a company incorporated in India;
(j) “Host country” means the country in which the foreign entity receiving the direct
investment from an Indian party is registered or incorporated;
(ja) “Indian Depository Receipts” shall have the same meaning as assigned to it in the
Companies (Issue of Indian Depository Receipt) Rules, 2004.]
(k) “Indian party” means a company incorporated in India or a body created under an
Act of Parliament or a partnership firm registered under the Indian Partnership Act, 1932
making investment in a Joint Venture or Wholly Owned Subsidiary abroad, and includes
any other entity in India as may be notified by the Reserve Bank :
Provided that when more than one such company, body or entity make an investment in
the foreign entity, all such companies or bodies or entities shall together constitute the
“Indian party”;
(l) “Investment banker” means an Investment banker registered with the Securities and
Exchange Commission in USA, or the Financial Services Authority in UK, or
appropriate regulatory authority in Germany, France, Singapore or Japan;
(m) “Joint Venture (JV)” means a foreign entity formed, registered or incorporated in
accordance with the laws and regulations of the host country in which the Indian party
makes a direct investment;
(n) “Mutual Fund” means a Mutual Fund referred to in clause (23D) of section 10 of
the Income-tax Act, 1961; (o) “Net worth” means paid up capital and free reserves;
(p) “Real estate business” means buying and selling of real estate or trading in Transferable
Development Rights (TDRs) but does not include development of townships,
construction of residential/commercial premises, roads or bridges;
(q)“Wholly Owned Subsidiary (WOS)” means a foreign entity formed, registered or
incorporated in accordance with the laws and regulations of the host country, whose
entire capital is held by the Indian party;
(qa) “Venture Capital Fund” means a fund as defined under the Securities and Exchange
Board of India (Venture Capital Fund) Regulations, 1996;]
(qb) “Trust” means a Trust registered under the Indian Trust Act, 1882;
(qc) “Society” means a society registered under the Societies Registration Act, 1860;
(r) “Agricultural Operations” means agricultural operations as defined in the ‘National Bank
for Agriculture and Rural Development Act, 1981’;
(s) “Foreign Currency Exchangeable Bond” means a bond expressed in foreign currency, the
principal and interest in respect of which is payable in foreign currency, issued by an
issuing company and subscribed to by a person who is a resident outside India in
foreign currency and exchangeable into equity share of offered company, in any
manner, either wholly, or partly or on the basis of any equity related warrants
attached to debt instruments;
(t) “issuing company” means a company registered under the Companies Act, 1956 (1 of
1956) and eligible to issue Foreign Currency Exchangeable Bond under these regulations;
(u) “offered company” means a company registered under the Companies Act, 1956 (1 of
1956) and whose equity share/s is/are offered in exchange of the Foreign Currency
Exchangeable Bond;
(v) “promoter group” has the same meaning as defined in the Securities and Exchange Board
of India (Disclosure and Investor Protection) Guidelines, 2000;
(w) words and expressions used but not defined in these Regulations shall have the meanings
respectively assigned to them in the Act.
3. Prohibition on issue or transfer of foreign security

Save as otherwise provided in the Act or rules or regulations made or directions issued
thereunder, no person resident in India shall issue or transfer any foreign security :
Provided that the Reserve Bank may, on application made to it, permit any person
resident in India to issue or transfer any foreign security.
4. Purchase and sale of foreign security by a person resident in India

A person resident in India
(a) may purchase a foreign security out of funds held in Resident Foreign Currency (RFC)
account maintained in accordance with the Foreign Exchange Management (Foreign
Currency Accounts) Regulations, 2000;
(b) may acquire bonus shares on the foreign securities held in accordance with the
provisions of the Act or rules or regulations made thereunder;
(c) when not permanently resident in India, may purchase a foreign security from out of
his foreign currency resources outside India;
(d) may sell the foreign security purchased or acquired under clause (a), (b) or (c).
Explanation:—For the purpose of this clause, ‘not permanently resident’ means a
person resident in India for employment of a specified duration (irrespective of length
thereof) or for a specific job or assignment, the duration of which does not exceed
three years.
Part I
Direct Investment Outside India
5. Prohibition on Direct Investment outside India

Save as otherwise provided in the Act, rules or regulations made or directions issued
thereunder, or with prior approval of the Reserve Bank,
(1) no person resident in India shall make any direct investment outside India; and
(2) no Indian party shall make any direct investment in a foreign entity engaged in real estate
business or banking business.
6. Permission for Direct Investment in certain cases

(1) Subject to the conditions specified in sub-regulation (2), (and Regulation 7 in case
investment by an Indian Party engaged] in financial services sector) an Indian party may make
direct investment in a Joint Venture or Wholly Owned Subsidiary outside India.
(2) (i) The total financial commitment of the Indian Party in Joint Ventures / Wholly
Owned Subsidiaries shall not exceed 100%, or as decided by the Reserve Bank from time to
time, of the net worth of the Indian Party as on the date of the last audited balance sheet.
Explanation: For the purpose of determining the 'total financial commitment' within the
limit of 100%, or as decided by the Reserve Bank from time to time, of the net worth,
the following shall be reckoned, namely:
(a) Remittance by market purchases, namely in freely convertible currencies; in case of
Bhutan, investment made in freely convertible currencies or equivalent Indian
Rupees, in case of Nepal investment made only in Indian Rupees;
(b) Capitalization of export proceeds and other dues and entitlements as mentioned in
Regulation 11;
(c) Hundred per cent of the value of guarantees issued by the Indian party to on or
behalf of the joint venture company or wholly owned subsidiary;
(d) Investment in agricultural operations through overseas offices or directly;
(e) External Commercial Borrowing in conformity with other parameters of the ECB
guidelines;
Overseas direct investment by an Indian party in Pakistan shall henceforth be
considered under the approval route under regulation 9 of this Notification.
(ii) The direct investment is made in an overseas JV or WOS engaged in a bona
fide business activity.
(iii) The Indian Party is not on the Reserve Bank’s Exporters caution list/list of
defaulters to the banking system circulated by the Reserve Bank or under investigation
by any investigation/enforcement agency or regulatory body.
(iv) The Indian Party has submitted its Annual Performance Report in respect of all its
overseas investments in the format given in Part III of Form ODI.
(v) The Indian Party routes all transactions relating to the investment in a Joint
Venture/Wholly Owned Subsidiary through only one branch of an authorised dealer to
be designated by it.
Explanation:—The Indian Party may designate different branches of authorised
dealers for different Joint Ventures/Wholly Owned Subsidiaries outside India.
(vi) The Indian Party submits Part I of Form ODI, duly completed, to the designated
branch of an authorised dealer.
(3) Investment under this Regulation may be funded out of one or more of the
following sources, namely :—
(i) out of balance held in the Exchange Earners’ Foreign Currency Account of
the Indian party maintained with an authorised dealer in accordance with Regulation 4
of Foreign Exchange Management (Foreign Currency Accounts by a Person Resident
in India) Regulations, 2000;
(ii) drawal of foreign exchange from an authorised dealer in India shall not
exceed 100%, or as decided by the Reserve Bank from time to time, of the net worth
of the Indian Party as on the date of last audited balance sheet;
Explanation: For the purpose of the limit of 100%, or as decided by the Reserve
Bank from time to time, of the net worth, the following shall be reckoned, namely:]
(a) cash remittance by market purchase;
(b) capitalisation of export proceeds and other dues and entitlements as mentioned in
Regulations 11 and 12;
(c) hundred] per cent of the value of guarantees issued by the Indian party to or on
behalf of the Joint Venture Company or Wholly Owned Subsidiary.
Explanation:—An Indian Party may offer to a person resident outside India any form
of guarantees, that is, corporate or personal/primary or collateral/guarantee by
promoter company in India/guarantee by group company, sister concern or associate
company in India, provided that:
(a) total “financial commitment” including all forms of guarantees remains within the
overall ceiling stipulated for overseas investment by an Indian Party; and
(b) no guarantee is “open ended”;
(d) utilisation of the amount raised by issue of ADRs/GDRs by the Indian
party;
(e) External Commercial Borrowing in conformity with other parameters of
the ECB guidelines;
(f) swap of shares;
(g) ADR/GDR stock swap subject to the valuation norms and sectoral cap.]
Explanation :— For the purpose of reckoning net worth of an Indian party, the net
worth of its holding company (which holds at least 51% stake in the Indian Party)
or its subsidiary company (in which the Indian party holds at least 51% stake)
may be taken into account to the extent not availed of by the holding company
or the subsidiary independently and has furnished a letter of disclaimer in favour
of the Indian Party :
Provided further that the ceiling mentioned in sub-clause (2)(i) shall not apply where
the investment is made out of balances held in its EEFC account, maintained in
accordance with the Foreign Exchange Management (Foreign Currency Accounts by
a Person Resident in India) Regulations, 2000, as amended from time to time.
(4) An Indian Party may extend a loan or a guarantee to or on behalf of the Joint Venture /
Wholly Owned Subsidiary abroad, within the permissible financial commitment, provided
that the Indian Party has made investment by way of contribution to the equity capital of
the Joint Venture.
(5) An Indian Party may make direct investment without any limit in any foreign security
out of the proceeds of its international offering of shares through the mechanism of ADR
and/or GDR :
Provided that
(a) the ADR/GDR issue has been made in accordance with the Scheme for issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt
Mechanism) Scheme, 1993 and the guidelines issued thereunder from time to time by
the Central Government;
(b) the Indian Party files with the designated authorised dealer in Parts I and II of Form
ODI full details of the investment proposed.
(6) (a) For the purposes of investment under this Regulation by way of remittance from
India in an existing company outside India, the valuation of shares of the company outside
India shall be made,—
(i) where the investment is more than USD 5 (five) million, by a Category I
Merchant Banker Registered with Securities and Exchange Board of India (SEBI),
or an Investment Banker/Merchant Banker outside India registered with the
appropriate regulatory authority in the host country; and
(ii) in all other cases, by a Chartered Accountant or a Certified Public Accountant.
(b) For the purposes of investment under this Regulation by acquisition of shares of
an existing company outside India where the consideration is to be paid fully or partly by
issue of the Indian party’s shares, the valuation of shares of the company outside India shall
in all cases, be carried out by a Category I Merchant Banker registered with the Securities
and Exchange Board of India (SEBI) or an Investment Banker/Merchant Banker outside
India registered with the appropriate regulatory authority in the host country.
6A. General Permission for Investment in Agricultural Operations Overseas Directly or

through Overseas Offices
A person resident in India being a company incorporated in India or a partnership firm
registered under Indian Partnership Act, 1932, may undertake agricultural operations including
purchase of land incidental to such activity either directly or through their overseas offices :
Provided that—
(a) the Indian party is otherwise eligible to make investment under Regulation 6 and that
such investment is
within the overall limits as specified in Regulation 6;
(b) for the purposes of investment under this regulation by acquisition of land overseas the
valuation of the land is certified by a certified valuer registered with the appropriate
valuation authority in the host country.
6B. General Permission for Investment in Equity of a Company Registered Overseas

A person resident in India, being [***] a listed Indian Company], may invest in:
(a) the shares of an overseas company which is listed on a recognised stock exchange [***];
(b) the rated bonds/fixed income securities issued by companies at (a) above:
Provided that—
(i) in the case of investment by a listed Indian company, the investment shall not
exceed [50%] of its net worth as on the date of its last audited balance sheet; [***]
(ii) every transaction relating to purchase and sale of shares of the overseas company or
bonds/securities shall be routed through the designated branch of an authorised dealer in
India.
6C. Investment by mutual funds

(1) Mutual funds registered with the Securities and Exchange Board of India, may invest
within specified limits, in the shares on the rated bonds/fixed income securities of an overseas
company listed on a recognised stock exchange or in Exchange Traded Funds, or other securities
as may be stipulated by the Reserve Bank of India from time to time.
(2) Every transaction relating to purchase and sale of foreign security by Mutual Funds
shall be routed through the designated branch of an authorised dealer in India.
7. Investment by Indian Party engaged in Financial Services Sector

(1) Subject to the Regulations in Part I, an Indian Party engaged in financial services sector
in India may make investment in an entity outside India:
Provided that the Indian party
(i) has earned net profit during the preceding three financial years from the
financial services activities;
(ii) is registered with the regulatory authority in India for conducting the financial
services activities;
(iii) has obtained approval from the concerned regulatory authorities both in India and
abroad, for venturing into such financial sector activity;
(iv) has fulfilled the prudential norms relating to capital adequacy as prescribed by the
concerned regulatory authority in India.
(2) Any additional investment by an existing JV/WOS or its stepdown company in the
Financial Services Sector shall be made only after complying with the conditions stipulated
in sub-clause (1).
8. Investment in a foreign security by swap or exchange of shares of an Indian company

[***]
9. Approval of the Reserve Bank in certain cases

(1) An Indian Party, which does not satisfy the eligibility norms under Regulation 6 or 7 or
8, may apply to the Reserve Bank for approval.
(2) Application for direct investment in Joint Venture/Wholly Owned Subsidiary outside
India, or by way of exchange for shares of a foreign company, shall be made in Part I of
Form ODI.
(2A) An application made under sub-regulation (2) in Form ODI
(a) for the purpose of investment by way of remittance from India, in an existing company
outside India, shall be accompanied, by the valuation of shares of the company outside
India, made—
(i) where the investment is more than USD 5 (five) million, by a Category I Merchant
Banker registered with SEBI or an Investment Banker/Merchant Banker registered
with the appropriate regulatory authority in the host country; and
(ii) in all other cases, by a Chartered Accountant or a Certified Public Accountant;
(b) for the purposes of investment by acquisition of shares of an existing company
outside India where the consideration is to be paid fully or partly by issue of the
Indian party’s shares, shall be accompanied by the valuation carried out by a Category
I Merchant Banker registered with the SEBI or an Investment Banker/ Merchant
Banker registered with the appropriate regulatory authority in the host country.
(3) The Reserve Bank may, inter alia, take into account following factors while
considering the application made under sub-regulation (2):
(a) Prima facie viability of the Joint Venture/Wholly Owned Subsidiary outside India;
(b) Contribution to external trade and other benefits which will accrue to India
through such investment;
(c) Financial position and business track record of the Indian Party and the foreign
entity;
(d) Expertise and experience of the Indian Party in the same or related line of activity
of the Joint Venture or Wholly Owned Subsidiary outside India.
9A. Overseas Investments by Registered Trust/Society

Registered Trusts and Societies engaged in the manufacturing/educational sector 2[and which
have set up hospital(s) in India] satisfying the criteria as per Schedule III of the Notification may
invest in the same sector(s) in a Joint Venture/ Wholly Owned Subsidiary outside India with the
prior approval of the Reserve Bank.
10. Unique Identification Number

Reserve Bank will allot a Unique Identification Number for each Joint Venture or Wholly
Owned Subsidiary outside India and the Indian Party shall quote such number in all its
communications and reports to the Reserve Bank and the authorized dealer.
11. Investment by capitalization

(1) An Indian Party may make direct investment outside India in accordance with the
Regulations in Part I by way of capitalisation in full or part of the amount due to the Indian
Party from the foreign entity towards:—
(i) payment for export of plant, machinery, equipment and other goods/software to the
foreign entity;
(ii) fees, royalties, commissions or other entitlements due to the Indian Party from the foreign
entity for the supply of technical know-how, consultancy, managerial or other services :
Provided that where the export proceeds have remained unrealised beyond 3[the
prescribed period of realization], and fees, royalties, commissions or other
entitlements of the Indian party have remained unrealised from the date on which
such payment is due, such proceeds shall not be capitalised without the prior
permission of the Reserve Bank.
(2) An Indian Software exporter may receive in the form of shares upto 25% of the value of
exports to an overseas software start up company without entering into JV agreement by filing
an application with the Reserve Bank through the Authorised Dealer.
12. Export of Goods towards Equity Procedure

(1) An Indian Party exporting goods/software/plant and machinery from India towards
equity contribution in a Joint Venture or Wholly Owned Subsidiary outside India shall declare
it on GR/SDF/SOFTEX form, as the case may be, which shall be superscribed as “Exports
against equity participation in the JV/WOS abroad”, and also quoting Identification Number,
if already allotted by Reserve Bank.
(2) Notwithstanding anything contained in Regulation 11 of the Foreign Exchange
Management (Export of Goods and Services) Regulations, 2000, the Indian Party shall, within 15
days of effecting the shipment of the goods, submit to the Reserve Bank a custom certified copy
of the invoice through the branch of an authorised dealer designated by it.
(3) An Indian Party capitalising exports under Regulation 11 shall, within six months from
the date of export, or any further time as allowed by Reserve Bank, submit to Reserve Bank
copy/ies of the share certificate/s or any document issued by the Joint Venture or Wholly
Owned Subsidiary outside India to the satisfaction of Reserve Bank evidencing the investment
from the Indian Party together with the duplicate of GR/SDF/SOFTEX form through the
branch of an authorised dealer designated by it.
13. Post investment changes/additional investment in existing JV/WOS

(1) A JV/WOS set up by the Indian party as per the Regulations may diversify its activities/set
up step down subsidiary/alter the shareholding pattern in the overseas entity:
Provided the Indian party reports to the Reserve Bank, the details of such decisions taken
by the JV/WOS within 30 days of the approval of those decisions by the competent
authority concerned of such JV/WOS in terms of local laws of the host country, and, include
the same in the Annual Performance Report required to be forwarded annually to the
Reserve Bank in terms of Regulation 15.
14. Acquisition of a foreign company through bidding or tender procedure

(1) On being approached by an Indian Party, which is eligible under the Regulations to
make investment outside India, an authorised dealer may allow remittance towards earnest
money deposit or issue a bid bond guarantee on its behalf for participation in bidding or tender
procedure for acquisition of a company incorporated outside India.
(2) On the Indian Party winning the bid,
(i) the authorised dealer may allow further remittances towards acquisition of the foreign
company, subject to the ceilings specified in Regulation 6; and
(ii) the Indian Party shall submit through the designated authorised dealer concerned a
report to the Reserve Bank in Parts I and II of Form ODI within 30 days of effecting the final
remittance.
(3) For participation in bidding or tender procedure for acquisition of a company
incorporated outside India which does not fall within the provisions of sub-regulation (1), the
Reserve Bank may, on application in Form ODI, allow remittance of foreign exchange
towards earnest money deposit or permit the authorised dealer in India to issue a bid bond
guarantee, subject to such terms and conditions as the Reserve Bank may stipulate.
(4) In case the Indian Party is successful in the bid but the terms and conditions of
acquisition of a company outside India are,—
(a) not in conformity with the provisions of Regulations in Part I, or different from those
for which approval under sub-regulation (3) was obtained, the Indian Party shall submit
application in Form ODI to Reserve Bank for obtaining approval for the foreign direct
investment in the manner specified in Regulation 9, or
(b) in conformity with the provisions of the Regulations in Part I or are same as those for
which approval under sub-regulation (3) was obtained, the Indian Party shall submit a
report to the Reserve Bank, giving details of the remittances made, within 30 days of
effecting the final remittance.
15. Obligations of the Indian Party

An Indian Party, which has acquired foreign security in terms of the Regulations in Part I,
shall—
(i) receive share certificates or any other document as an evidence of investment in the
foreign entity to the satisfaction of the Reserve Bank within six months, or such further
period as Reserve Bank may permit, from the date of effecting remittance or the date on
which the amount to be capitalised became due to the Indian Party or the date on
which the amount due was allowed to be capitalised;
(ii) repatriate to India, all dues receivable from the foreign entity, like dividend, royalty,
technical fees etc., within 60 days of its falling due, or such further period as the Reserve
Bank may permit :
Provided that in the case of investment in securities in Bhutan made in freely
convertible currency, all dues receivable thereon as are repatriable, including those on
account of disinvestment/dissolution/winding up, shall be realised and repatriated in
freely convertible currency only;
(iii) “submit to the Reserve Bank, through the designated Authorised Dealer, every year on
or before a specified date, an Annual Performance Report (APR) in Part III of Form
ODI in respect of each JV or WOS outside India, and other reports or documents as
may be prescribed by the Reserve Bank from time to time. The APR, so required to be
submitted, has to be based on the audited annual accounts of the JV / WOS for the
preceding year, unless specifically exempted by the Reserve Bank.”
(iv) Indian companies, which have made overseas direct investments under the provisions of
this Notification, shall submit an ‘Annual Return on Foreign Liabilities and Assets’ in the
format and by a specified dates prescribed by the Reserve Bank from time to time, to the
Director, Balance of Payment Statistics Division, Department of Statistics and Information
Management (DSIM), Reserve Bank of India, C-9, 8th Floor, Bandra Kurla Complex,
Bandra (E), Mumbai – 400051.
16. Transfer by way of sale of shares of a JV/WOS outside India

(1) An Indian Party may transfer, by way of sale to another Indian Party which complies with
the provisions of Regulation 6 above, or to a person resident outside India, any share or security
held by it in a JV or WOS outside India subject to the following conditions:
(i) the sale does not result in any write off of the investment made;
(ii) the sale is to be effected through a stock exchange where the shares of the overseas
JV/ WOS are listed;
(iii) if the shares are not listed on the stock exchange and the shares are
disinvested by a private arrangement, the share price is not less than the value certified
by a Chartered Accountant / Certified Public Accountant as the fair value of the shares
based on the latest audited financial statements of the JV / WOS;
(iv) the Indian Party does not have any outstanding dues by way of dividend,
technical know-how fees, royalty, consultancy, commission or other entitlements
and / or export proceeds from the JV or WOS;
(v) the overseas concern has been in operation for at least one full year and the Annual
Performance Report together with the audited accounts for that year has been
submitted to the Reserve Bank;
(vi) the Indian party is not under investigation by CBI / DoE / SEBI / IRDA or any
other regulatory authority in India.
(2) Sale proceeds of shares/securities shall be repatriated to India immediately on receipt
thereof and in any case not later than 90 days from the date of sale of the shares/securities and
documentary evidence to this effect shall be submitted to the Regional office of the Reserve
Bank through the designated authorized dealer.
(3) An Indian party, which does not satisfy the criteria specified at sub-regulation (1)
above, shall apply to the Reserve Bank for permission to transfer by way of sale of shares of a
JV/WOS outside India which may be granted subject to such conditions as the Reserve Bank may
consider appropriate.
17. Transfer by way of Sale of Shares involving Write-off

Where the transfer by way of sale of shares or security referred to in sub-regulation (1) of
Regulation 16 by any Indian party listed on any stock exchange in India, is for a price less
than the amount invested in the share or the security transferred,—
1. where the difference between the said value and the sale price does not exceed the
percentage approved by the Reserve Bank, from time to time, of the Indian party’s
actual export realisation of the previous year, the Indian party may write off to the
extent of the difference, the capital invested in the overseas JV/WOS;
2. where such difference is more than the percentage approved by the Reserve Bank,
from time to time, of the Indian party’s actual export realisation of the previous year,
the Indian party shall apply to the Reserve Bank for permission to write-off the capital
invested, which permission may be granted subject to such conditions as the Reserve
Bank considers appropriate.
18. Pledge of Shares of Joint Ventures and Wholly Owned Subsidiaries

An Indian Party may transfer, by way of pledge, shares held in a Joint Venture or Wholly
Owned Subsidiary outside India as a security for availing of fund based or non-fund based
facilities for itself or for the Joint Venture or Wholly Owned Subsidiary from an authorised
dealer or a public financial institution in India 2[or to an overseas lender, provided the lender is
regulated and supervised as a bank and the total financial commitment of the Indian Party
remains within the limit stipulated by the Reserve Bank for overseas investments in JV/WOS.
PART II
Investments abroad by Individuals in India
19. Prior permission of the Reserve Bank for a Proprietary concern in India to accept
shares
A proprietary concern in India may apply to the Reserve Bank through the authorised dealer in
Part I of Form ODI for permission to accept shares of a company outside India in lieu of fees
due to it for professional services rendered to the said company :
Provided that,—
(a) the value of the shares accepted from each company outside India shall not exceed fifty
per cent of the fees receivable by the Indian concern from that company; and
(b) the Indian concern’s shareholding in any one company outside India by virtue of shares
accepted as aforesaid shall not exceed ten per cent of the paid-up capital of the company
outside India, whose shares are accepted.
19A. Overseas Investments - Proprietorship Concerns

Proprietary/unregistered partnership firm in India being a recognised Star Export House with
a proven track record and a consistently high export performance satisfying the criteria as per
Schedule II of the Notification may set up a JV/ WOS outside India with the prior approval of
the Reserve Bank.
20. Investment by Individuals

(1) A resident individual may acquire shares of a foreign entity in part / full
consideration of the professional services rendered to the foreign entity or in lieu of director’s
remuneration, provided the limit of acquiring such shares in terms of value shall be within the
overall ceiling prescribed for the resident individuals under the Liberalized Remittance Scheme
(LRS) in force at the time of acquisition.
(2) Reserve Bank may, after taking into account, inter alia, the following factors, grant
permission subject to such terms and conditions as are considered necessary:
(i) credentials and net worth of the individual and the nature of his/her profession;
(ii) the extent of his/her forex earnings / balances in his EEFC and / or RFC
account; (iii) financial and business track record of the foreign entity;
(iv) potential for forex inflow to the country;
(v) other likely benefits to the country.
Part III
Investments in Foreign Securities other than by way of Direct Investment
21. Prohibition on issue of foreign security by a person resident in India

(1) Save as otherwise provided in the Act or in sub-regulation (2), no person resident in
India shall issue or transfer a foreign security.
(2) A person resident in India, being an Indian Company or a Body Corporate created by an
Act of Parliament,—
(i) may issue FCCBs not exceeding USD 750 million to a person resident
outside India in accordance with the subject to the conditions stipulated in Schedule I.
(ii) may issue FCCBs beyond USD 750 million with the specific approval of the
Reserve Bank.
(iii) may issue Foreign Currency Exchangeable Bonds to a person resident
outside India in accordance with and subject to the conditions specified in Schedule IV
with the specific approval of the Reserve Bank.
(3) The company/body corporate referred to in sub-regulation (2), issuing the FCCBs
shall, within 30 days from the date of issue, furnish a report to the Reserve Bank giving
the details and documents as under:
(a) Total amount for which FCCBs have been issued;
(b) Names of the investors resident outside India and number of FCCBs issued to each
of them;
(c) The amount repatriated to India through normal banking channels and/or the
amount received by debit to NRE/FCNR accounts in India of the investors (duly supported
by bank certificate).
22. Permission for purchase/acquisition of foreign securities in certain cases

(1) A person resident in India being an Individual may acquire
foreign securities:—
(i) by way of gift from a person resident outside India; or
(ii) issued by a company incorporated outside India under Cashless Employees
Stock Option Scheme : Provided it does not involve any remittance from India; or
(iii) by way of inheritance from a person whether resident in or outside India.
(2) A person resident in India, being an individual, who is an employee or a director of
Indian office or branch of a foreign entity or of a subsidiary in India of a foreign entity or
of an Indian company in which foreign entity has direct or indirect equity holding, may
accept the shares offered by such foreign entity provided that:
i. the shares under the ESOP Scheme are offered by the issuing company globally on
uniform basis, and
ii. an Annual Return is submitted by the Indian company to the Reserve Bank
through the Authorised Dealer bank giving details of remittances / beneficiaries
etc.,
Explanation: - For the purpose of this sub-regulation, 'indirect' means 'indirect foreign
equity holding through a trust/special purpose vehicle/ a step down subsidiary'.
(3) An authorised dealer bank may allow the remittance by the person eligible to purchase
the shares in terms of sub-regulation (2) for acquiring shares under ESOP Schemes,
irrespective of the method of the operationalisation of the scheme:
Provided that the conditions specified in that sub-regulation are fulfilled.
(4) A person resident in India may transfer by way of sale, the shares acquired in terms of
sub-regulations (2) and (3) above:
Provided that the proceeds thereof are repatriated immediately on receipt thereof and in any
case not later than 90 days from the date of sale of such securities.]
(5) A foreign company, who has issued the shares in terms of sub-regulation (2) of this
regulation may repurchase the same provided that:
(i) the shares were issued in accordance with the Rules/Regulations framed under
Foreign Exchange Management Act, 1999,
(ii) the shares are being repurchased in terms of the initial offer document, and
(iii) an Annual Return is submitted through the Authorised Dealer bank giving details of
remittances/beneficiaries, etc.
(6) An Authorised Dealer bank may allow the remittance by the person eligible to
purchase the shares in terms of sub-regulation (2).
(7) (i) A Domestic Depository may acquire, hold and transfer equity shares of eligible
company resident outside India, being the underlying shares for the purpose of issuing
IDRs as may be authorized by such company or its Overseas Custodian Bank.
(ii) A person resident in India may redeem IDRs issued by an eligible company resident
outside India through a Domestic Depository, subject to compliance of the following
conditions with respect to the underlying shares on redemption :
(a) Listed Indian companies may either sell or continue to hold the underlying
shares subject to the terms and conditions as per Regulations 6B and 7 of the
Notification No.FEMA.120/RB-2004 dated July 7, 2004, as amended from time to
time,
(b) Indian Mutual Funds, registered with SEBI may either sell or continue to
hold the underlying shares subject to the terms and conditions as per Regulation 6C
of the Notification No.FEMA.120/RB-2004 dated July 7, 2004, as amended from
time to time.
(c) Other persons resident in India including resident individuals may hold the
underlying shares only for the purpose of sale within a period of 30 days from the
date of conversion of the IDRs into underlying shares.
23. Transfer of a foreign security by a person resident in India

A person resident in India, who has acquired or holds foreign securities in accordance with
the provisions of the Act, rules or regulations made thereunder, may transfer them by way of
pledge for obtaining fund based or non-fund based facilities in India from an authorised dealer.
24. General Permission for Acquisition of foreign securities as qualification/rights shares
(1) A person resident in India being an individual may
(a) acquire foreign security as qualification shares issued by an entity incorporated outside
India for holding the post of a director in the entity provided that:
(i) the extent of acquiring the qualification shares is as per the law of the host country
where the entity is located and
(ii) the limit of remittance for acquiring such qualification shares shall be within the
overall ceiling prescribed for the resident individuals under the Liberalized
Remittance Scheme (LRS) in force at the time of acquisition.
(b) acquire foreign securities by way of rights shares in a company incorporated outside
India:
Provided that the right shares are being issued by virtue of holding shares in
accordance with the provisions of the law for the time being in force,
(c) where such person is an employee or a director of the Indian promoter company,
acquire by way of purchase shares of a Joint Venture or Wholly Owned Subsidiary
outside India of the Indian promoter company, in the field of software :
Provided that—
(i) the consideration for purchase does not exceed the ceiling as stipulated by RBI from
time to time,
(ii) the shares so acquired do not exceed 5% of the paid-up capital of the Joint
Venture or Wholly Owned Subsidiary outside India, and
(iii) after allotment of such shares, the percentage of shares held by the Indian
promoter company, together with shares allotted to its employees is not less
than the percentage of shares held by the Indian promoter company prior to
such allotment.
(2) A person resident in India, being an individual holding qualification/rights shares in
terms of sub-regulation (a) or (b) above may sell the shares so acquired, without prior
approval, provided the sale proceeds are repatriated to India through banking channels and
documentary evidence is submitted to the authorized dealer.
(3) An Indian company in the knowledge based sector may allow its resident
employees (including working directors) to purchase foreign securities under the ADR/GDR
linked stock option schemes:
Provided that the issue of employees stock option by a listed company shall be governed by
SEBI (Employees Stock Option and Stock Purchase Scheme) Guidelines, 1999 and the
issue of employees stock option by an unlisted company shall be governed by the
guidelines issued by the Government of India for issue of ADR/GDR linked stock options:
Provided further that the consideration for the purchase does not exceed the ceiling as
stipulated by the Reserve Bank from time to time.
Explanation.— For the purpose of this clause “knowledge based sector”means such sectors as
have been notified by the Government of India from time to time in terms of its guidelines
for the issue of ADR/GDR linked Employees Stock Options by the Indian Companies,
dated 15th September, 2000.
25. Prior permission of Reserve Bank in certain cases

A person resident in India being an individual seeking to acquire qualification shares in a
company outside India beyond the limits laid down in the proviso to clause (a) of sub-
regulation (1) of Regulation 24 shall apply to the Reserve Bank for prior approval.
26. Investment by Mutual Funds 1[and Venture Capital Funds]

The purchase of foreign securities by Mutual Funds and Venture Capital Funds shall be
subject to these regulations, and such other terms and conditions as may be notified by the
SEBI from time to time.
27. Opening of Demat Accounts by Clearing Corporations of Stock Exchanges and

Clearing Members
A person resident in India being a Securities and Exchange Board of India approved
clearing corporation of stock exchanges and their clearing members may, subject to the
guidelines, issued by the SEBI from time to time:—
(i) open and maintain demat accounts with foreign depositories and acquire, hold, pledge
and transfer the foreign sovereign securities, offered as collateral by FIIs;
(ii) remit the proceeds arising from corporate action, if any, on such foreign sovereign
securities; and
(iii) liquidate such foreign sovereign securities and repatriate the proceeds thereof to India.
Schedule I
Automatic Route for Issue of Foreign Currency Convertible Bonds (FCCBs)
(i) The FCCBs to be issued will have to conform to the Foreign Direct Investment Policy
(including Sectoral Cap and Sectors where FDI is permissible) of the Government of India as
announced from time to time and the Reserve Bank’s Regulations/directions issued from time
to time.
(ii) Effective 23.9.2011, the issue of FCCBs shall be subject to a ceiling of USD 750
million in any one financial year. (It is clarified that no person will be adversely affected as a
result of retrospective effect being given to these regulations.)
(iii) Public issue of FCCBs shall be only through reputed lead managers in the international
capital market. In case of private placement, the placement shall be with banks, or with
multilateral and bilateral financial institutions, or foreign collaborators, or foreign equity holder
having a minimum holding of 5% of the paid up equity capital of the issuing company. Private
placement with unrecognized sources is prohibited.
(iv) The maturity of the FCCB shall not be less than 5 years. The call and put option,
if any, shall not be exercisable prior to 5 years.
(v) Issue of FCCBs with attached warrants is not permitted.
(vi) The “all in cost” will be on par with those prescribed for External Commercial
Borrowing (ECB) schemes specified in the Schedule to Notification No. FEMA 3/2000-RB,
dated 3rd May, 2000. The “all in cost” shall include coupon rate, redemption premium, default
payments, commitment fees, and fronting fees, if any, but shall not include the issue related
expenses such as legal fees, lead managers fees, out of pocket expenses.
(vii) The FCCB proceeds shall not be used for investment in Stock Market, and may be used
for such purposes for which ECB proceeds are permitted to be utilized under the ECB schemes.
(viii) FCCBs are allowed for corporate investments in industrial sector, especially
infrastructure sector. Funds raised through the mechanism may be parked abroad unless actually
required.
(ix) FCCBs for meeting rupee expenditure under automatic route to be hedged unless
there is a natural hedge in the form of uncovered foreign exchange receivables, which will be
ensured by Authorised Dealers.
(x) Financial intermediaries (viz. a bank, DFI, or NBFC) shall not be allowed access to
FCCBs, except those Banks and financial intermediaries that have participated in the Textile or
Steel Sector restructuring package of the Government/ RBI subject to the limit of their
investment in the package.
(xi) Banks, FIs, NBFCs shall not provide guarantee/letter of comfort etc. for the FCCB
issue.
(xii) The issue related expenses shall not exceed 4% of issue size and in case of private
placement, shall not exceed 2% of the issue size.
(xiii) The issuing entity shall, within 30 days from the date of completion of the issue,
furnish a report to the concerned Regional Office of the Reserve Bank of India through a
designated branch of an Authorized Dealer giving the details and documents as under :
(a) The total amount of the FCCBs issued,
(b) Names of the investors resident outside India and number of FCCBs issued to
each of them.
Schedule II
(See Regulation 19A)
Overseas Investments - Proprietorship concerns
Criteria for considering investment proposals outside India by established proprietorship or

unregistered partnership exporter firms:
(i) The Partnership/Proprietorship firm is a DGFT recognised Star Export House (export
exceeding Rs. 15 crore per annum).
(ii) The Authorised Dealer bank is satisfied that the exporter is KYC (Know Your Customer)
compliant, is engaged in the proposed business and has turnover as indicated.
(iii) Exporter has proven track record, i.e., export outstanding does not exceed 10 per cent
of the average export realisation of the preceding three years.
(iv) The exporter has not come under the adverse notice of any Government agency like
Directorate of Enforcement, Central Bureau of Investigation and does not appear in the
exporters’ caution list of the Reserve Bank or in the list of defaulters to the banking system
in India.
(v) The amount of investment outside India does not exceed 10 per cent of the average
of three years export realisation or 200 per cent of the net owned funds of the firm,
whichever is lower.
Schedule III
(See Regulation 9A)
Overseas Investments by Registered Trust/Society
CRITERIA FOR OVERSEAS INVESTMENT BY REGISTERED TRUST/SOCIETY
Trust
(i) The Trust should be registered under the Indian Trust Act, 1882.
(ii) The Trust deed permits the proposed investment overseas.
(iii) The proposed investment should be approved by the trustee/s.
(iv) The Authorised Dealer bank is satisfied that the Trust is KYC (Know Your Customer)
compliant and is engaged in a bona fide activity.
(v) The Trust has been in existence at least for a period of three years.
(vi) The Trust has not come under the adverse notice of any Regulatory/Enforcement
agency like the Directorate of Enforcement, CBI etc.
Society
(i) The Society should be registered under the Societies Registration Act, 1860.
(ii) The Memorandum of Association and rules and regulations permit the Society to make
the proposed investment which should also be approved by the governing body/council or a
managing/executive committee.
(iii) The Authorised Dealer bank is satisfied that the Society is KYC (Know Your
Customer) compliant and is engaged in a bona fide activity.
(iv) The Society has been in existence at least for a period of three years.
(v) The Society has not come under the adverse notice of any Regulatory/Enforcement
agency like the Directorate of Enforcement, CBI etc.
In addition to the registration, the activities which require special
license/permission either from the Ministry of Home Affairs, Government of India or
from the relevant local authority, as the case may be, the Authorised Dealer Category-I
bank should ensure that such special license/permission has been obtained by the
applicant.
Schedule IV
Foreign Currency Exchangeable Bonds (FCEBs)
1. Currency.
The FCEB may be denominated in any freely convertible foreign currency.
2. Eligible Issuer.
The issuing company shall be part of the promoter group of the offered company and shall
hold the equity share/s being offered at the time of issuance of FCEB.
3. The Offered Company.

The Offered Company shall be a listed company which is engaged in a sector eligible to
receive Foreign Direct Investment and eligible to issue or avail FCCB or External
Commercial Borrowings (ECB).
4. Entities not eligible to issue FCEB.

An Indian company, which is not eligible to raise funds from the Indian securities
market, including a company which has been restrained from accessing the securities
market by the SEBI shall not be eligible to issue FCEB.
5. Eligible subscriber.
Entities complying with the Foreign Direct Investment policy and adhering to the sectoral
caps at the time of issue of FCEB can subscribe to FCEB. Prior approval of Foreign
Investment Promotion Board, wherever required under the Foreign Direct Investment
policy, should be obtained.
6. Entities not eligible to subscribe to FCEB.

Entities prohibited to buy, sell or deal in securities by the SEBI will not be eligible to
subscribe to FCEB.
7. End-use of FCEB proceeds: Issuing Company.

(i) The proceeds of FCEB may be invested by the issuing company outside India by
way of direct investment including in Joint Ventures or Wholly Owned Subsidiaries
abroad, subject to the existing guidelines on Overseas Investment in Joint Ventures or
Wholly Owned Subsidiaries (abroad).
(ii) The proceeds of FCEB may be invested by the issuing company in the promoter group
companies.
Promoter Group Companies –

Promoter Group Companies receiving investments out of the FCEB proceeds may utilise
the FCEB proceeds in accordance with end-uses prescribed under the External Commercial
Borrowings policy.
8. End-uses not permitted.
The promoter group companies receiving such investments will not be permitted to
utilise the proceeds for investments in the capital market or in real estate in India.
9. All-in-cost.
The rate of interest payable on FCEB and the issue expenses incurred in foreign currency
shall be within the all-in- cost ceiling as provided in the Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000, (Notification No. FEMA
3/2000-RB, dated May 3, 2000), and the directions issued in that behalf by the Reserve
Bank of India.
10. Pricing of FCEB.

At the time of issuance of FCEB, the exchange price of the offered listed equity shares
shall not be less than the higher of the following two:
(i) The average of the weekly high and low of the closing prices of the shares of the
offered company quoted on the stock exchange during the six months preceding the
relevant date; and
(ii) The average of the weekly high and low of the closing prices of the shares of the
offered company quoted on a stock exchange during the two week preceding the
relevant date.
Explanation to clauses (i) and (ii) : “Relevant date” means the date on which the Board of
directors of the issuing company passes the resolution authorizing the issue of FCEB.
11. Average Maturity.

Minimum maturity of FCEB shall be five years. The exchange option can be
exercised at any time before redemption. While exercising the exchange option, the holder of
the FCEB shall take delivery of the offered shares. Cash (Net) settlement of FCEB shall not be
permissible.
The proceeds of FCEB shall be retained and/or deployed overseas by the issuing/Group
Companies in accordance with the Foreign Exchange Management (Borrowing or Lending in
Foreign Exchange) Regulations, 2000, (FEMA 3/2000-RB, dated May 3, 2000), and the
directions issued in that behalf by the Reserve Bank from time to time.
12. Parking of FCEB proceeds abroad.

The proceeds of FCEB shall be retained and/or deployed overseas by the issuing/promoter
group companies in accordance with the policy for the ECB. It shall be the responsibility of the
issuing company to ensure that the proceeds of FCEB are used by the promoter group company
only for the permitted end-uses prescribed under the ECB policy. The issuing company should
also submit audit trail of the end-use of the proceeds by the issuing company/promoter group
companies to the Reserve Bank duly certified by the designated Authorised Dealer Bank.
13. Operational Procedure.

Issuance of FCEB shall require prior approval of the Reserve Bank of India as specified in
the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations,
2000, (Notification No. FEMA 3/2000-RB, dated May 3, 2000).
14. Reporting.
The provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000, (Notification No. FEMA 3/2000-RB, dated May 3, 2000), with
regard to reporting of external commercial borrowings shall apply to FCEB.
THE FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF
SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) REGULATION, 2000
Notification No. FEMA 20/2000-RB dated 3rd May, 2000 as amended by

Notification No. 32/2001-RB dated 26th December 2000, Notification No.
35/2001-RB dated 16th February 2001, Notification No. FEMA.41/2001-RB dated
2nd March 2001, Notification No. FEMA.46/2001-RB dated 29th November 2001,
Notification No. FEMA.76/2002-RB dated 12.11.2002, Notification No.
FEMA.85/2003-RB dated 17.1.2003, Notification No. FEMA.94/2003-RB dated
21st June 2003, Notification No. FEMA.100/2003-RB dated 3rd October 2003,
Notification No. FEMA.101/2003-RB dated 3rd October 2003, Notification No.
106/2003-RB dated 27-10-2003, Notification No. 108/2004-RB dated 1-1-2004,
Notification No. 111/2004-RB dated 6-3-2004, Notification FEMA No. 118/2004-
RB dated 16-6-2004, Notification No. FEMA.122/2004-RB dated 30-8-2004,
Notification No. FEMA. 125/2004-RB dated 27-11-2004, Notification No. FEMA.130/2005/RB
dated 17.3.2005, Notification No. FEMA.131/2005/RB dated 17.3.2005, Notification No.
FEMA.136/2005/RB dated 19.7.2005, Notification No. FEMA.137/2005/RB dated 22.7.2005,
Notification No. FEMA.138/2005/RB dated 22.7.2005, Notification No. FEMA.145/2006/RB dated
6.1.2006, Notification No. FEMA.153/2007-RB dated 31.05.2007, Notification No.
FEMA.141/2005-RB dated 30.11.2005, Notification No. FEMA.149/2006-RB dated 9.6.2005,
Notification No. FEMA 166/2007-RB dated 17.10.2007, Notification No. FEMA 167/2007-RB
dated 23.10.2007, Notification No. FEMA 170/2007-RB dated 13.11.2007, Notification No. FEMA.
175/2008-RB dated 22-2-2008, Notification No. FEMA.179/2008-RB dated 22.8.2008, Notification
No. FEMA.202/2009-RB dated 10th November 2009, Notification No. FEMA.205/2010-RB dated
7th April 2010. Notification No.FEMA.222 /2012-RB- dated 07.03.2012, Notification No.
FEMA.224/2012-RB dated 07.03.2012, Notification No. FEMA 229/2012-RB dated 23.04.2012,
Notification [No. FEMA 230/2012-RB dated 29.05.2012, Notification No. FEMA. 236/2012-RB
dated 25.09.2012, Notification No.FEMA.242 /2012-RB dated 19.10.2012, Notification No. FEMA.
244/2012-RB dated 22.10.2012, Notification No. FEMA 255/2013-RB dated 19-1-2013, Notification
No. FEMA. 261/2013-RB dated 27.02.2013, Notification No.FEMA.266/2013-RB dated 5.3.2013,
Notification No. FEMA 272/2013-RB dated 26-3-2013, Notification No. FEMA. 265/2013-RB
dated 05.03.2013, Notification No. FEMA. 287/2013-RB dated 07.06.2013, Notification No.
FEMA. 279/2013-RB dated 10.07.2013, Notification No. FEMA 284/2013-RB dated 27.8.2013,
Notification No. FEMA. 285/2013-RB dated 30.08.2013, Notification No.FEMA.289/2013-RB
dated 04.10.2013, Notification No.FEMA.290/2013-RB dated 04.10.2013, Notification
No.FEMA.292/2013-RB dated 04.10.2013
G.S.R. 406(E), dated 3-5-2000.— In exercise of the powers conferred by clause (b) of
sub-section (3) of Section 6 and Section 47 of the Foreign Exchange Management Act,
1999 (42 of 1999), the Reserve Bank makes the following regulations to prohibit, restrict or
regulate, transfer or issue security by a person resident outside India, namely:—

(1) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident outside India) Regulations, 2000.
(2) They shall come into effect on the 1st day of June, 2000.
2. Definitions
(ia) ‘Asset Reconstruction Company’ (ARC) means a company registered with the Reserve
Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (SARFAESI Act);
(ii) ‘Capital’ means equity shares, preference shares and convertible debentures;
(iia) ‘entity incorporated outside India’ means an entity incorporated/registered under the
relevant statutes, laws of the host country;
(iib) “preference shares” mean compulsorily and mandatorily convertible preference shares;
(iic) “debenture” means compulsorily and mandatorily convertible debenture;
(iid) 'Domestic Depository' shall have the meaning as assigned to it in the Companies (Issue
of Indian Depository Receipt) Rules, 2004;
(iie) "Eligible Company" means a Company eligible to issue Indian Depository
Receipts under Rule 4 of the Companies (Issue of Indian Depository Receipts) Rules,
2004;
(iii) ‘registered Foreign Institutional Investor (FII)’ means the foreign institutional investor
registered with SEBI;
(iiia) ‘Foreign Venture Capital Investor’ means an investor incorporated and established
outside India which proposes to make investment in Venture Capital Fund(s) or Venture
Capital Undertaking(s) in India and is registered with SEBI under SEBI (Foreign Venture
Capital Investors) Regulations, 2000;
(iiib) “Foreign Central Bank” means an institution/organization/body corporate established in a
country outside India and entrusted with the responsibility of carrying out central bank
functions under the law for the time being in force in that country.
(iv) ‘Government approval’ means approval from the Secretariat for Industrial Assistance
(SIA), Department of Industrial Policy and Promotion, Government of India or as the case
may be, Foreign Investment Promotion Board (FIPB) of the Government of India;
(v) ‘Indian company’ means a company incorporated in India;
(va) ‘Indian Depository Receipts’ shall have the meaning as assigned to it in the
Companies (Issue of Indian Depository Receipt) Rules, 2004;
(vb) ‘Indian Venture Capital Undertaking’ means a company incorporated in India whose
shares are not listed on a recognized stock exchange in India and which is not engaged in
an activity under the negative list specified by SEBI;
(vi) ‘Investment on repatriation basis’ means an investment the sale proceeds of which
are, net of taxes, eligible to be repatriated out of India, and the expression ‘Investment on
non-repatriation basis’, shall be construed accordingly;
(vii) ‘Joint Venture’ (JV) and Wholly Owned Subsidiary shall have the meanings
respectively assigned to them in the Foreign Exchange Management (Transfer and Issue of
Foreign Security) Regulations, 2000;
(viia) “Non-Resident India (NRI) shall have the meaning assigned to him under the Foreign
Exchange Management (Deposit) Regulations, 2000;
(viii) [***] ‘Overseas Corporate Body (OCB)’, shall have the meanings respectively
assigned to them in the Foreign Exchange Management (Deposit) Regulations, 2000;
(viiia) 'Qualified Foreign Investor' (QFI) means
(a) during the period from 9th day of August, 2011 to 15th day of July, 2012, a
person who satisfied the following criteria at the relevant time,
(i) resident of a country, that is compliant with the Financial Action Task
Force (FATF) standards and is a signatory to the IOSCO's Multilateral
Memorandum of Understanding (MMoU); and
(ii) satisfied the KYC requirements stipulated by SEBI:
Provided that such a person is not registered with SEBI as a Foreign
Institutional Investor (FII) or Foreign Venture Capital Investor (FVCI).
(b) With effect from 16th day of July, 2012, a person who satisfies the following
criteria at the relevant time:
(i) Resident in a country that is a member of FATF or a member of a
group which is a member of FATF; and
(ii) Resident in a country that is a signatory to IOSCO's MMoU (and
referred to as Appendix A Signatories therein) or a signatory of a bilateral
MoU with SEBI:
Provided that the person is not resident in a country listed in the public statements issued by
FATF from time to time on jurisdictions having 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 address
the deficiencies:
Provided that such person is not resident in India:
Provided further that such person is not registered with SEBI as a FII or Sub-Account of an
FII or FVCI.
Explanation - For the purposes of this clause :
1. 'bilateral MoU with SEBI' shall mean a bilateral MoU between SEBI and the
overseas regulator that, inter alia, provides for information sharing
arrangements.
2. Member of FATF shall not mean an associate member of FATF.
(ix) ‘SEBI’ means the Securities and Exchange Board of India established under the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(x) ‘Secretariat for Industrial Assistance’ means Secretariat for Industrial Assistance in
the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry,
Government of India;
(xi) ‘Transferable Development Rights (TDR)’ shall have the same meaning as assigned
to it in the Regulations made under sub-section (2) of section 6 of the Act;
(xia) ‘Venture Capital Fund’ means a fund established in the form of a trust, a company
including a body corporate and registered under the Securities and Exchange Board of
India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital
raised in a manner specified under the said Regulations and which invests in Venture
Capital Undertakings in accordance with the said Regulations;
(xii) The words and expressions used but not defined in these Regulations shall have the
same meanings respectively assigned to them in the Act.
3. Restriction on issue or transfer of Security by a person resident outside India

Save as otherwise provided in the Act, or rules or regulations made thereunder, no person
resident outside India shall issue or transfer any security:
Provided that a security issued prior to, and held on, the date of commencement of these
Regulations, shall be deemed to have been issued under these Regulations and shall
accordingly be governed by these Regulations:
Provided further that the Reserve Bank may, on an application made to it and for
sufficient reasons, permit a person resident outside India to issue or transfer any security, subject
to such conditions as may be considered necessary.
4. Restriction on an Indian entity to issue security to a person resident outside India

or to record a transfer of security from or to such a person in its books
Save as otherwise provided in the Act or Rules or Regulations made thereunder, an Indian
entity shall not issue any security to a person resident outside India or shall not record in its
books any transfer of security from or to such person:–
Provided that the Reserve Bank may, on an application made to it and for sufficient
reasons, permit an entity to issue any security to a person resident outside India or to record in
its books transfer of security from or to such person, subject to such conditions as may be
considered necessary.
5. Permission for purchase of shares by certain persons resident outside India

(1) (i) A person resident outside India (other than a citizen of Bangladesh or Pakistan
[***] or) or an entity incorporated outside India,] (other than an entity in Bangladesh or
Pakistan), may purchase shares or convertible debentures of an Indian company under Foreign
Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.
(ii) Notwithstanding anything contained in sub-regulation (i) above, a person who is a
citizen of Bangladesh or an entity incorporated in Bangladesh may, with the prior approval of the
Foreign Investment Promotion Board of the Government of India, purchase shares and convertible
debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms
and conditions specified in Schedule 1.
(iii) Further, notwithstanding anything contained in clause (i) of the sub-regulation (1)
above, a person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with
the prior approval of the Foreign Investment Promotion Board of the Government of India,
purchase shares and convertible debentures of an Indian company under Foreign Direct
Investment Scheme, subject to the terms and conditions specified in Schedule 1.
Provided further that notwithstanding anything contained in Schedule 1, the Indian
company, receiving such foreign direct investment, is not engaged or shall not engage in sectors /
activities pertaining to defence, space and atomic energy and sectors/ activities prohibited for
foreign investment.
(2) A registered Foreign Institutional Investor (FII) may purchase shares or convertible
debentures of an Indian company under the Portfolio Investment Scheme, subject to the terms
and conditions specified in Schedule 2 6@ and the limits and margin requirements prescribed
by RBI/SEBI as well as the stipulations regarding collateral securities as specified by the
Reserve Bank from time to time:
[* * *]
Provided further that Foreign Institutional Investors shall not invest in the paid up
equity capital of Asset Reconstruction Companies.
(3) (i) A Non-resident Indian (NRI) may purchase shares or convertible debentures of an
Indian Company on a
Stock Exchange under Portfolio Investment Scheme, subject to the terms and conditions
specified in Schedule 3 [***].
(ii) A non-resident Indian [* * *] may purchase shares or convertible debentures of an
Indian company on non-repatriation basis other than under Portfolio Investment Scheme
subject to the terms and conditions specified in Schedule 4 [***.]
(4) A non-resident Indian or a registered FII or a Foreign Central Ban 'or a QFI or any
other person resident outside India included in Schedule 5' shall be inserted and shall be
deemed to have been inserted with effect from the
9th day of August 2011. may purchase securities, other than shares or convertible debentures
of an Indian company, subject to the terms and conditions specified in Schedule 5.]
(5) A Foreign Venture Capital Investor registered with SEBI may make investment in a
Venture Capital Fund or an Indian Venture Capital Undertaking, in the manner and subject to the
terms and conditions specified in schedule 6:(* * *)
(6) A registered Foreign Institutional Investor (FII) having valid approval under the Foreign
Exchange Regulation Act, 1973 or under the Foreign Exchange Management Act, 1999 may
trade in all exchange traded derivative contracts approved by RBI/SEBI subject to the limits and
margin requirement prescribed by RBI/SEBI as well as the stipulations regarding collateral
securities as directed by the Reserve Bank from time to time.
(7) A non-Resident Indian (NRI) may invest in exchange traded derivative contracts
approved by SEBI from time to time out of INR funds held in India on non-repatriable basis
subject to the limits prescribed by SEBI. Such investments will not be eligible for repatriation
benefits.
(7A) A QFI may purchase equity shares of an Indian company subject to the terms and
conditions specified in Schedule 8." This is effective from the 13th day of January, 2012.
Explanation : For the purposes of sub-regulations (1) to (7) above, no class of investor
referred to in those sub- regulations shall make investment, directly or indirectly, in any
security, issued by an Indian company which is engaged or proposes to engage in any of the
activities in which foreign investment is prohibited under sub-regulation (b) of Regulation 4
of the Foreign Exchange Management (Permissible Capital Account Transactions)
Regulations, 2000, as amended from time to time.
(8) A registered Foreign Institutional Investor (FII) including SEBI approved sub-accounts of
the FIIs, registered with SEBI or a Non-Resident Indian (NRI) may purchase, hold or sell
Indian Depository Receipts (IDRs) of eligible companies resident outside India and issued in
the Indian capital market, subject to the terms and conditions specified in Para 2 of Schedule 7.
6. Acquisition of right shares

(1) A person resident outside India may purchase equity or preference shares or convertible
debentures offered on right basis by an Indian company which satisfies the conditions
specified in sub-regulation (2).
(2) An Indian company which satisfies the following conditions, may offer to a person
resident outside India, equity or preference shares or convertible debentures on right basis,
namely:—
(i) The offer on right basis does not result in increase in the percentage of foreign
equity already approved, or permissible under the Foreign Direct Investment Scheme in
terms of these Regulations;
(ii) The existing non-resident shareholders may apply for issue of additional shares, and
the Investee Company may allot the same subject to the condition that the overall issue
of shares to non-residents in the total paid- up capital does not exceed the sectoral cap.
(iii) The existing shares or debentures against which shares or debentures are issued by
the company on right basis were acquired and are held by the person resident outside
India in accordance with these Regulations;
(iv) The offer on right basis to the persons resident outside India shall be:
(a) in the case of shares of a company listed on a recognized stock exchange in
India, at a price as determined by the company;
(b) in the case of shares of a company not listed on a recognized stock exchange in
India, at a price which is not less than the price at which the offer on right basis
is made to resident shareholders.
(3) The right shares or debentures purchased by the person resident outside India shall
be subject to same conditions including restrictions in regard to repatriability as are applicable
to the original shares against which right shares or debentures are issued:–
Provided that the amount of consideration for purchase of right shares or debentures is
paid by way of inward remittance in foreign exchange through normal banking channels or by
debit to NRE/FCNR account, when the shares or debentues are issued on repatriation basis:
Provided further that in respect of the shares or debentures issued on non-repatriation basis,
the amount of consideration may also be paid by debit to NRO/NRSR/NRNR account.
6A. Acquisition of Bonus Shares

An Indian company may issue bonus shares to its non-resident shareholder, subject to the
following conditions.
(a) the shares against which bonus shares are issued by the company (hereinafter
referred to as “the original shares”) were acquired or held by the non-resident
shareholder in accordance with the Rules/Regulations applicable to such acquisition;
(b) the bonus shares acquired by the non-resident shareholder shall be subject to the same
conditions including restrictions in regard to repatriability as are applicable to the
original shares.
6B. Report to RBI

A company issuing rights shares or bonus shares in terms of these Regulations shall report to
the Reserve Bank in form FC-GPR as stipulated in Paragraph 9(1)(B) of Schedule 1 to these
Regulations.
7. Issue and acquisition of shares after merger or demerger or amalgamation of Indian

companies
(1) Where a Scheme of merger or amalgamation of two or more Indian companies or a
reconstruction by way of demerger or otherwise of an Indian company, has been approved by a
Court in India, the transferee company or, as the case may be, the new company may issue
shares to the shareholders of the transferor company resident outside India, subject to the
following conditions, namely:
(a) the percentage of shareholding of persons resident outside India in the transferee or
new company does not exceed the percentage specified in the approval granted by the
Central Government or the Reserve Bank, or specified in these Regulations:
Provided that where the percentage is likely to exceed the percentage specified in
the approval or the Regulations, the transferor company or the transferee or new
company may, after obtaining an approval from the Central Government, apply to the
Reserve Bank for its approval under these Regulations.
(b) the transferor company or the transferee or new company shall not engage in
agriculture, plantation or real estate business or trading in TDRs; and
(c) the transferee or the new company files a report within 30 days with the Reserve Bank
giving full details of the shares held by persons resident outside India by the transferor
and the transferee or the new company, before and after the
merger/amalgamation/reconstruction, and also furnishes a confirmation that all the terms
and conditions stipulated in the scheme approved by the Court have been complied
with.
8. Issue of shares under Employees Stock Options Scheme to persons resident outside
India
(1) An Indian company may issue shares under the Employees’ Stock Options Scheme, by
whatever name called, to its employees or employees of its joint venture or wholly owned
subsidiary abroad who are resident outside India, directly or through a Trust:—
Provided that —
(a) the scheme has been drawn in terms of regulations issued under the Securities
Exchange Board of India Act, 1992; and
(b) face value of the shares to be allotted under the scheme to the non-resident
employees does not exceed 5% of the paid-up capital of the issuing company.
(2) The Trust and the issuing company shall ensure that value of shares held by persons
resident outside India under the scheme does not exceed the limit specified in clause (b) of
sub-regulation (1).
(3) The issuing company shall furnish to the Reserve Bank, within thirty days from the
date of issue of shares under the scheme, a report giving the following
particulars/documents,
(i) names of persons to whom shares are issued under the scheme and number of shares
issued to each of them;
(ii) a certificate from the Company Secretary of the issuing company that the value of
shares issued under the scheme does not exceed 5% of the paid up capital of the
issuing company and that the shares are issued in compliance with the regulations
issued by the SEBI in this behalf.
9. Transfer of shares and convertible debentures of an Indian company by a person

(1) Subject to the provisions of sub-regulation (2), a person resident outside India holding the
shares or debentures of an Indian company in accordance with these Regulations, may transfer
the shares or debentures so held by him, in compliance with the conditions specified in the
relevant Schedule of these regulations.
(2) (i) A person resident outside India, not being a non-resident Indian or an overseas
corporate body, may transfer by way of sale or gift the shares or convertible debentures held by
him or it to any person resident outside India;
(ii) A non-resident Indian [* * *] may transfer by way of sale or gift, the shares or
convertible debentures held by him or it to another non-resident Indian [* * *] only;
[Deleted]
(iii) A person resident outside India holding the shares or convertible debentures of
an Indian company in accordance with these Regulations,
(a) may transfer the same to a person resident in India by way of gift ;
(b) may sell the same on a recognized Stock Exchange in India through a register
broker.
10. Permission of Reserve Bank in certain cases for transfer of security

(A) Transfer by way of gift or sale by a person resident in India
A person resident in India who proposes to transfer to a person resident outside India
not being erstwhile OCBs :—
(a) (i) Any security by way of gift, shall make an application to the Reserve Bank for
its approval
(ii) The Reserve Bank may grant such approval on being satisfied of the following
conditions:
(a) The donee is eligible to hold such a security under Schedules 1, 4, and 5 of
these Regulations. (b) The gift does not exceed 5% of the paid-up capital of
the Indian company/each series of debentures/each mutual fund Scheme.
(c) The applicable sectoral cap/foreign direct investment limit in the
Indian company is not breached.
(d) The donor and the donee are relatives as defined in Section 6 of the
Companies Act, 1956.
(e) The value of security to be transferred by the donor together with any
security transferred to any person residing outside India as gift in the
calendar year does not exceed the rupee equivalent of USD 50,000.
(f) Such other conditions as considered necessary in public interest by
the Reserve Bank.
(iii) The application for approval referred to in sub-clause (i) shall contain the
following information/ documents;
(a) Name and address of the donor and the donee.
(b) Relationship between the donor and the donee.
(c) Reasons for making the gift.
(d) In case of Government dated securities and treasury bills and bonds, a
certificate issued by a Chartered Accountant on the market value of such
security.
(e) In case of units of domestic mutual funds and units of Money Market
Mutual Funds, a certificate from the issuer on the Net Asset Value of such
security.
(f) In case of shares and debentures, a certificate from a Chartered
Accountant on the value of such securities according to the guidelines
issued by the Securities & Exchange Board of India or the erstwhile CCI
with regard to listed companies and unlisted companies respectively.
(g) Certificate from the concerned Indian company certifying that the proposed
transfer of shares/ convertible debentures, by way of gift, from resident to
the non-resident shall not breach the applicable sectoral cap/FDI limit in
the company and that the proposed number of shares/ convertible
debentures to be held by the non-resident transferee shall not exceed 5%
of the paid up capital of the company.
(b) with effect from 4.11.2011, any shares or convertible debentures of an Indian
company under the Foreign Direct Investment Scheme, whose activities fall under
Annexure B to Schedule 1, shall, subject to sectoral limits specified therein,
transfer such shares or convertible debentures without prior approval of the Reserve
Bank if the same is by way of sale, subject to the following:
(i) that the parties concerned adhere to the pricing guidelines,
documentation and reporting requirements for such transfers, stipulated by
the Reserve Bank from time to time
(ii) where the transfer of shares or convertible debentures requires the
prior approval of the Foreign Investment Promotion Board (FIPB) as per the
extant Foreign Direct Investment (FDI) policy:
(a) the requisite approval of the FIPB has been obtained; and
(b) the transfer of shares or convertible debentures adheres with the
pricing guidelines and documentation, reporting requirements as stipulated
by the Reserve Bank from time to time.
(iii) where SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 are attracted, the pricing guidelines and documentation, reporting
requirements as stipulated by SEBI are complied with:
Provided howsoever that in case the SEBI guidelines as aforesaid are not
complied with, for the purposes of this Regulation, compliance with pricing
guidelines, reporting and documentation requirements as stipulated by RBI
shall be sufficient.
(iv) where the pricing guidelines under the Foreign Exchange Management
Act, (FEMA) 1999 are not complied with —
(a) The resultant FDI is in compliance with the requirements of
Schedule 1, other than pricing guidelines; and
(b) The pricing for the transaction is compliant with the applicable SEBI
Regulations/guidelines; and
(c) Chartered Accountants Certificate to the effect that compliance with
the applicable SEBI regulations/ guidelines as indicated above is attached
to the form FC-TRS to be filed with the AD bank.
(v) where the investee company is in the financial services sector
(a) No Objection Certificates (NOCs) are obtained from the respective
financial sector regulators/regulators of the investee company as well as
transferor and transferee entities and such NOCs are filed along with the
form FC-TRS with the AD bank; and
(b) The requirements of Schedule 1 are complied with.
Explanation : For the purpose of this Regulation, "financial services", shall
mean service rendered by banking and non-banking companies regulated
by the Reserve Bank, insurance companies regulated by Insurance
Regulatory and Development Authority (IRDA), pension funds regulated
by the Pension Fund Regulatory and Development Authority, other
companies regulated by any other financial regulator and such other
services as may be directed by Reserve Bank from time to time,
(c) any shares or convertible debentures by way of sale, shall make an
application to the Reserve Bank for its approval if
(i)the transfer is to take place at a price which is not in conformity with
the pricing guidelines stipulated by either the Reserve Bank or the SEBI,
or
(ii) it is not covered by clause (b) above."
(d) any shares or convertible debentures by way of sale, shall make
an application to the Reserve Bank for its approval if the non-resident
acquirer proposes deferment of payment of the amount of consideration.
(B) Transfer by way of sale not covered by Regulation 9 by a person resident outside India
[* * *]
(2) A person resident outside India, may transfer share or convertible debenture of
an Indian company, without the prior permission of the Reserve Bank, by way of
sale, to a person resident in India subject to the adherence to pricing guidelines,
documentation and reporting requirements for such transfers as may be specified by
(3) Where pricing guidelines under the Foreign Exchange Management Act (FEMA), 1999
are not complied with, a person resident outside India, may transfer shares or convertible
debentures of an Indian Company, by way of sale, to a person resident in India, without
the prior permission of the Reserve Bank, subject to the following:-
(a) the original and resultant investment are in conformity with the requirements of
Schedule 1, other than pricing Guidelines; and
(b) the pricing for the transaction is complaint with the applicable SEBI
regulations/guidelines; and
(c) Chartered Accountants Certificate to the effect that compliance with the applicable
SEBI regulations/guidelines as indicated above is attached to the Form FC-TRS to be filed
with the AD bank.
11. Remittance of sale proceeds

(1) No remittance of sale proceeds of an Indian security held by a person resident outside
India shall be made otherwise than in accordance with these Regulations and the conditions
specified in the relevant Schedule.
(2) An authorised dealer may allow the remittance of sale proceeds of a security (net of
applicable taxes) to the seller of shares resident outside India:
Provided —
(a) the security was held by the seller on repatriation basis;
(b) either the security has been sold on a recognised stock exchange in India through a stock
broker at the ruling market price as determined on the floor of the exchange, or the
Reserve Bank’s approval has been obtained in other cases for sale of the security and
remittance of the sale proceeds thereof; and
(c) a no objection/tax clearance certificate from the Income Tax authority has been
produced.
12. Pledge of shares of company incorporated in India

(i) Any person being a promoter of a company registered in India (borrowing company),
which has raised external commercial borrowing, may pledge the shares of the borrowing
company or that of its associate resident companies for the purpose of securing the external
commercial borrowing (ECB) raised by the borrowing company:
Provided that no person shall pledge any such share unless no-objection has been obtained
from a bank which is an authorised dealer.
(ii) A bank which is an authorised dealer may grant ‘no objection’ for pledge of shares
under clause (i) after satisfying itself of the following:
(a) the underlying ECB is strictly in compliance with the extant ECB guidelines,
(b) the loan agreement has been signed by both the lender and the borrower,
(c) there exists a security clause in the Loan Agreement requiring the borrower to
create charge on financial securities, and
(d) the borrower has obtained Loan Registration Number (LRN) from the Reserve Bank
(Amendment) Rules, 2009:
Provided that the ‘no objection’ may be granted by a bank which is an authorised dealer
subject to the following conditions, namely:—
(a) the period of such pledge shall be co-terminus with the maturity of the underlying
external commercial borrowing;
(b) in case of invocation of pledge, transfer shall be in accordance with the extant FDI
policy and directions issued by the Reserve Bank;
(c) the Statutory Auditor has certified that the borrowing company will utilise/has utilised
the proceeds of the external commercial borrowing for the permitted end-use/s only.
(iii) with effect from the 2nd day of May, 2011, Any person being a non-resident investor of
a company registered in India (resident investee company) may pledge the shares or convertible
debentures of that company to a bank in India to secure the credit facilities being extended to
that company for bona fide purposes, subject to the AD bank satisfying itself of the
compliance of the conditions stipulated by the Reserve Bank, from time to time, in this regard
(iv) Any person being a non-resident investor of a company registered in India (resident
investee company) may pledge the shares or convertible debentures of that company to an
overseas bank to secure the credit facilities being extended to the non-resident investor or
non-resident promoter of the resident investee company or its overseas group company subject
to the AD bank satisfying itself of the compliance of the conditions stipulated by the Reserve
Bank from time to time in this regard.
13. Issue of Indian Depository Receipts
An eligible company resident outside India may issue IDRs through a Domestic Depository,
to persons resident in India and outside India, subject to the terms and conditions specified
in Para 1 of Schedule 7.
Schedule 1
[See Regulation (5)(1)]
Foreign Direct Investment Scheme
1. Purchase by a person resident outside India of equity/preference/convertible

preference shares and convertible debentures issued by an Indian company
(1) A person resident outside India referred to in clauses (i), (ii) and (iii) of sub-
regulation (1) of Regulation 5, may purchase shares or convertible debentures issued by an
Indian company up to the extent and subject to the terms and conditions set out in this
Schedule.]
(2) Deleted
2. Automatic Route of Reserve Bank for Issue of shares by an Indian company

(1) An Indian company, not engaged in any activity/sector mentioned in Annex A to this
schedule, may issue shares or convertible debentures to a person resident outside India, subject
to the limits prescribed in Annex B to this schedule, in accordance with the Entry Routes
specified therein and the provisions of Foreign Direct Investment Policy, as notified by the
Ministry of Commerce and Industry, Government of India, from time to time:
1[Provided that the shares or convertible debentures are not being issued by the Indian
company with a view to acquire existing shares of any Indian company. However, downstream
investment by an Indian company receiving Foreign Direct Investment would be permitted to the
extent specified in Regulation14.”
Explanation.— A company which proposes to embark on expansion programme to
undertake activities or manufacture items included in Annex B to this Schedule may issue
shares or debentures out of fresh capital proposed to be issued by it for the purpose of
financing expansion programme, up to the extent indicated in Annex B, subject to compliance
with the provisions of this paragraph.
[***]
(2) A company which is reckoned as Micro and Small Enterprise (MSE) (earlier Small
Scale Industrial Unit) in terms of the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006, including an Export Oriented Unit or a Unit in a Free Trade Zone or in
an Export Processing Zone or in a Software Technology Park or in an Electronic Hardware
Technology Park, and which is not engaged in any activity/sector mentioned in Annex A to this
Schedule may issue shares or convertible debentures to a person referred to in paragraph 1,
subject to the limits prescribed in Annex B to this Schedule, in accordance with the Entry Routes
specified therein and the provision of the Foreign Direct Investment Policy, as notified by the
Ministry of Commerce & Industry, Government of India, from time to time.
(3) Any Industrial undertaking, with or without Foreign Direct Investment, which is not
an MSE, having an industrial license under the provisions of the Industries (Development &
Regulation) Act, 1951 for manufacturing items reserved for manufacture in the MSE sector may
issue shares to persons resident outside India referred to in paragraph 1, to the extent of 24 per
cent of its paid-up capital. Issue of shares in excess of 24 per cent of paid-up capital shall require
prior approval of the Foreign Investment Promotion Board of the Government of India and
shall be in compliance with the terms and conditions of such approval.
(4) An Indian company, otherwise eligible to issue shares under this Schedule may issue
equity/preference shares, subject to pricing guidelines as given in paragraph 5 of this Schedule,
to a person resident outside India,
(i) being a provider of technology/technical know-how, against Royalty/Lump sum fees
due for payment;
(ii) against External Commercial Borrowing (ECB) (other than import dues deemed as
ECB or Trade Credit as per RBI Guidelines):
Provided that the foreign equity in the company after the conversion of Royalty/Lump sum
fee/ECB into equity is within the sectoral cap notified, if any.
(iii) against import of capital goods by units in SEZs, subject to the valuation by a
Committee consisting of Development Commissioner and the appropriate Customs
officials.
Provided that the foreign equity in the company after the conversion of royalty/lump sum
fee/ECB into equity is within the sectoral cap notified, if any.
3. An Indian company intending to issue shares to a person resident outside India in accordance with
these Regulations directly against foreign inward remittance (or by debit to NRE account/FCNR
account) or against consideration other than inward remittance i.e., against royalty/lump sum
fee due for payment/import of capital goods by units in SEZs/ ECBs (excluding those deemed
as ECBs) shall obtain prior approval of the Foreign Investment-Promotion Board (FIPB) of
Government of India, if the Indian company ;
(a) is engaged or proposes to engage, in any activity specified in Annex A to this
Schedule; or
(b) proposes to issue shares to a person resident outside India beyond sectoral limits or the
activity of the Indian company falls under the FIPB route, as stipulated in Annex B to
this Schedule; or
(c) proposes to issue shares to a person resident outside India against shares swap5 i.e. in
lieu of consideration to be paid for shares acquired in the overseas company; or
(d) proposes to issue shares to a person resident outside India against import of capital
goods/machinery/equipment (excluding* second-hand machinery) subject to compliance
with the conditions specified by the Government of India and the Reserve Bank from
time to time; or
(e) proposes to issue shares to a person resident outside India against preoperative/pre-
incorporation expenses (including payments of rent etc.), subject to compliance with
the conditions specified by the Government of India and the Reserve Bank from time
to time.
4. Issue of Shares by International offering through ADR and/or GDR

(1) An Indian company may issue its Rupee denominated shares to a person resident
outside India being a depository for the purpose of issuing Global Depository Receipts
(GDRs) and/or American Depository Receipts (ADRs):
Provided the Indian company issuing such shares —
(a) has an approval from the Ministry of Finance, Government of India to issue
such ADRs and/or GDRs or is eligible to issue ADRs/GDRs in terms of the relevant
scheme in force or notification issued by the Ministry of Finance, and
(b) is not otherwise ineligible to issue shares to persons resident outside India in
terms of these Regulations, and
(c) the ADRs/GDRs are issued in accordance with the Scheme for issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt
Mechanism) Scheme, 1993 and guidelines issued by the Central Government thereunder
from time to time.
(2) The Indian company issuing shares under sub-paragraph (1), shall furnish to the Reserve
Bank, full details of such issue in the 1[Form DR], within 30 days from the date of closing
of the issue.
(3) The Indian company issuing shares against ADRs/GDRs shall furnish a quarterly
return in the Form DR- Quarterly to Reserve Bank within fifteen days of the close of the
calendar quarter.
(4) Pending repatriation or utilisation of foreign exchange resources raised in terms of
clause (1) the Indian company may invest the foreign currency funds in —
(a) deposits with or Certificate of Deposit or other instruments offered by banks
who have been rated by Standard and Poor, Fitch, IBCA or Moody’s etc.; and such
rating not being less than the rating stipulated by Reserve Bank from time to time for
the purpose,]
(b) deposits with branch outside India of an authorised dealer in India, and
(c) treasury bills and other monetary instruments with a maturity or unexpired
maturity of the instrument of one year or less.
4A. Purchase of shares by a registered broker

A registered broker in India may purchase shares of an Indian Company on behalf of a
person resident outside India, for the purpose of converting the shares so purchased into
ADRs/GDRs :
Provided that —
(i) the shares are purchased on a recognized stock exchange;
(ii) the Indian company has issued ADRs/GDRs;
(iii) the shares are purchased with the permission of Custodian of the ADRs/GDRs of the
concerned Indian company and are deposited with the Custodian;
(iv) the number of shares so purchased shall not exceed ADRs/GDRs converted into
underlying shares and shall be subject to sectoral caps as applicable;
(v) the non-resident investor, broker, Custodian and the overseas depository comply with
the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines
issued thereunder by the Central Government from time to time.
4B. Sponsoring an issue of ADRs/GDRs by Indian company

An Indian company may sponsor an issue of ADRs/GDRs with an overseas depository
against shares held by its shareholders at a price to be determined under the provisions of the
Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of
India and the reporting requirements as directed by Reserve Bank, from time to time.]
5. Issue price
Price of shares issued to persons resident outside India under this Schedule, shall not be less
than :—
(a) the price worked out in accordance with the SEBI guidelines, as applicable, where the
shares of the company is listed on any recognized stock exchange in India;
(b) the fair valuation of shares done by a SEBI registered Category-I Merchant Banker or a
Chartered Accountant as per the discounted free cash flow method, where the shares of
the company is not listed on any recognized stock exchange in India; and
(c) the price as applicable to transfer of shares from resident to non-resident as per the
pricing guidelines laid down by the Reserve Bank from time to time, where the issue
of shares is on preferential allotment.]
5A [***]
5B. Notwithstanding anything contained in paragraph 5 above, where shares in an Indian
company are issued to a person resident outside India in compliance with the provisions of the
Companies Act, 1956, by way of subscription to Memorandum of Association, such
investments may be made at face value subject to eligibility to invest under this Schedule.
(Effective 26.09.2012).
6. Issue price of ADRs/GDRs

The pricing of ADRs/GDRs to be issued to a person resident outside India shall be
determined under the provisions of the Scheme for Issue of Foreign Currency Convertible
Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and
guidelines issued by the Government of India from time to time.
7. Rate of Dividend on Preference Shares

The rate of dividend on preference shares or convertible preference shares issued under
these Regulations shall not exceed 300 basis points over the Prime Lending Rate of State Bank
of India prevailing as on the date of the Board meeting of the company in which issue of such
shares is recommended.
8. Mode of payment for shares issued to persons resident outside India

A company in India issuing shares or convertible debentures under this Schedule to a person
resident outside India shall receive the amount of consideration for such shares –
(i) by inward remittance through normal banking channels, or
(ii) by debit to NRE/FCNR account of the person concerned maintained with an authorised
dealer/authorised bank.
(iii) by debit, to a non-interest bearing Escrow account (in Indian Rupees) maintained in
India with an AD bank in accordance with Foreign Exchange Management (Deposit)
Regulations, 2000.
Explanation – Conversion of Royalty/Limp Sum fee due for payment or conversion of ECB,
as given elsewhere in the Schedule, the import payables of capital goods by units in Special
Economic Zones effective 1.4.2003, shall be treated as consideration for issue of shares
within the meaning of this paragraph.
Provided that if the shares or convertible debentures are not issued within 180 days from the
date of receipt of the inward remittance or date of debit to NRE/FCNR(B)/Escrow account-
effective 2.5.2011, the amount of consideration so received shall be refunded to the person
concerned by outward remittance through normal banking channels or by credit to his
NRE/FCNR(B) account, as the case may be.
Provided further that the Reserve Bank may, on an application made to it and for
sufficient reasons permit an Indian company to refund the amount of consideration received
towards issue of security, if such amount is outstanding beyond a period of 180 days from
the date of receipt.
9. Reporting of issuance of shares of Indian company

(1) Effective 30th May 2008, an Indian company issuing shares or convertible debentures in
accordance with these Regulations shall submit through AD bank to the Regional Office
concerned of the Reserve Bank under whose jurisdiction the Registered office of the
company operates,
(A) not later than 30 days from the date of receipt of the amount of consideration
received by Indian company for issue of shares and convertible debentures, a report
in form specified in Annex C to this Schedule along with a copy/ies of Foreign
Inward Remittance Certificate/s (FIRC), Know Your Customer (KYC) report on
the non-resident investor and details of the Government approval, if any.
(B) not later than 30 days from the date of issue of shares, 2[a report in form FC-GPR as
specified by Reserve Bank from time to time] together with,
(i) a certificate from the Company Secretary of the company accenting investment
from persons resident
outside India certifying that
(a) all the requirements of the Companies Act, 1956 have been complied with;
(b) terms and conditions of the Government approval, if any, have been
complied with;
(c) the company is eligible to issue shares under these Regulators; and
(d) the company has all original certificates issued by authorised dealers in
India evidencing receipt of amount of consideration in accordance with
paragraph 8 of this Schedule;
(ii) a certificate from SEBI registered Merchant Banker or Chartered Accountant
indicating the manner of arriving at the price of the shares issued to the persons
resident outside India:
Provided that, in addition to above, the company shall report the conversion of
ECB into equity, in ECB-2 Return of the respective month in case of full
conversion of ECB. In case of partial conversion of ECB, the converted portion
shall be reported in form FG-GPR to the Regional Office concerned of Reserve
Bank and non-converted portion in Form ECB-2.
(2) All Indian companies which have received Foreign Direct Investment in the previous
year(s) including the current year shall submit to the Reserve Bank of India, on or
before the 15th day of July of each year, a report titled "Annual Return on Foreign
Liabilities and Assets" in the form specified in Annex E to this Schedule.
(3) Reserve Bank may, by notification, modify from time to time, the format of report titled
"Annual Return on Foreign Liabilities and Assets" specified in Annex E to this
Schedule.
10. Reporting of transfer of shares of Indian company (effective 22.04.2009)

(i) In case of transfer of shares or convertible debentures of an Indian company by way
of sale from a person resident in India to a person resident outside India or vice versa,
the transferor/transferee, resident in India, shall submit to the AD bank a report in the
form FC-TRS as specified by Reserve Bank from time to time, within 60 days from the
date of receipt or payment of the amount of consideration. The onus of submission of the
form FC-TRS within the specified time shall be on the transferor/transferee, resident in
India.
(ii) Reserve Bank may, by notification, modify from time to time the Form FC-TRS
specified in Annex F to this Schedule.
(iii) Deleted
(iv) The sale consideration in respect of shares or convertible debentures remitted into
India through normal banking channels, shall be subjected to a KYC check by the
remittance receiving AD bank at the time of receipt of funds, in case, the remittance
receiving AD bank is different from the AD bank handling the transfer transaction, the
KYC check shall be carried out by the remittance receiving bank and the KYC report
shall be submitted by the customer to the AD bank for carrying out the transaction
along with the form FC-TRS.
(v) In case prior approval of the Reserve Bank is granted for transfer of shares or
convertible debentures, from a resident to the non-resident on deferred payment of
consideration, the same shall be reported in form FC- TRS, duly certified by the AD
bank, within 60 days from the date of receipt of the full and final amount of
consideration.]
11. Permission for retaining share subscription money received from persons resident
outside India in a foreign currency account
Reserve Bank may, on an application made to it and on being satisfied that it is
necessary so to do, permit an Indian company issuing shares to persons resident outside India
under this Schedule, to retain the subscription amount in a foreign currency account, subject to
such terms and conditions as it may stipulate.
ANNEXURE A
(See Paragraph 2 of Schedule I)
Automatic Route of Reserve Bank for issue of shares by an Indian Company
Sectors Prohibited for FDI

FDI is prohibited in:
(a) Lottery Business including Government/private lottery, o nline lotteries, etc.
(b) Gambling and Betting including casinos etc.
(c) Chit funds
(d) Nidhi company
(e) Trading in Transferable Development Rights (TDRs)
(f) Real Estate Business or Construction of Farm Houses
(g) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes
(h) Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway
Transport (other than Mass Rapid Transport Systems).
Note: Foreign technology collaboration in any form including licensing for franchise, trademark,
brand name, management contract is also prohibited for Lottery Business and Gambling and
Betting activities."
ANNEXURE B
SECTOR SPECIFIC POLICY FOR FOREIGN INVESTMENT
In the following sectors/activities, FDI up to the limit indicated against each sector/activity is
allowed, subject to applicable laws/regulations; security and other conditionalities. In
sectors/activities not listed below, FDI is permitted upto 100% on the automatic route, subject to
applicable laws/regulations; security and other conditionalities.
Wherever there is a requirement of minimum capitalization, it shall include share premium
received along with the face value of the share, only when it is received by the company upon
issue of the shares to the non-resident investor. Amount paid by the transferee during post-issue
transfer of shares beyond the issue price of the share, cannot be taken into account while
calculating minimum capitalization requirement.
Sr. No. Sector/Activity % of Entry Route

As per Cap/
FDI Equity
Circular
AGRICULTURE
1 a) Floriculture, Horticulture, Apiculture and 100% Automatic
Cultivation o f Ve ge table s an d M u s h r o o
ms u n de r c o n tr o l l e d conditions;
(b) Development and production of Seeds and
planting material;
(c) Animal Husbandry (including breeding of
dogs), Pisciculture, Aquaculture, under
controlled conditions; and
(d) Services related to agro and allied sectors
Note: Besides the above, FDI is not allowed in
any other agricultural sector/activity
1.1 Other Conditions :

I. For companies dealing with development of transgenic seeds/vegetables, the
following conditions apply:
(i) When dealing with genetically modified seeds or planting material the
company shall comply with safety requirements in accordance with laws
enacted under the Environment (Protection) Act on the genetically modified
organisms.
(ii) Any import of genetically modified materials if required shall be
subject to the conditions laid down vide Notifications issued under Foreign
Trade (Development and Regulation) Act, 1992.
(iii) T h e c o mpany s h al l c o mply w i th any o th e r Law, Regulation or
Policy governing genetically modified material in force from time to time.
(iv) Undertaking of business activities involving the use of genetically
engineered cells and material shall be subject to receipt of approvals from
Genetic Engineering Approval Committee (GEAC) and Review Committee
on Genetic Manipulation (RCGM).
(v) Import of materials shall be in accordance with National Seeds Policy.
II. The term 'under controlled conditions' covers the following:
• 'Cultivation under controlled conditions' for the categories of Floriculture,
Horticulture, Cultivation of vegetables and Mushrooms is the practice of
cultivation wherein rainfall, temperature, solar radiation, air humidity
and culture medium are controlled artificially. Control in these parameters may
be effected through protected cultivation under green houses, net houses, poly
houses or any other improved infrastructure facilities where microclimatic
conditions are regulated anthropogenically.
• In case of Animal Husbandry, scope of the term 'under controlled Conditions'
covers –
• Rearing of animals under intensive farming systems with stall-feeding.
Intensive, farming system will require climate systems (ventilation,
temperature/ humidity management), health care and nutrition, herd
registering/pedigree recording, use of machinery, waste management systems.
• Poultry breeding farms and hatcheries where micro- climate is controlled
through advanced technologies like incubators, ventilation systems etc.
• In the case of pisciculture and aquaculture, scope of the term 'under controlled
conditions" covers -
• Aquariums
• Hatcheries where eggs are artificially fertilized and fry are hatched and incubated
in an enclosed environment with artificial climate control.
• In the case of apiculture, scope of the term "under controlled conditions'
covers production of honey by bee-keeping, except in forest/wild, in designated
spaces with control of temperatures and climatic factors like humidity and
artificial feeding during lean seasons.
Sr. No. Sector/Activity % of Cap/ Entry Route
As per Equity
FDI
Circular
2 Tea Plantation 100% Government
2.1 Tea sector including tea plantations
Note: Besides the above, FDI is not allowed
in any other plantation sector/activity
2.2 Other Conditions :
(i) compulsory disinvestment of 26% equity of the company in favour of an
Indian partner/Indian public within a period of 5 years.
(ii) Prior approval of the State Government concerned in case of any future
land use change.
3 MINING
3.1 Mining and Exploration of metal and non 100% Automatic
metal ores including diamond, gold, silver
and precious ores but excluding titanium
bearing minerals and its ores; subject to the
Mines and Minerals (Development and
Regulation) Act, 1957.
3.2 Coal and Lignite
(1) Coal and Lignite mining for captive 100% Automatic
consumption by power projects, iron and
steel and cement units and other eligible
activities permitted under and subject to
the provisions of Coal Mines
(Nationalization) Act, 1973.
(2) Setting up coal processing plants like 100% Automatic
washeries, subject to the condition that
the company shall not do coal mining
and shall not sell washed coal or sized
coal from its coal processing plants in
the open market and shall supply the
washed or sized coal to those parties
who are supplying raw coal to coal
processing plants for washing or sizing.
3.3 Mining and mineral separation of titanium
bearing minerals and ores, the value addition
and integrated activities.
As per Equity
FDI
3.3.1 Mining and mineral separation of titanium 100% Government
Circular bearing minerals and ores, the value addition
and integrated activities subject to sectoral
regulations and the Mines and Minerals
(Development and Regulation) Act, 1957
3.3.2 Other Conditions:
India has large reserves of beach sand minerals in the coastal stretches
around the country. Titanium bearing minerals viz. Ilmenite, rutile and
leucoxene, and Zirconium bearing minerals including zircon are some of the
beach sand minerals which have been classified as prescribed substances under
the Atomic Energy Act, 1962.
Under the Industrial Policy Statement, 1991, mining and production of minerals
classified as ‘prescribed substances’ and specified in the Schedule to the
Atomic Energy (Control of Production and Use) Order, 1953 were included
in the list of industries reserved for the public sector. Vide Resolution No.
8/1(1)/97-PSU/1422 dated 6th October 1998 issued by the Department of
Atomic Energy laying down the policy for exploitation of beach sand
minerals, private participation including Foreign Direct Investment (FDI), was
permitted in mining and production of Titanium ores (Ilmenite, Rutile and
Leucoxene) and Zirconium minerals (Zircon).
Vide Notification No. S.O. 61(E) dated 18-1-2006, the Department of Atomic
Energy re-notified the list of 'prescribed substances' Under the Atomic Energy Act
1962. Titanium bearing ores and concentrates (Ilmenite, Rutile and Leucoxene) and
Zirconium, its alloys and compounds/ and minerals/concentrates including Zircon,
were removed from the list of prescribed substances'.
(i) FDI for separation of titanium bearing minerals and ores will be subject
to the following additional conditions viz.:
(A) value addition facilities are set up within India along with transfer of
technology;
(B) dis pos al o f tail i n gs dur i n g th e mi n e r al separation shall be carried
out in accordance w i th r e gu l atio n s f r amed by th e Atomi c Energy
Regulatory Board such as Atomic Energy (Radiation Protection) Rules,
2004 and the Atomic Energy (Safe: Disposal of Radioactive Wastes) Rules,
1987.
(ii) FDI will not be allowed in mining of 'prescribed substances' listed in the
Notification No. SO. 61(E), dated 18.1.2006 issued by the Department of
Atomic Energy.
Clarification:
(1) For titanium bearing ores such as llmenite, Leucoxene and Rutile,
manufacture of titanium dioxide pigment and titanium sponge
constitutes value addition, llmenite can be processed to produce Synthetic
Rutile or Titanium Slag as an intermediate value added product.
(2) The objective is to ensure that the raw material available in the country
is utilized for setting up downstream industries and the technology
available internationally is also made available for setting up such
industries within the country. Thus, if with the technology transfer, the
objective of the FDI Policy can be achieved, the conditions prescribed at
(i) (A) above shall be deemed to be fulfilled.
4 Petroleum and Natural Gas

4.1 Explo r atio n ac ti v i ti e s o f o i l an d n atur 100% Automatic
al gas f i e l ds, infrastructure related to
marketing of petroleum products and natural
gas, marketing of natural gas and petroleum
products, petroleum product pipelines, natural
gas/pipelines, LNG Regasification
infrastructure, market study and formulation
and Petroleum refining in the private sector,
subject to the existing sectoral policy and
regulatory framework in the oil marketing
sector and the policy of the Government on
private participation in exploration of oil and
the discovered fields of national oil
companies.
4.2 Petroleum refining by the Public Sector 49% Government
Undertakings (PSUs), without any
disinvestment or dilution of domestic equity in
the existing PSUs.
5 MANUFACTURING
Manufacture of items reserved for production in Micro and Small Enterprises
(MSEs)
5.1 FDI in MSEs [as defined under Micro, Small and Medium Enterprises Development
Act, 2006 (MSMED Act, 2006)] will be subject to the sectoral caps, entry routes
and other relevant sectoral regulations. Any industrial undertaking which is not a
Micro or Small Scale Enterprise, but manufactures items reserved for the MSE
sector would require Government route where foreign investment is more than
24% in the capital. Such an undertaking would also require an Industrial License
under the Industries (Development and Regulation) Act, 1951, for such
manufacture. The issue of Industrial License is subject to a few general conditions
and the specific condition that the Industrial Undertaking shall undertake to export a
minimum of 50% of the new or additional annual production of the MSE reserved
items to be achieved within a maximum period of three years. The export
obligation would be applicable from the date of commencement of commercial
production and in accordance with the provisions of section 11 of the Industries
(Development and Regulation) Act, 1951.
6 DEFENCE
6.1 Defence Industry subject to Industrial license 26% Government
under the Industries (Development and
Regulation) Act, 1951
6.2 Other Conditions:
(i) Licence applications will be considered and licences given by the Department
of Industrial Policy and Promotion, Ministry of Commerce and Industry, in
consultation with Ministry of Defence.
(ii) The applicant should be an Indian company/firm.
(iii) The management of the applicant company / partnership should be in
Indian hands with majority representation on the Board as well as the Chief
Executives of the company/partnership firm being resident Indians.
(iv) Full particulars of the Directors and Chief Executives should be furnished with
the applications.
(v) The Government reserves the right to verify the antecedents of the foreign
collaborators and domestic promoters including their financial standing and
credentials in the world market. Preference would be given to original
equipment manufacturers or design establishments, and companies having a
good track record of past supplies to Armed Forces, Space and Atomic energy
sections and having an established R and D base.
(vi) There would be no minimum capitalization for the FDI. A proper assessment,
however, needs to be done by the management of the applicant company
depending upon the product and the technology. The licensing authority would
satisfy itself about the adequacy of the net worth of the non-resident investor
taking into account the category of weapons and equipment that are proposed to
be manufactured.
(vii) There would be a three-year lock-in period for transfer of equity from one non-
resident investor to another non-resident investor (including NRIs and erstwhile
OCBs with 60% or more NRI stake) and such transfer would be subject to prior
approval of the Government.
(viii) The Ministry of Defence is not in a position to give purchase guarantee for
products to be manufactured. However, the planned acquisition programme for
such equipment and overall requirements would be made available to the extent
possible.
(ix) The capacity norms for production will be provided in the licence based on the
application as well as the recommendations of the Ministry of Defence, which
will look into existing capacities of similar and allied products.
(x) Import of equipment for pre-production activity including development of
prototype by the applicant company would be permitted.
(xi) Adequate safety and security procedures would need to be put in place by the
licensee once the licence is granted and production commences. These would
be subject to verification by authorized Government agencies.
(xii) The standards and testing procedures for equipment to be produced under
licence from foreign collaborators or from indigenous R and D will have to be
provided by the licensee to the Government nominated quality assurance
agency under appropriate confidentiality clause. The nominated quality
assurance agency
would inspect the finished product and would conduct surveillance and audit of
the Quality Assurance Procedures of the licensee. Self-certification would be
permitted by the Ministry of Defence on case to case basis, which may involve
either individual items, or group of items manufactured by the licensee. Such
permission would be for a fixed period and subject to renewals.
(xiii) Purchase preference and price preference may be given to the Public Sector
organizations as per guidelines of the Department of Public Enterprises.
(xiv) Arms and ammunition produced by the private manufacturers will be
primarily sold to the Ministry of Defence. These items may also be sold to
other Government entities under the control of the Ministry of Home Affairs
and State Governments with the prior approval of the Ministry of Defence. No
such item should be sold within the country to any other person or entity. The
export of manufactured items would be subject to policy and guidelines as
applicable to Ordnance Factories and Defence Public Sector Undertakings.
Non-lethal items would be permitted for sale to persons/entities other than the
Central of State Governments with the prior approval of the Ministry of Defence.
Licensee would also need to institute a verifiable system of removal of all
goods out of their factories. Violation of these provisions may lead to
cancellation of licence.
(xv) Government decision on applications to FIPB for FDI in defence industry sector
will be normally communicated within a time frame of 10 weeks from the date of
acknowledgement.
SERVICES SECTOR
INFORMATION SERVICES
7 Broadcasting
7.1 Broadcasting Carriage Services
7.1.1 (1) Teleports (setting up of up-linking 74% Automatic up to
HUBs/Teleports); 49%
(2) Direct to Home (DTH);
(3) Cable Networks (Multi System Operators
(MSOs) operating at National or State or
District level and undertaking
upgradation of networks towards
digitalization and addressability);
(4) Mobile TV;
(5) Headend-in-the Sky Broadcasting Service
7.1.2 Cable Networks (Other MSOs not undertaking 49% Automatic

upgradation of networks towards digitalization
and addressability and Local Cable Operators
(LCOs).
7.2 Broadcasting Content Services
7.2.1 Terrestrial Broadcasting FM (FM Radio), 26% Government
subject to such terms and conditions, as
specified from time to time, by Ministry of
Information and Broadcasting, for grant of
permission for setting up of FM Radio
stations.
7.2.2 Up-linking of 'News and Current Affairs' TV 26% Government
Channels
7.2.3 Up-linking a Non-'News and Current Affairs' 100% Government
TV Channels/ Down-linking of TV Channels
7.3 FDI for Up-linking/Down-linking TV Channels will be subject to compliance
with the relevant Up-linking/Down- linking Policy notified by the Ministry of
Information and Broadcasting from time to time.
As per Equity
7.4FDI Foreign investment (FI) in companies engaged in all the aforestated services will be
Circular subject to relevant regulations an d such terms and conditions as may be specified from
time to time, by the Ministry of Information and Broadcasting.
7.5 The foreign investment (FI) limit in companies engaged in the aforestated activities
shall include, in addition to FDI, investment by Foreign Institutional Investors (FIIs),
Non-Resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American
Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible
preference shares held by foreign entities.
7.6 Foreign investment in the aforestated broadcasting carriage services will be subject to
the following security conditions/ terms:
Mandatory Requirement for Key Executives of the
Company
(i) The majority of the Directors on the Board of the Company shall be Indian
Citizens.
(ii) The Chief Executive Officer (CEO), Chief Officer In- charge of technical
network operations and Chief Security Officer should be resident Indian Citizens.
Security Clearance of Personnel
(iii) The Company, all Directors on the Board of Directors and such key executives
like Managing Director/Chief Executive Officer, Chief Financial Officer (CFO),
Chief Security Officer (CSO), Chief Technical Officer (CTO), Chief Operating
Officer (COO), shareholders who individually hold 10% or more paid-up capital
in the company and any other category, as may be specified by the Ministry of
Information and Broadcasting from time to time, shall require to be security
cleared.
In case of appointment of directors on Board of the Company and such key
executives like Managing Director/Chief Executive Officer, Chief Financial
Officer (CFO), Chief Security Officer (CSO), Chief Technical Officer (CTO),
Chief Operating Officer (COO), etc., as may be specified by the Ministry of
Information and Broadcasting from time to time, prior permission of the Ministry
of Information and Broadcasting shall have to be obtained.
It shall be obligatory on the part of the company to also take prior permission
from the Ministry of Information and Broadcasting before effecting any change
in the Board of Directors.
(iv) The Company shall be required to obtain security clearance of all security personnel
to be deployed for more that 60 days in a year by way of appointment,
contract, and consultancy or in any other capacity for installation, maintenance,
operation or any other services prior to their deployment. The security clearance
shall be required to be obtained every two years.
As per Equity
FDI Permission vis-a-vis Security Clearance
Circular (v) The permission shall be subject to permission holder/ licensee remaining
security cleared throughout the currency of permission. In case the security
clearance is withdrawn the permission granted is liable to be terminated
forthwith.
(vi) In the event of security clearance of any of the persons associated with the
permission holder/ licensee or foreign personnel is denied or withdrawn for any
reasons whatsoever, the permission holder/ licensee will ensure that the
concerned person resigns or his services terminated forthwith after receiving
such directives from the Government, failing which the permission/license
granted shall be revoked and the company shall be disqualified to hold any such
Permission/license in future for a period of five years.
Infrastructure/Network/Software related requirement
(vii) The officers/officials of the licensee companies dealing with the lawful
interception of Services will be resident Indian citizens.
(viii) Details of infrastructure/diagram (technical details of the network) could be
provided, on a need basis only, to equipment suppliers/manufacturers and the
affiliate of the licensee company. Clearance from the licensor would be
required if such information is to be provided to anybody else.
(ix) The Company shall not transfer the subscribers’ databases to any person/place
outside India unless permitted by relevant Law.
(x) The Company must provide traceable identity of their subscribers.
Monitoring, Inspection and Submission of Information
(xi) The Company should ensure that necessary provision (hardware/software) is
available in their equipment for doing the Lawful interception and monitoring
from a centralized location as and when required by Government.
(xii) The company, at its own costs, shall, on demand by the Government or its
authorized representative, provide the necessary equipment, services and
facilities as designated place9s0 for continuous monitoring or the broadcasting
service by or under supervision of the Government or its authorized
representative.
As per Equity
FDI (xiii) The Government of India, Ministry of Information and Broadcasting or its
Circular authorized representative shall have the right to inspect the broadcasting
facilities. No prior permission/intimation shall be required to exercise the right
of Government or its authorized representative to carry out the inspection. The
company will, if required by the Government or its authorized representative,
provide necessary facilities for continuous monitoring for any particular aspect
of the company's activities and operations. Continuous monitoring, however, will
be confined only to security related aspects, including screening of
objectionable content.
(xiv) The inspection will ordinarily be carried out by the Government of India,
Ministry of Information and Broadcasting or its authorized representative after
reasonable notice, except in circumstances where giving such a notice will
defeat the very purpose of the inspection.
(xv) The company shall submit such information with respect to its services as may
be required by the Government or its authorized representative, in the format as
may be required, from time to time.
(xvi) The permission holder/licensee shall be liable to furnish the Government of
India or its authorized r e pre s e n tativ e o r T RAI o r i ts au th o r i
z e d representative, such reports, accounts, estimates, returns or such other
relevant information and at such periodic intervals or such times as may be
required.
(xvii) The service providers should familiarize/train designated officials of the
government or officials of TRAI or its authorized representative(s) in respect of
relevant operations/features of their systems.
National Security Conditions:
(xviii) It shall be open to the licensor to restrict the Licensee Company from
operating in any sensitive area from the National Security angle . T h e
Government of India, Ministry of Information and Broadcasting shall have the
right to temporarily suspend the permission of the permission holder/ Licensee
in public interest or for national security for such period or periods as it may
direct. The company shall immediately comply with any directives issued in this
regard failing which the permission issued shall be revoked and the company
disqualified to hold any such permission, in future, for a period or five years.
(xix) The company shall not import or utilize any equipment, which are identified as
unlawful and/or render network security vulnerable.
As per Equity
FDI Other conditions:
Circular (xx) Licensor reserves the right to modify these conditions or incorporate new
conditions considered necessary in the interest of national security and public
interest or for proper provision of broadcasting services.
(xxi) L i c e n s e e w i l l e n s u r e that br o adcas ti n g s e r vi c e installation carried
out by it should not become a safety hazard and is not in contravention
of any statute, rule or regulation and public policy.
8 Print Media
8.1 Publishing of Newspaper and periodicals 26% ( F D I Government
dealing with news and current affairs an d i n v e s
8.2 Publication of Indian editions of foreign tmen
26% t ( F D byI Government
magazines dealing with news and current NRIs/PIOs/FII
an d i n v e s
8.2.1 affairs Conditions
Other )tmen t by
NRIs/PIOs/FII
(i) 'Magazine', for the purpose of these guidelines, will be defined as a periodical
)
publication, brought out on non-daily basis, containing public news or
comments on public news.
(ii) Foreign investment would also be subject to the Guidelines for Publication of
Indian editions of foreign magazines dealing with news and current affairs
issued by the Ministry of Information and Broadcasting on 4.12.2008.
8.3 Publishing/Printing of Scientific and Technical 100% Government

Magazines/ specialty journals/periodicals,
subject to compliance with the legal
framework as applicable and guidelines issued
in this regard from time to time by Ministry
of Information and Broadcasting.
8.4 Publication of facsimile edition of foreign 100% Government

newspapers
(i) FDI should be made by the owner of the original foreign newspapers whose
facsimile edition is proposed to be brought out in India.
(ii) Publication of facsimile edition of foreign newspapers can be undertaken only by
an entity incorporated or registered in India under the provisions of the
Companies Act, 1956.
(iii) Publication of facsimile edition of foreign newspaper would also be subject to
the Guidelines for publication of newspapers and periodicals dealing with news
and current affairs and publication of facsimile edition of foreign newspapers
issued by Ministry of Information and Broadcasting on 31.3.2006, as amended
from time to time.
9 Civil Aviation
9.1 The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic
passenger airlines, Helicopter services/Seaplane services, Ground Handling Services,
Maintenance and Repair organizations; Flying training institutes; and Technical
training institutions.
For the purposes of the Civil Aviation sector:
(i) 'Airport' means a landing and taking off area for aircrafts, usually with
runways and aircraft maintenance and passenger facilities and includes
aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934;
(ii) "Aerodrome" means any definite or limited ground or water area intended to be
used, either wholly or in part for the landing or departure of aircraft, and includes
all buildings, sheds, vessels, piers and other structures thereon or pertaining
thereto;
(iii) "Air transport service " means a service for the transport by air of persons,
mails or any other thing, animate or inanimate, for any kind of remuneration
whatsoever, whether such service consists of a single flight or series of flights;
(iv) "Air Transport Undertaking" means an undertaking whose business includes the
carriage by air of passengers or cargo for hire or reward;
(v) "Aircraft component" means any part, the soundness and correct functioning of
which, when fitted to an aircraft, is essential to the continued airworthiness or
safety of the aircraft and includes any item of equipment;
(vi) "Helicopter " means a heavier than air aircraft supported in flight by the reactions
of the air on one or more power driven rotors on substantially vertical axis;
(vii) "Scheduled air transport service" means an air transport service undertaken
between the same two or more places and operated according to a published time
table or with flights so regular or frequent that they constitute a recognizably
systematic series, each flight being open to use by members of the public;
(viii)“Non-Scheduled Air Transport service" means any service which is not a
scheduled air transport service and will include Cargo airlines;
(ix) "Cargo airlines" would mean such airlines which meet the conditions as given in
the Civil Aviation Requirements issued by the Ministry of Civil Aviation;
(x) "Seaplane" means an aeroplane capable normally of taking off from and
alighting solely on water;
(xi) "Ground Handling" means (i) ramp handling , (ii) traffic handling both
of which shall include the activities as specified by the Ministry of Civil
Aviation through the Aeronautical Information Circulars from time to time, and
(iii) any other activity specified by the Central Government to be a part of either
ramp handling or traffic handling.
9.2 Airports
(a) Greenfield projects 100% Automatic
(b) Existing projects 100% Automatic upto
74%.
Government route
beyond 74%.
9.3 Air Transport Services
(1) Scheduled Air Transport Service/Domestic 49% FDI Automatic
ScheduledPassenger Airline (100%
for NRIs)
(2) Non-Scheduled Air Transport Service 74% FDI Automatic upto

(100% 49%. Government
for NRIs) route beyond 49%
ad upto74%
(3) Helicopter services/seaplane services 100% Automatic
requiring DGCA approval

(a) Air Transport Services would include Domestic Scheduled Passenger Airlines;
Non-Scheduled Air Transport Services, helicopter and seaplane services.
(b) Foreign airlines are allowed to participate in the equity of companies operating
cargo airlines, helicopter and seaplane services, as per the limits and entry routes
mentioned above.
(c) Foreign airlines are also, henceforth, allowed to invest, in the capital of
Indian companies, operating scheduled and non-scheduled air transport
services, upto the limit of 49% o f their paid- u p capital . Such investment
would be subject to the following conditions:–
(i) It would be made under the Government approval route.
(ii) The 49% limit will subsume FDI and FII investment.
(iii) The investments so made would need to comply with the relevant
regulations of SEBI, such as the Issue of Capital and Disclosure
Requirements (ICDR) Regulations/Substantial Acquisition of Shares and
Takeovers (SAST) Regulations, as well as other applicable rules and
regulations.
(iv) A Scheduled Operator 's Permit can be granted only to a company:–
(a) that is registered and has its principal place of business within
India;
(b) the Chairman and at least two-thirds of the Directors of which are
citizens of India; and
(c) the substantial ownership and effective control of which is vested
in Indian nationals.
(v) All foreign nationals likely to be associated with Indian scheduled
and non-scheduled air transport services, as a result of such
investment shall be cleared from security view point before
deployment; and
(vi) Al l tec h n i c al e qu i pmen t that mi gh t be i mpor te d i n to India
as a result of such investment shall require clearance from the relevant
authority in the Ministry of Civil Aviation.
Note: The FDI limits/entry routes, mentioned at paragraph 9.3(1) and 9.3(2)
above, are applicable in the situation where there is no investment by foreign
airlines.
(d) The policy mentioned at (c) above is not applicable to M/s Air India Limited.
9.4 Other services under Civil Aviation sector

(1) Ground Handling Services subject to 74% FDI Automatic upto
sectoral regulations and security clearance (100% 74%.
for NRIs) Government route
beyond 74%.
(2) Maintenance and Repair organizations; 100% Automatic
flying training institutes; and technical training
institutions
10 Courier services for carrying packages, 100% Automatic
parcels and other items which do not come
within the ambit of the Indian Post Office
Act, 1898 and excluding the activity relating
to the distribution of letters.
11 Construction Development: Townships,
Housing, Built-up infrastructure
11.1 Townships , housing, built-up infrastructure 100% Automatic
and construction-development projects (which
would include, but not be restricted to, housing,
commercial premises, hotels, resorts, hospitals,
educational institutions, recreational facilities,
city and regional level infrastructure)
11.2 Investment will be subject to the following conditions:
(1) Minimum area to be developed under each project would be as under:–

(i) In case of development of serviced housing plots, a minimum land area
of 10 hectares
(ii) In case of construction-development projects, a minimum built-up area of
50,000 sq.mts.
(iii) In case of a combination project, any one of the above two conditions
would suffice
(2) Minimum capitalization of US$10 million for wholly owned subsidiaries an d
US $5 million for joint ventures with Indian partners. The funds would have to
be brought in within six months of commencement of business of the Company.
(3) Original investment cannot be repatriated before a period of three years from
completion of minimum capitalization. Original investment means the entire
amount brought in as FDI. The lock-in period of three years will be applied from
the date of receipt of each instalment/tranche of FDI or from the date of
completion of minimum capitalization, whichever is later. However, the investor
may be permitted to exit earlier with prior approval of the Government through
the FIPB.
(4) At least 50% of each such project must be developed within a period of five
years from the date o f obtaining all statutory clearances. The investor/
investee company would not be permitted to sell undeveloped plots. For the
purpose of these guidelines, 'undeveloped plots' will mean where roads, water
supply, street lighting, drainage, sewerage, and other conveniences, as
applicable under prescribed regulations, have not been made available . It
will be necessary that the investor provides, this infrastructure and obtains the
completion certificate from the concerned local body/service agency before he
would be allowed to dispose of serviced housing plots.
(5) The project shall conform to the norms and standards, including land use
requirements and provision of community amenities and common facilities, as
laid down in the applicable building control regulations, bye-laws, rules, and
other regulations of the State Government/Municipal/Local Body concerned.
(6) The investor/investee company shall be responsible for obtaining all necessary
approvals, including those of the building/layout plans, developing internal and
peripheral areas and other infrastructure facilities, payment of development,
external development and other charges and complying with all other
requirements as prescribed under applicable rules/bye- laws/regulations of the
State Government/Municipal/ Local Body concerned.
(7) The State Government/ Municipal / Local Body concerned, which approves
the building/development plans , would monitor compliance of the above
conditions by the developer.
Notes :
(i) The conditions at (1) to (4) above would not apply to Hotels and Tourism,
Hospitals, Special Economic Zones (SEZs), Education Sector, Old age Homes
and investment by NRIs.
(ii) FDI is not allowed in Real Estate Business.
12 Industrial Parks - new and existing 100% Automatic

12.1 (i) "Industrial Park” is a project in which quality infrastructure in the form of
plots of developed land or built up space or a combination with common
facilities, is developed and made available to all the allottee units for the
purposes of industrial activity.
(ii) "Infrastructure" refers to facilities required for functioning of units located
in the Industrial Park and includes roads (including approach roads), water
supply and sewerage, common effluent treatment facility, telecom
network, generation and distribution of power, air conditioning.
(iii) "Common Facilities" refer to the facilities available for all the units
located in the industrial park, and include facilities of power, roads
(including approach roads), water supply and sewerage, common effluent
treatment, common testing, telecom services, airconditioning, common
facility buildings, industrial canteens, convention/conference halls, parking,
travel desks, security service, first aid center, ambulance and other safety
services, training facilities and such other facilities meant for common use of
the units located in the Industrial Park.
(iv) "Allocable area" in the Industrial Park means-
(a) in the case of plots of developed land- the net site area available for
allocation to the units, excluding the area for common facilities.
(b) in the case of built up space- the floor area and built up space
utilized for providing common facilities.
(c) in the case of a combination of developed land and built-up space- the net
site and floor area available for allocation to the units excluding the site
area and built up space utilized for providing common facilities.
(v) "Industrial Activity" means manufacturing; electricity; gas and water supply;
post and telecommunications; software publishing, consultancy and supply;
data processing, database activities and distribution of electronic content; other
computer related activities; basic and applied R and D o n bio-technology,
pharmaceutical sciences/life sciences, natural sciences and engineering;
business and management consultancy activities; and architectural, engineering
and other technical activities.
12.2 FDI in Industrial Parks would not be subject to the conditionalities

applicable for construction development projects etc. spelt out in paragraph 11
above, provided the Industrial Parks meet with the under-mentioned conditions:
(i) it would comprise of a minimum of 10 units and no single unit shall
occupy more than 50% of the allocable area;
(ii) the minimum percentage of the area to be allocated for industrial activity
shall not be less than 66% of the total allocable area.
13 Satellites - Establishment and operation

13.1 Satellites - Establishment and operation, 74% Government
subject to the sectoral guidelines of
Department of Space/ISRO
14 Private Security Agencies 49% Government

15 Telecom Services 74% Automatic utpo
49% Government route
beyond 49% and upto 74%
15.1.1 Other conditions.

(1) General Conditions:
(i) This is applicable in case of Basic, Cellular, Unified Access Services, National/International
Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal
Communications Services (GMPCS) and other value added Services.
(ii) Both direct and indirect foreign investment in the licensee company shall be counted for the
purpose of FDI ceiling. Foreign investment shall include investment by Foreign Institutional
Investors (Flls), No-resident Indians (NRIs) Foreign Currency Convertible Bonds (FCCBs),
American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible
preference shares held by foreign entity. In any case, the “Indian” shareholding will not be less
than 26 per cent.
(iii)FDI in the licensee company/Indian promoters/investment companies including their holding
companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a
bearing on-the overall ceiling of 74 per cent. While approving the investment proposals, FIPB
shall take not that investment is not coming from countries of concern and/or unfriendly entities.
(iv) The investment approval by FIPB shall envisage the conditionality that Company would
adhere to licence Agreement.
(v) FDI shall be subject to laws of India and not the laws of the foreign country/countries.s
(2) Security Conditions:
(i) The Chief Officer In-charge of technical network operations and the Chief Security Officer
should be a resident Indian citizen.
(ii) Details of infrastructure/network diagram (technical details of the network) could be provided
on a need basis only to telecom equipment suppliers/manufacturers and the affiliate/parents of the
licensee company. Clearance from the licensor (Department of Telecommunications) would be
required if such information is to be provided to anybody else.
(iii) For security reasons, domestic traffic of such entities as may be indentified specified by the
licensor shall not be hauled/routed to any place outside India.
(iv) The licensee company shall take adequate and timely measures to ensure that the information
transacted through a network by the subscribers is secure and protected.
(v) The officers/officials of the licensee companies dealing with the lawful interception of
messages will be resident Indian citizens.
(vi)The majority Directors on the Board of the company shall be Indian citizens.
(vii) The positions of the Chairman, Managing Director, Chief Executive Officer (CEO) and/or
Chief Financial Officer (CFO), if held by foreign nationals, would require security clearance by
Ministry of Home Affairs (MHA). Security clearance shall be required on yearly basis. In case
something adverse in found during the security clearance, the direction of MHA shall be binding
on the licensee.
(viii) The Company shall not transfer the following to any person/place outside India:-
(a) Any accounting information relating to subscriber (except for international roaming/billing)
(Note.- It does not restrict a statutorily required disclosure of financial nature): and
(b) User information (except pertaining to foreign subscribers using Indian Operator’s network
while roaming).
(ix) The Company must provide traceable identity of their subscribers.
However, in case of providing service to roaming subscriber of foreign companies, the Indian
Company shall endeavour to obtain traceable identity of roaming subscribers from the foreign
company as a part of its roaming agreement.
(x) On request of the licensor or any other agency authorised by the licensor, the telecom service
provider should be able to provide the geographical location of any subscriber (BTS location) at a
given point of time.
(xi) The Remote Access (RA) to Network would be provided only to approved location(s) abroad
through approved location9s) in India. The approval for location(s) would be given by the Licensor
(DOT) in consultation with the Ministry of Home Affairs.
(xii) Under no circumstances, should any RA to the suppliers/manufacturers and affiliate(s) be

enabled to access Lawful Interception System(LIS), Lawful Interception Monitoring(LIM), Call
contents of the traffic and any such sensitive sector/data, which the licensor may notify from time
to time.
(xiii) The licensee company is not allowed to use remote access facility for monitoring content.
(xiv) Suitable technical device should be made available at Indian end to the designated security
agency/licensor in which a mirror image of the remote access information is available on line for
monitoring purposes.
(xv) Complete audit trail of the remote access activities pertaining to the network operated in India
should be maintained for a period of six months and provided on request to the licensor or any
other agency authorised by the licensor.
(xvi) The telecom service providers should ensure that necessary provision (hardware/software) is
available in their equipment for doing the Lawful interception and monitoring from a centralized
location.
(xvii) The telecom service providers should familiarize/train Vigilance Technical Monitoring
(VTM)/security agency officers/officials in respect of relevant operations/features of their systems.
(xviii) It shall be open to the licensor to restrict the Licensee Company from operating in any
sensitive area from the National Security angle.
(xix) In order to maintain the privacy of voice and data, monitoring shall only be upon
authorisation by the Union Home Secretary or Home Secretaries of the State/Union Territories.
(xx) For monitoring traffic, the licensee company shall provide access of their network and other
facilities as well as to books of accounts to the security agencies.
(xxi) The aforesaid Security Conditions shall be applicable to all the licensee companies operating
telecom services covered under this circular irrespective of the level of FDI.
(xxii) Other Service Providers (OSPs), providing services like Call Centres, Business Process
Outsourcing (BOP), tele-marketing, tele-education, etc., and are registered with DoT as OSP. Such
OSPs operate the service using the telecom infrastructure provided by licensed telecom service
providers and 100% FDI is permitted for OSPs. As the security conditions are applicable to all
licensed telecom service providers, the security conditions mentioned above shall not be separately
enforced on OSPs.
(3) The above General Conditions and Security Conditions shall also be applicable to the
companies operating telecom service(s) with the FDI cap of 49%.
(4) All the telecom service providers shall submit a compliance report on the aforesaid conditions
to the licensor on 1st day of July and January every year.
15.2 (a) ISP with gateways 74% Automatic

upto 49%
(b) ISP’s not providing gateways i.e. without gate ways
(both for satellite and marine cables) Government
route beyond
Note: The new guidelines of August 24, 2007 49% and upto 74%
Department of Telecommunications provide for new
ISP licenses with FDI up to 74%.
(c) Radio paging
(d) End-to-End bandwidth
15.3 (a) Infrastructure provider providing dark fibre, right of 100% Automatic
way, duct space, tower (IP Category I); (b) Electronic upto 49%
Mail; (c) Voice Mail
Note: Investment in all the above activities is subject to Government

the conditions that such companies will divest 26% of route beyond
their equity in favour of Indian public in 5 years, if 49%
these companies are listed in other parts of the world.
16 TRADING
16.1 (i) Cash and Carry Wholesale 100% Automatic
Trading/Wholesale Trading (including
sourcing from MSEs)
16.1.1 Definition: Cash and Carry Wholesale trading/Wholesale trading, would mean sale of
goods/merchandise to retailers, industrial, commercial, institutional or other
professional business users or to other wholesalers and related subordinated service
providers. Wholesale trading would, accordingly, be sales for the purpose of trade,
business and profession, as opposed to sales for the purpose of personal consumption.
The yardstick to determine whether the sale is wholesale or not would be the type of
customers to whom the sale is made and not the size and volume of sales. Wholesale
trading would include resale, processing and thereafter sale, bulk imports with ex-
port/ex-bonded warehouse business sales and B2B e-Commerce.
16.1.2 Guidelines for Cash and Carry Wholesale Trading/
Wholesale Trading (WT):
(a) For undertaking WT, requisite licenses/registration/ per mi ts , as s pe c i f i e d
under the relevant Ac ts/ Regulations/Rules/Orders of the State Government/
Government Body/Government Authority/Local Self- Government Body
under that State Government should be obtained.
(b) Except in case of sales to Government, sales made by the wholesaler would
be considered as 'cash and carry wholesale trading/wholesale trading' with
valid business customers, only when WT are made to the following entities:
(i) Entities holding sales tax/VAT registration/service tax/excise duty
registration; or
(ii) Entities holding trade licenses i.e. a license/ registration
certificate/membership certificate/ registration under Shops and
Establishment Act, issued by a Government Authority/ Government
Body/Local Self-Government Authority, reflecting that the
entity/person holding the license/registration certificate/ membership
certificate, as the case may be, is itself/himself/herself engaged in a
business involving commercial activity; or
(iii) Entities holding permits/license etc. for undertaking retail trade
(like tehbazari and similar license for hawkers) from Government
Authorities/Local Self Government Bodies; or
As per Equity
FDI (iv) Institutions having certificate of incorporation or registration as a society
Circular or registration as public trust for their self consumption.
Note: An Entity, to whom WT is made, may fulfil any one of the 4 conditions.
(c) Full records indicating all the details of such sales like name of entity, kind
of entity, registration/license/ permit etc. number, amount of sale etc. should
be maintained on a day to day basis.
(d) WT of goods would be permitted among companies of the same group.
However, such WT to group companies taken together should not exceed
25% of the total turnovers the wholesale venture.
(e) WT can be undertaken as per normal business practice, including extending
credit facilities subject to applicable regulations.
(f) A Wholesale/Cash and Carry trader cannot open retail shops to sell to the
consumer directly.
16.2 E-Commerce activities 100% Automatic

E-Commerce activities refer to the activity of buying and selling by a company
through the e-commerce platform. Such companies would engage only in Business to
Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing
restrictions on FDI in domestic trading would be applicable to e-commerce as well.
16.3 Test marketing of such items for which a 100% Government

company has approval for manufacture, provided
such test marketing facility will be for a period
of two years, and investment in setting up
manufacturing facility commences
simultaneously with test marketing.
16.4 Single Brand product retail trading 100% Government

(1) Foreign Investment in Single Brand product retail trading is aimed at
attracting investments in production and marketing, improving the
availability of such goods for the consumer, encouraging increased sourcing of
goods from India, and enhancing competitiveness of Indian enterprises through
access to global designs, technologies and management practices.
(2) FDI in Single Brand product retail trading would be subject to the following
conditions:–
(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e.
products should be sold under the same brand in one or more
countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which
are branded during manufacturing.
(d) A non-resident entity or entities, whether owner of the brand or
otherwise, shall be permitted to underta specific brand, directly or
through a legally tenable agreement, with the brand owner for
undertaking single brand product retail trading. The onus for ensuring
compliance with this condition shall rest with the Indian entity carrying
out single-brand product retail trading in India. The investing entity
shall provide evidence to this effect at the time of seeking approval,
including a copy of the licensing/franchise/sub-licence agreement,
specifically indicating compliance with the above condition.
(e) In respect of proposals involving FDI beyond 51%, sourcing of 30% of
the value of goods purchased, will be done from India, preferably from
MSMEs, village and cottage industries, artisans and craftsmen in all
sectors. The quantum of domestic sourcing will be self- certified by the
"company, to be subsequently checked, by statutory auditors from the
duly certified accounts which the company will be required to
maintain. This procurement requirement would have to be met, in the
first instance, as an average of five years; total value of the goods
purchased, beginning 1st April of the year during which the first tranche
of FDI is received. Thereafter, it would have to be met on an annual
basis. For the purpose of ascertaining the sourcing requirement, the
relevant entity would be the company, incorporated in India, which is the
recipient of FDI for the purpose of carrying out single brand product
retail trading.
(f) Retail trading, in any form, by means of e-commerce, would not
be permissible for companies with FDI, engaged in the activity of
single brand retail trading.
(3) Applications seeking permission of the Government for FDI exceeding 49% in a
company which proposes to undertake single brand retail trading in India
would be made to the Secretariat for Industrial Assistance (SIA) in the
Department of Industrial Policy and Promotion. The applications would
specifically indicate the product/ product categories which are proposed to be
sold under a ‘Single Brand’.
As per Equity
FDI Any addition to the product/ product categories to be sold under ‘Single
Circular Brand’ would require a fresh approval of the Government.
(4) Applications would be processed in the Department of Industrial Policy and

Promotion, to determine whether the proposed investments satisfies the
notified guidelines, before being considered by the FIPB for Government
approval.
16.5 Multi Brand Retail Trading 51% Government
FDI in multi brand retail trading, in all products, will be permitted, subject to the
following conditions:
(i) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses,
fresh poultry, fishery and meat products, may be unbranded.
(ii) Minimum amount to be brought in, as FDI, by the foreign investor, would be
US $ 100 million.
(iii) At least 50% of total FDI brought in the first tranche of US $ 100 million, shall
be invested in 'back-end infrastructure' within three years, where 'back-end
infrastructure' will include capital expenditure on all activities, excluding
that on front-end units; for instance, back-end infrastructure will include
investment made towards processing, manufacturing, distribution, design
improvement, quality control, packaging, logistics, storage, ware-house,
agriculture market produce infrastructure etc. Expenditure on land cost and
rentals, if any, will not be counted for purposes of back-end infrastructure.
(iv) At l e as t 30% o f the value o f pro c u r e me n t o f manufactured/

processed products purchased shall be sourced from Indian micro, small
and medium industries, which have a total investment in plant and
machinery not exceeding US $1.00 million. This valuation refers to the
value at the time of installation, without providing for depreciation. Further,
if at any point in time, this valutation is exceeded, the industry shall not qualify as
a ‘small industry’ for this purpose. This procurement requirement would have to be
met, in the first instance, as an average of five years’ total value of the
manufactured/processed products purchased, beginning 1st April of the year during
which the first tranche of FDI is received, Thereafter, it would have to be met on
an annual basis.
(v) Self-certification by the company, to ensure compliance of the conditions at serial
nos. (ii), (iii) and (iv) above, which could be cross-checked, as and when
required. Accordingly, the investors shall maintain accounts, duly cerfied by
statutory auditors.
(vi) Retail sales outlets may be set up only in cities with a population of
more than 10 lakh as per the 2011 Census or any other cities as per the
decision of the receptive State Governments, and may also cover an area of
10 kms. around the municipal/urban agglomeration limits of such cities; retail
locations will be restricted to conforming areas as per the Master/ Zonal Plans
of the concerned cities and provision will be made for requisite facilities such
as transport connectivity and parking.
(vii) Government will have the first right to procurement of agricultural products.
(viii)The above policy is an enabling policy only and the State Governments/Union
Territories would be free to take their own decisions in regard to implementation
of the policy. Therefore, retail sales outlets may be set up in those
States/Union Territories which have agreed, or agree in future, to allow FDI in
MBRT under this policy. The States/Union Territories which have conveyed
their concurrence are as under:–
1. Andhra Pradesh
2. Assam
3. Delhi
4. Haryana
5. Jammu & Kashmir
6. Maharashtra
7. Manipur
8. Rajasthan
9. Uttarkhand
10. Daman & Diu and Dadra and Nagar Haveli (Union Territories)
The States/ Union Territories, which are willing to permit establishment of retail
outlets under this policy, would convey their concurrence to the Government of
India through the Department of Industrial Policy and Promotion and additions
would be made accordingly. The establishment of the retail sales outlets will be
in compliance of applicable State/Union Territory laws/ regulations, such as, the
Shops and Establishments Act etc.
(ix) Retail trading, in any form, by means of e-commerce, would not be permissible,
for companies with FDI, engaged in the activity of multi brand retail trading.
(x) Applications would be processed in the Department of Industrial Policy and
Promotion, to determine whether the proposed investment satisfies the notified
guidelines, before being considered by the FIPB for Government approval.
FINANCIAL SERVICES
Foreign investment in other financial services , other than those indicated below,
would require prior approval of the Government:
17. Asset Reconstruction Companies
17.1 'Asset Reconstruction Company' (ARC) means 49% of paid-up Government.
a company registered with the Reserve Bank capital of ARC
of India under section 3 of the Securitisation
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(SARFAESI Act).
17.2 Other Conditions
(i) Persons resident outside India, can invest in the capital of Asset
Reconstruction Companies (ARCs) r e g i s te r e d w i th Re s e rve Ban k, u
pto 49% u n de r the Automatic Route and beyond 49% under the
Government Route. Such investments have to be strictly in the nature of
FDI. Investments by FIIs are not permitted in the equity capital of ARCs.
(ii) No sponsor shall be permitted to hold more than 50% of the shareholding in
an ARC either by way of FDI or by routing through an FII. The foreign
investment
in ARCs are required to comply with entry route conditionality and sectoral
caps. However, the total shareholding of an individual FII shall not exceed
10% of the total paid-up capital of the ARC.
(iii) FIIs registered with SEBI can invest in the Security Receipts (SRs) issued by
ARCs registered with Reserve Bank. FIIs can invest upto 74 per cent of the
paid-up value each tranche of scheme of Security Receipts issued by the
ARCs.
18. (iv) An y - iPrivate
Banking n divi dual i n ve s tmen t o f mor e th an 10% would be subject to
sector
provisions of section 3(3) (f) of Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002.
18.1 Banking -Private sector 74% including Automatic
investment by FIIs upto 49%.
Gove r n me n t r o u te b
Beyond 49%
and upto 74%.

(1) This 74% limit will include investment under the Portfolio Investment
Scheme (PIS) by FIIs, NRIs and shares acquired prior to September 16,
2003 by erstwhile OCBs, and continue to include IPOs, Private placements,
GDR/ADRs and acquisition of shares from existing shareholders.
(2) The aggregate foreign investment in a private bank from all sources will be
allowed - up to a maximum of 74 per cent of the paid up capital of the Bank.
At all times, at least 26 per cent of the paid up capital will have to be held by
residents, except in regard to a wholly-owned subsidiary of a foreign bank.
(3) The stipulations as above will be applicable to all investments in existing
private sector banks also.
(4) The permissible limits under portfolio investment schemes through stock
exchanges for Flls and NRIs will be as follows:–
(i) In the case of FIIs, as hitherto, individual FII holding is restricted to
10 per cent of the total paid-up capital, aggregate limit for all Flls
cannot exceed 24 per cent of the total paid-up capital, which can be
raised to 49 per cent of the total paid-up capital by the bank concerned
through a resolution by its Board of Directors followed by a special
resolution to that effect by its General Body.
(a) Thus, the FII investment limit will continue to be within 49 per
cent of the total paid-up capital.
(b) In the case of N RIs, as hitherto, individual holding is restricted to
5% of the total paid-up capital both on repatriation and non-
repatriation basis and aggregate limit cannot exceed 10 per cent of
the total paid-up capital both on repatriation and non-repatriation
basis. However, NRI holding can be allowed up to 24% of the
total paid-up capital both on repatriation and non-repatriation
basis provided the banking company passes a special resolution
to that effect in the General Body.
(c) Applications for foreign direct investment in private banks
having joint venture/subsidiary in insurance sector may be
addressed to the RBI for consideration in consultation with the
IRDA in order to ensure that the 26 per cent limit of foreign
shareholding applicable for the insurance sector is not being
breached.
(d) Transfer of shares under FDI from residents to non-residents
will continue to require approval of RBI and Government as per
para 3.6.2 o f D IPP’s Circular 1 o f 2012 as applicable.
(e) The policies and procedures prescribed from time to time by RBI
and other institutions such as SEBI, D / o Company Affairs and
IRDA on these matters will continue to apply.
(f) RBI guidelines relating to acquisition by purchase or otherwise of
shares of a private bank, if such acquisition r e s u l ts i n an y
person owning or controlling 5 per cent or more of the paid up
capital of the private bank will apply to non-resident investors as
well.
(ii) Setting up of a subsidiary by foreign banks
(a) Foreign banks will be permitted to either have branches or
subsidiaries but not both.
(b) Foreign banks regulated by banking supervisory authority in the
home country and meeting Reserve Bank's licensing criteria will be
allowed to hold 100 per cent paid up capital to enable them to set up a
wholly-owned subsidiary in India.
(c) A foreign bank may operate in India through only one of the three
channels viz., (i) branches (ii) a wholly-owned subsidiary and (iii) a
subsidiary with aggregate foreign investment upto a maximum of 74
per cent in a private bank.
(d) A foreign bank will be permitted to establish a wholly-owned
subsidiary either through conversion of existing branches into a
subsidiary or through a fresh banking license. A foreign bank will be
permitted to establish a subsidiary through acquisition of shares of
an existing private sector bank provided at least 26 per cent of the paid
capital of the private sector bank is held by residents at all times
consistent with para (i) (b) above.
(e) A subsidiary of a foreign bank will be subject to the licensing
requirements and conditions broadly consistent with those for new
private sector banks.
(f) Guidelines for setting up a wholly- owned subsidiary of a foreign
bank will be issued separately by RBI.
(g) All applications by a foreign bank for setting up a subsidiary or for
conversion of their existing branches to subsidiary in India will have
to be made to the RBI.
(iii) At present there is a limit of 10% on voting rights in respect of banking companies,
and this should be noted by potential investor. Any change in the ceiling can be
brought about only after final policy decisions and appropriate Parliamentary
approvals.
As per Equity
19 FDI Banking-Public Sector
Circular Banking - Public Sector subject to Banking 20% (FDI
19.1 Government
Companies (Acquisition and Transfer of and portfolio
Undertakings) Acts, 1970/80. This ceiling investment)
(20%) is also applicable to the State Bank
of India and its associate Banks.
20 Commodity Exchanges
20.1 1. Futures trading in commodities are regulated under th e Forward Contracts
Regulation) Ac t, 1952. Commodity Exchanges, like Stock Exchanges, are
infrastructure companies in the commodity futures market. With a view to
infuse globally acceptable best practices, modern management skills and latest
technology, it was decided to allow foreign investment in Commodity Exchanges.
2. For the purposes of this Chapter –
(i) "Commodity Exchange " is a recognized association under the provisiosn
of the Forward Contracts (Regulation) Act, 1952, as amended from time
to time, to provide exchange platform for trading in forward contracts in
commodities.
(ii) "recognized association" means an association to which recognition for the
time being has been granted by the Central Government under section 6 of
the Forward Contracts (Regulation) Act, 1952.
(iii) "Association" means anybody of individuals, whether incorporated or
not, constituted for the purposes of regulating and controlling the business
of the sale or purchase of any goods and commodity derivative.
(iv) "Forward contract" means a contract for the delivery of goods and which
is not a ready delivery contract.
(v) "Commodity derivative" means-
□ a contract for delivery of goods, which is not a ready delivery
contract; or
□ a contract for differences which derives its value from prices or
indices of prices of such underlying goods or activities, services,
rights, interests and events , as may be notified in consultation with
the Forward Markets Commission by the Central Government, but
does not include securities.
20.2 Policy for FDI in Commodity Exchange 49% (FDI & Government (For
FII) FDI)
[Investment
by Registered
FII under
Portfolio
Investment
Scheme (PIS)
will be limited
to 23% and
Investment
under FDI
Scheme
limited to
26%]
20.3 Other conditions:
(i) FII purchases shall be restricted to secondary market only, and
(ii) No non-resident investor/entity, including persons acting in concert, will hold more
than 5% of the equity in these companies.
(iii) Foreign investment in commodity exchanges will be subject to the guidelines of the
Department of Consumer Affairs / Forward Markets Commission (FMC).
21. Credit Information Companies (CIC)

21.1 Credit Information Companies 46% ( F D I Government
and
FII)
(1) Foreign investment in Credit Information Companies is subject to the Credit
Information Companies (Regulation) Act, 2005.
(2) Foreign Investment is permitted under the Government route, subject to regulatory
clearance from RBI.
(3) Investment by a registered FII under the Portfolio Investment Scheme would be
permitted upto 24% only in the CICs listed at the Stock Exchanges, within the overall
limit of 49% for foreign investment.
(4) Such FII investment would be permitted subject to the conditions that:–
(a) No single entity should directly or indirectly hold more than 10% equity.
(b) Any acquisition in excess of 1% will have to be reported toRBI as a
mandatory requirement; and
(c) F IIs investing in CICs s h al l n o t s e e k a representation on the Board
of Directors based upon their shareholding.
22. Infrastructure Company in the Securities
22.1 Infrastructure
Market companies in Securities Markets, 46% ( FDI Automatic
namely, stock exchanges, depositories and and
clearing corporations, in compliance with FII) [FDI
SEBI Regulations limit of 26%
and FII limit
of 23 % of
the paid-up
capital]
22.2.1 FII can invest only through purchases in the secondary market
23 Insurance
23.1 Insurance 26% Automatic

(1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is
allowed under the automatic route.
(2) This will be subject to the condition that Companies bringing in FDI shall
obtain necessary license from the Insurance Regulatory and Development Authority
for undertaking insurance activities
24. Non-Banking Finance Companies (NBFCs)
24.1 Foreign Investment in NBFC is al l o w e d u n de 100% Automatic
r the automatic route in only the following
activities:–
(i) Merchant Banking
(ii) Under Writing
(iii) Portfolio Management Services
(iv) Investment Advisory Services
(v) Financial Consultancy
(vi) Stock Broking
(vii) Asset Management
(viii) Venture Capital
(ix) Custodian Services
(x) Factoring
(xi) Credit Rating Agencies
(xii) Leasing and Finance
(xiii) Housing Finance
(xiv) Forex Broking
(xv) Credit Card Business
(xvi) Money Changing Business
(xvii) Micro Credit
(xviii) Rural Credit
24.2 Other conditions:
(1) Investment would be subject to the following minimum capitalisation norms:–
(i) US $0.5 million for foreign capital upto 51% to be brought upfront.
(ii) US $ 5 million for foreign capital more than 51% and upto 75% to be
brought upfront.
(iii) US $ 50 million for foreign capital more than 75% out of which US$
7.5 million to be brought upfront and the balance in 24 months.
(iv) NBFCs (i) having foreign investment more than 75% and upto 100%,
and (ii) with a minimum capitalisation of US$ 50 million, can set up
step down subsidiaries for specific NBFC activities, without any
restriction on the number of operating subsidiaries and without bringing
in additional capital. The mi n i mu m capitalization c o n diti o n as
man date d by par a 3.10.4.1 of DIPP Circular 1 of 2012 dated April
10, 2012, on Consolidated FDI Policy, therefore, shall not apply to
downstream subsidiaries.
(v) Joint Venture operating NBFCs that have 75% or less than 75%
foreign investment can also set up subsidiaries for undertaking other
NBFC activities, subject to the subsidiaries also complying with the
applicable minimum capitalisation norm mentioned in (i), (ii) and (iii)
above and (vi) below.
(vi) Non-Fund based activities : US$ 0.5 million to be brought upfront for
all permitted non- fund based NBFCs irrespective of the level of
foreign investment subject to the following condition:–
It would not be permissible for a company to set up any subsidiary for
any other activity, nor can it participate in any equity of an NBFC
holding/operating company.
Note: The following activities would be classified as Non-Fund Based
activities:
(a) Investment Advisory Services
(b) Financial Consultancy
(c) Forex Broking
(d) Money Changing Business
(e) Credit Rating Agencies
(vii) This will be subject to compliance with the guidelines of RBI.
Note: (i) Credit Card business includes issuance, sales, marketing and design of
various payment products such as credit cards, charge cards, debit cards, stored
value cards, smart card, value added cards etc.
(ii) Leasing and Finance covers only financial leases and not operating leases.
(2) The NBFC will have to comply with the guidelines of the relevant regulator/s,
as applicable.
As per Equity
25.FDI Pharmaceuticals
Circular
25.1 Greenfield 100% Automatic
25.2 Existing Companies 100% Government
26. Power Exchanges
26.1 Power Exchanges under the Central Electricity 49% ( FDI Automatic
Regulatory Commission (Power Market) and Fll)
Regulations, 2010
(i) Such foreign investment would be subject to an FDI limit of 26 per cent and an
FII limit of 23 per cent of the paid-up capital;
(ii) FII investments would be permitted under the automatic route and FDI would be
permitted under the government approval route;
(iii) No non-resident investor/entity, including persons acting in concert, will hold
more than 5% of the equity in these companies; and
(iv) The foreign investment would be in compliance with SEBI Regulations; other
applicable laws/regulations; security and other conditionalities.
ANNEXURE C
Report by the Indian company receiving amount of consideration for issue of shares
/convertible debentures under the FDI Scheme
(To be filed by the company through its Authorised Dealer Category – I bank, with the Regional
Office of the Reserve Bank under whose jurisdiction the Registered Office of the company making
the declaration is situated, not later than 30 days from the date of receipt of the amount of
consideration, as specified in para 9 (I) (A) of Schedule I to Notification No. FEMA 20/2000-
RB dated May 3, 2000)
Permanent Account Number (PAN) of the

investee company given by the Income Tax
Department
No. Particulars (in Block Letters)

1. Name of the Indian company
Address of the Registered Office
Fax
Telephone
e.mail
2. Details of the foreign investor/collaborator
Name
Address
Country
3. Date of receipt of funds
4. Amount In foreign currency In Indian Rupees
5. Whether investment is under Automatic Automatic Route/Approval Route

Route or Approval Route
If Approval Route, give details (ref.no. of
approval and date)
6. Name of the AD Category-I bank through
whom the remittance is received
7. Address of the AD
A Copy of the FIRC/s evidencing the receipt of consideration for issue of shares/convertible
debentures as above is enclosed.
(Authorised signatory of the investee company) (Authorised signatory of

the AD) (Stamp) (Stamp)
FOR USE OF THE RESERVE BANK ONLY:

Unique Identification Number for the remittance received:
Know Your Customer (KYC) Form in respect of the non-resident investor
Registered Name of the Remitter / Investor

(Name, if the investor is an Individual)
Registration Number (Unique Identification

Number* in case remitter is an Individual)
Registered Address (Permanent Address if

remitter Individual)
Name of the Remitter’s Bank

Remitter’s Bank Account No.
Period of banking relationship with the
remitter
*Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as
prevalent in the remitter’s
country
We confirm that all the information furnished above is true and accurate as provided by the
overseas remitting bank of
the non-resident investor.
(Signature of the Authorised Official of the AD bank receiving the remittance)
Date:
Place:
Stamp :
SCHEDULE 2
Purchase/sale of shares and/or convertible debentures of an Indian company by a registered
Foreign Institutional Investor under Portfolio Investment Scheme
1. Purchase/sale of shares and/or convertible debentures

(1) A registered Foreign Institutional Investor (FII) may purchase the shares and
convertible debentures of an Indian company under Portfolio Investment Scheme.
(2) The purchase of shares /convertible debentures under sub-paragraph (1) shall be made
through registered broker on recognized stock exchange in India.
(3) The amount of consideration for purchase of shares/debentures 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 these Regulations.
(4) The total holding by each FII/SEBI approved sub-account of FII shall not exceed
10% (ten per cent) of the total paid-up equity capital or 10% (ten per cent) of the paid-up
value of each series of convertible debentures issued by an Indian company and the total
holdings of all FIIs/sub-accounts of FIIs put together shall not exceed 24 per cent of paid-
up equity capital or paid-up value of each series of convertible debentures.
Provided that the limit of 24% referred to in this paragraph may be increased up to
sectorial cap/statutory ceiling as applicable by the Indian company concerned by passing a
resolution by its Board of Directors followed by passing of a special resolution to that
effect by its General Body.
Explanation.— For arriving at the ceiling on holdings of FIIs, shares/convertible
debentures acquired both through primary as well as secondary market will be included.
However, the ceiling will not include investment made by FII through off-shore Funds,
Global Depository receipts and Euro-Convertible Bonds.
(5) A registered FII is permitted to purchase shares/convertible debentures of an Indian
company through offer/ private placement, subject to the ceiling specified in sub-paragraph
(4) of this paragraph and the Indian company is permitted to issue such shares.
Provided that —
(a) in case of Public Offer, the price of the shares to be issued is not less than the price
at which shares are issued to residents, and
(b) With effect from 21st day of April 2010, in case of issue by private placement,
the price is not less than the price arrived in terms of SEBI guidelines or not less than
the fair price worked out as per the Discounted Cash Flow method duly certified by a
SEBI registered Merchant Banker or Chartered Accountant, as applicable.
(6) A registered FII may, undertake short selling as well as lending and borrowing of
securities subject to such conditions as may be stipulated by the Reserve Bank of India and
the SEBI from time to time.”]
2. Maintenance of account by a registered FII for routing transactions of purchase and
sale of shares/ convertible debentures
A registered Foreign Institutional Investor may open a Foreign Currency Account and/or a
Special Non-resident Rupee Account with a designated branch of an authorized dealer for
routing the receipt and payment for transaction relating to purchase and sale of shares/
convertible debentures under this Scheme, subject to the following conditions:
(i) The Account shall be funded by inward remittance through normal banking channels
or by credit of sale proceeds (net of taxes) of the shares/convertible debentures sold on
stock exchange.
(ii) The funds in the account shall be utilized for purchase of shares/ convertible
debentures in accordance with the provisions of paragraph 1 of this Scheme or for
remittance outside India.
(iii) The funds from Foreign Currency Account of the Registered FII may be transferred to
Special Non-Resident Rupee account of the same FII and vice versa.
(iv) The Foreign Currency Account and the Special Non-Resident Rupee account of the
registered FII shall be a non-interest bearing account/s.
3. Remittance of sale proceeds of shares/convertible debentures

The designated branch of an authorised dealer may allow remittance of net sale proceeds
(after payment of taxes) or credit the net amount of sale proceeds of shares/convertible
debentures to the foreign currency account or a Non-resident Rupee Account of the registered
Foreign Institutional Investor concerned.
4. Investment by certain other investors

(1) A domestic asset management company or portfolio manager, who is registered
with SEBI as a foreign institutional investor managing the fund of a sub-account may make
investment under the Scheme on behalf of—
(i) a person resident outside India who is a citizen of a foreign state, or
(ii) a body corporate registered outside India:
Provided that such investment is made out of funds raised or collected or brought from
outside through normal banking channel.
[***]
(2) Investments permitted to be made under sub-paragraph (1) shall not exceed 5% (five per
cent) of the total paid- up equity capital or 5% (five per cent) of the paid-up value of each
series of convertible debentures issued by an Indian company, and shall also not exceed the
overall ceiling specified in sub-paragraph (4) of paragraph 1 of this Schedule.
SCHEDULE 3
Purchase/Sale of shares and/or convertible debentures by an NRI 4[***] on a Stock
Exchange in India on repatriation and/or non-repatriation basis under Portfolio Investment
Scheme
1. A Non-resident Indian (NRI) 5[* * *] may purchase/sell shares and/or convertible

debentures of an Indian company, through a registered broker on a recognised stock
exchange, subject to the following conditions :
(i) NRIs may purchase and sell shares/convertible debentures under the Portfolio
Investment Scheme through a branch designated by an Authorised Dealer for the
purpose.
(ii) the paid-up value of shares of an Indian company, purchased by each NRI 7[***]
both on repatriation and on non-repatriation basis, does not exceed 5 per cent of the
paid-up value of shares issued by the company concerned;
(iii) the paid-up value of each series of convertible debentures purchased by each NRI [***]
both on repatriation and non-repatriation basis does not exceed 5 per cent of the
paid-up value of each series of convertible debentures issued by the company
concerned;
(iv) the aggregate paid-up value of shares of any company purchased by all NRIs [* * *]
does not exceed 10 per cent of the paid up capital of the company and in the case of
purchase of convertible debentures the aggregate paid-up value of each series of
debentures purchased by all NRIs 2[***] does not exceed 10 per cent of the paid-up
value of each series of convertible debentures:
Provided that the aggregate ceiling of 10 per cent referred to in this clause may be
raised to 24 per cent if a special resolution to that effect is passed by the General Body
of the Indian company concerned;
(v) the NRI [***] investor takes delivery of the shares purchased and gives delivery of
shares sold;
(vi) payment for purchase of shares and/or debentures is made by inward remittance in foreign
exchange through normal banking channels or out of funds held in NRE/FCNR account maintained
in India if the shares are purchased on repatriation basis and by inward remittance or out of funds
held in NRE/FCNR/NRO/NRNR/NRSR account of the [NR] concerned maintained in India where
the shares/debentures are purchased on on-repartriation basis;
2. Report to Reserve Bank

The link office of the designated branch of an authorized dealer referred to in paragraph 1
shall furnish to the Chief General Manager-in-Charge, Reserve Bank of India, Central Office,
Mumbai, a report on daily basis on PIS transactions undertaken by I, such report shall be
furnished online or on floppy or in hard copy in a format supplied by Reserve Bank.
3. Remittance/credit of sale/maturity proceeds of shares and/or debentures.- The net
sale/maturity proceeds (after payment of taxes) of shares and/or debentures of an Indian company
purchased by NRI [***] under this Scheme, may be allowed by the designated branch of an
authorised dealer referred to in paragraph 1-
(a) to be credited to NRO account of the NRI/[***] investor where the payment for purchase of
shares and/or debentures sold was made out of funds held in NRO account or where shares and/or
debentures were purchased on non-repatriation basis, or
(b) at the NRI [***] investor’s option, to be remitted abroad or credited to his/its NRE/FCNR/NRO
account of the NRI, where he shares and/or debentures were purchased on repatriation basis.
SCHEDULE 4
[See Regulation 5(3)(ii)]
Purchase and sale of shares/convertible debentures by a Non-resident Indian (NRI) 2[* * *],
on non-repatriation basis
1. Prohibition on purchase of shares/convertible debentures of certain companies

No purchase of shares or convertible debentures of an Indian company shall be made
under this Scheme if the company concerned is a Chit Fund or a Nidhi company or is
engaged in agricultural/plantation activities or real estate business or construction of farm
houses or dealing in Transfer of Development Rights.
Explanation.— For the purpose of this paragraph, real estate business shall not include
development of township, construction of residential/commercial premises, roads, bridges, etc.
2. Permission to purchase and/or sell shares/convertible debentures of an Indian company

Subject to paragraph 1, a Non-resident Indian [* * *] may, without any limit, purchase on
non-repatriation basis, shares or convertible debentures of an Indian company issued whether
by public issue or private placement or right issue.[***]
3. Method of payment for purchase of shares/convertible debentures

The amount of consideration for purchase of shares or convertible debentures of an
Indian company on non- repatriation basis, shall be paid by way of inward remittance
through normal banking channels from abroad or out of funds held in
NRE/FCNR/NRO/NRSR/NRNR account maintained with an authorised dealer or as the
case may be with an authorised bank in India:
Provided that in the case of an NRI/[* * *] resident 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.
(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
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.

(1) A registered Foreign Institutional Investor (FII) may purchase, on repatriation basis,
either directly from the issuer of such securities or through a registered stock broker
on a recognized Stock Exchange in India the following securities, subject to the terms
and conditions as specified by the SEBI and the Reserve Bank from time to time:
(a) dated Government securities/treasury bills;
(b) listed non-convertible debentures/bonds issued by an Indian company;
(c) commercial papers issued by an Indian company;
(d) units of domestic mutual funds;
(e) Security Receipts issued by Asset Reconstruction Companies provided that 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 eligible investors
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;
(f) Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital
instruments as upper Tier II capital issued by banks in India to augment their
capital (Tier I capital and Tier II capital as defined by Reserve Bank, and
modified from time to time) provided that the investment by all eligible investors
in Perpetual Debt instruments (Tier I) shall not exceed an aggregate ceiling of 49
per cent of each issue, and investment by individual FII shall not exceed the limit
of 10 per cent of each issue.
(g) with effect from April 29, 2011 listed and unlisted non-convertible debentures/bonds
issued by an Indian company in the infrastructure sector, where 'infrastructure' is
defined in terms of the extant ECB guidelines;
(h) with effect from November 3, 2011 non-convertible debentures/bonds issued by
Non-Banking Finance Companies categorized as 'Infrastructure Finance
Companies'(IFCs) by the Reserve Bank;
(i) with effect from November 22, 2011, Rupee denominated bonds/units issued by
Infrastructure Debt Funds, provided that the FIIs may trade such bonds/units amongst
the eligible non-resident investors for Infrastructure Debt Funds within the lock-in
period;
(j) with effect from March 1, 2012, primary issues of non-convertible
debentures/bonds provided such non- convertible debentures/bonds are committed to be
listed within 15 days of such investment. In the event of such non-convertible
debentures/bonds issued not being listed within 15 days of issuance, for any reason,
then the FII shall immediately dispose of those non-convertible debentures/bonds either
by way of sale to a third party or to the issuer and the terms of offer to FIIs should
contain a clause that the issuer of such debt securities shall immediately
redeem/buyback those securities from the FIIs in such an eventuality:
Provided that FIIs may offer such securities as permitted by the Reserve Bank from
time to time as collateral to the recognized Stock Exchanges in India for their
transactions in exchange traded derivative contracts as specified in sub-Regulation
6 of Regulation 5.
1A Permission for Qualified Foreign investors for purchase of securities

(i) With effect from 9th day of August 2011, A QFI may purchase on repatriation basis,
subject to the terms and conditions stipulated by the SEBI and the Reserve Bank in this
regard from time to time in the following rupee denominated units of:
(a) equity schemes of SEBI registered domestic mutual funds,
(b) debt scheme of SEBI registered domestic mutual funds which invest in infrastructure,
(c) any scheme of SEBI registered domestic mutual funds that hold at least 25 per cent
of their assets (either in debt or equity or both) in infrastructure.
For the purpose of sub-clauses (b) and (c) above, 'infrastructure' shall mean infrastructure as
defined in terms of the ECB guidelines.
(ii) A QFI may purchase securities referred to in sub-clauses (a) to (c) above under the
following routes, subject to the terms and conditions stipulated by SEEI and Reserve Bank
in this regard, from time to time:
(a) Direct Route- SEBI registered Qualified Depository Participant (QDP)-route;
(b) Indirect Route - Unit Confirmation Receipt (UCR) route."
(iii) A QFI may:
(a) purchase, on repatriation basis through SEBI registered Qualified Depository
Participants (QDPs) (defined as per the extant SEBI regulations), listed non-
convertible debentures, listed bonds of Indian companies and listed units of Mutual
Fund Debt Schemes directly from the issuer or through a registered stock broker
on a recognized stock exchange in India and sell through a registered stock broker on
a recognized stock exchange in India or by way of buy-back or redemption by the
issuer;
(b) invest in primary issues of non-convertible debentures/bonds provided such non-
convertible debentures/ bonds are committed to be listed within 15 days of such
investment. In the event of such non-convertible debentures/bonds issued to the QFI
not being listed within 15 days of issuance to the QFI for any reason, then the QFI
shall immediately dispose of these non-convertible debentures/bonds either by way
of sale to a third party or to the issuer and the terms of offer to QFI should
contain a clause that the issuer of such debt securities shall immediately
redeem/buy-back the said securities from the QFIs in such an eventuality."
(iv) With effect from 22nd day of November 2011, A QFI which purchases securities
under this Regulation shall open a single demat account with a Qualified Depository
Participant in India.
1B Permission to Other Non Resident investors for purchase of securities

(i) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies,
Endowment Funds, Insurance Funds, Pension Funds which are registered with SEBI as
eligible investors in Infrastructure Debt Funds may purchase on repatriation basis Rupee
Denominated bonds/units issued by Infrastructure Debt Funds."
(ii) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies,
Endowment Funds, Insurance Funds and Pension Funds and Foreign Central Banks
registered with SEBI may purchase, on repatriation basis, either directly from the issuer of
such securities or through registered stock broker on a recognised Stock Exchange in India,
the following securities, subject to the terms and conditions as specified by the SEBI and
2. Permission to Non-resident Indian and [* * *] for purchase of securities

1A. A Non-resident Indian 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.
(iv) bonds / units issued by Infrastructure Debt Funds.
1B. A Non-resident Indian may purchase on repatriation basis perpetual debt instruments
eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital
issued by banks in India to augment their capital, as stipulated by Reserve Bank from time
to time. The investments by all NRIs in 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 per cent of each issue. Investment by NRIs in Debt capital instruments
(Tier II) shall be in accordance with the extant policy for investment by NRIs in other debt
instruments.
(2) A Non-resident Indian [* * *] 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.
(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

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 [* * *] 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 [* * *] 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) A Multilateral Development 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.
(5) With effect the 9th day of August 2011, A QFI who purchases securities under this
Schedule (other than by way of Indirect Route) shall make payment out of funds held in a single
non-interest bearing Rupee Account maintained with an AD bank in terms of the Foreign
Exchange Management (Deposit) Regulations, 2000, as amended from time to time".
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.
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.
(ii) In the case of a Non-resident Indian [ * * *] 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 [* * *] 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 [* * *] 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.
(iii) 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 Reserve Bank.
[SCHEDULE 6
Investment in an Indian Venture Capital Undertaking by a registered Foreign Venture
Capital Investor
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.
2[The registered FVCI may invest in the eligible securities (equity, equity linked instruments,
debt, debt instruments, debentures of an IVCU or VCF, units of schemes/funds set up by a
VCF) by way of private arrangement/purchase from a third party, subject to the terms and
conditions stipulated by the Reserve Bank from time to time. The registered FVCI may invest
in securities on a recognized stock exchange subject to the provisions of the SEBI (FVCI)
Regulations, 2000, as amended from time to time, as well as the terms and conditions stipulated
therein.
(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.
5. Adherence to SEBI Guidelines

FVCIs shall abide by the relevant regulations/guidelines issued by Securities and Exchange
Board.
SCHEDULE 7
[See Regulations 5(8) & 13]
INDIAN DEPOSITORY RECEIPTS (IDRS) BY ELIGIBLE COMPANIES RESIDENT
OUTSIDE INDIA
1. Issue of IDRs. - Eligible companies resident outside India may issue India Depository
Receipts (IDRs) through a Domestic Depository, to persons resident India and outside India,
subject to the following conditions:-
(a) the issue of IDRs is in compliance with the Companies (Issue of India Depository Receipts)
Rules, 2004, as amended from time to time.
(b) the issue is in compliance with the SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009, as amended from time to time.
(c) any issue of IDRs by financial/banking companies having presence in India either through
a branch or subsidiary, shall require prior approval of the sectors regulator(s).
(d) IDRs shall be denominated in Indian Rupees only.
(e) The proceeds of the issue of IDRs shall be immediately repatriated outside India by the
eligible companies issuing such IDRs.
2. Purchase/sale of IDRs.- A SEBI registered FII including SEBI approved sub-accounts of the
FIls or an NRI may purchase, hold or sell IDRs, subject to the following terms and conditions:-
(a) NRIs may invest in the IDRs out of funds held in their NRE/FCNR(B) account, maintained
with an Authorised Dealer/Authorised bank.
(b) Limited two way fungibility of IDRs shall be permissible subject to the terms and
conditions stipulated by Reserve Bank in this regard from time to time.
(c) IDRs shall not be redeemable into underlying equity shares before the expiry of one year
from the date of issue.
(d) Redemption/conversion of IDRs into underlying equity shares of the issuing company shall
be in compliance with sub-regulation (7) of Regulation 22, of the Foreign Exchange
Management (Transfer or Issue of Any Foreign Security) Regulations, 2004.
SCHEDULE 8
[See Regulation 5(7A)]
Scheme for Investment by Qualified Foreign Investors in equity shares
Eligible Investors
1. The Schedule shall be applicable to Qualified Foreign Investors (QFIs) as efined
in these regulations.
Eligible instruments and eligible transactions -

2. (a) Purchase: QFIs shall be permitted to invest through SEBI registered Qualified
Depository Participants (QDPs)-
(i) in equity shares of listed Indian companies through SEBI registered stock
brokers on recognized stock exchanges in India.
(ii) in equity shares of Indian companies which are offered to public in India in
terms of the relevant and applicable SEBI guidelines/regulations.
(iii) equity shares by way of rights shares, bonus shares or equity shares on
account of stock split/ consolidation or equity shares on account of
amalgamation, demerger or such corporate actions.
(b) Sale: QFIs shall be allowed to sell the equity shares so acquired by way of
sale.
(i) Through recognized brokers on recognized stock exchanges in India; or
(ii) In an open offer in accordance with the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011; or
(iii) In an open offer in accordance with the SEBI (Delisting of Securities)
Guidelines, 2009; or
(iv) Through buyback of shares by a listed Indian company in accordance with
the SEBI (Buyback) Regulations, 1998.
Pricing
3. The pricing of all eligible transactions and investment in all eligible instruments by
QFIs under this scheme shall be in accordance with the relevant and applicable SEBI guidelines
only.
Mode of payment/repatriation
4. For QFI investments under this scheme open a single non-interest bearing Rupee
Account with an AD Category- I bank in India, for the limited purpose of routing the receipt and
payment for transactions relating to purchase and sale of equity shares of listed Indian companies
subject to the following conditions :
(a) The account shall be funded by inward remittance through normal banking channel
and by credit of the sale/redemption/buyback proceeds (net of taxes) and on account
of interest payment/dividend on the eligible securities for QFIs.
(b) The funds in this account shall be utilized for purchase of eligible securities for QFIs or
for remittance (net of taxes) outside India.
(c) The QDP will operate such non-interest bearing Rupee Accounts on behalf of the QFIs
and at the instructions of the QFIs.
Demat accounts
5. QFIs would be allowed to open a dedicated demat account with a QDP in India for
investment in equity shares under the scheme. It is clarified that each QFI shall maintain a single
demat account with a QDP for all investments in eligible securities for QFIs in India.
Limits and its monitoring

6. The individual and aggregate investment limits for the QFIs shall be 5 per cent and
10 per cent respectively of the paid up capital of an Indian company. These limits shall be over
and above the FII and NRI investment ceilings prescribed under the Portfolio Investment
Scheme for foreign investment in India. Further, wherever there are composite sectoral caps
under the extant FDI policy, these limits for QFI investment in equity shares shall also be
within such overall FDI sectoral caps.
The onus of monitoring and compliance of these limits shall remain jointly and severally
with the respective QFIs, DPs and the respective Indian companies (receiving such investment).
7. Other conditions
(i) Eligibility - QFI would have to meet eligibility criteria as prescribed by SEBI from time
to time.
(ii) Know Your Customer (KYC) - QDPs will ensure KYC of the QFIs as per the norms
prescribed by SEBI. AD Category-I banks will also ensure KYC of the QFIs for opening and
maintenance of the single non-interest bearing Rupee accounts as per the extant norms.
(iii) Permissible currencies - QFIs will remit foreign inward remittance through normal
banking channel in any permitted currency (freely convertible) directly into the single non-
interest bearing Rupee account of the QFI maintained with an AD Category-I bank.
Reporting
8. In addition to the reporting to SEBI as may be prescribed by them, QDPs and
AD Category-I banks (maintaining QFI accounts) will also ensure reporting to the Reserve Bank
of India in a manner and format as prescribed by the Reserve Bank of India from time to time.]
THE FOREIGN EXCHANGE MANAGEMENT (ACQUISITION AND TRANSFER OF
IMMOVABLE PROPERTY IN INDIA) REGULATIONS, 2000
Notification No. FEMA 21/2000-RB, dated 3rd May, 2000, FEMA Notification No. FEMA
65/2002/RB dated 29th June 2002, Notification No. FEMA 93/2003-RB dated 9-6-2003,
Notification No. FEMA.146/2006-RB dated 10.2.2006, Notification No. FEMA.186/2009-RB
dated February 3, 2009 and Notification No. FEMA.200/2009-RB dated October 5,2009
G.S.R. 407(E), dated 3-5-2000.— In exercise of the powers conferred by clause (i) of sub-
Act, 1999 (42 of 1999), the Reserve Bank of India makes the following regulations, namely:—

(i) These Regulations may be called the Foreign Exchange Management (Acquisition and
Transfer of Immovable Property in India) Regulations, 2000.
(ii) They shall come into force on 1st day of June 2000.
2. Definitions
In these Regulations, unless the context otherwise requires —
(b) ‘An authorised dealer’ means a person authorised as an authorised dealer under sub-
(c) ‘a person of Indian origin’ means an individual (not being a citizen of Pakistan or
Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who—
(i) at any time, held Indian passport; or
(ii) who or either of whose father or mother or whose grandfather or grandmother was
a citizen of India by virtue of the Constitution of India or the Citizenship Act,
1955 (57 of 1955).
(d) ‘repatriation outside India’ means the buying or drawing of foreign exchange from an
authorised dealer in India and remitting it outside India through normal banking
channels or crediting it to an account denominated in foreign currency or to an account
in Indian currency maintained with an authorised dealer from which it can be converted
in foreign currency;
(e) the words and expressions used but not defined in these Regulations shall have the same
3. Acquisition and Transfer of Property in India by an Indian Citizen resident outside

India
A person resident outside India who is a citizen of India may —
(a) acquire immovable property in India other than an agricultural property plantation
or a farm house: Provided that in case of acquisition of immovable property,
payment of purchase price, if any, shall be made out of (i) funds received in India
through normal banking channels by way of inward remittance from any place
outside India or (ii) funds held in any non-resident account maintained in accordance
with the provisions of the Act and the regulations made by the Reserve Bank :
Provided further that no payment of purchase price for acquisition of immovable
property shall be made either by traveller’s cheque or by foreign currency notes or
by other mode other than those specifically permitted by this clause.
(b) transfer any immovable property in India to a person resident in India, and
(c) transfer any immovable property other than agricultural or plantation property or
farm house to a person resident outside India who is a citizen of India or to a
person of Indian origin resident outside India.
4. Acquisition and Transfer of Property in India by a Person of Indian origin

A person of Indian origin resident outside India may —
(a) acquire immovable property in India other than an agricultural property, plantation, or a
farm house: Provided that in case of acquisition of immovable property, payment of
purchase price, if any, shall be made out of (i) funds received in India through normal
banking channels by way of inward remittance from any place outside India or (ii) funds
held in any non-resident account maintained in accordance with the provisions of the
Act and the regulations made by the Reserve Bank:
Provided further that no payment of purchase price for acquisition of immovable
property shall be made either by traveller’s cheque or by currency notes of any foreign
country or any mode other than those specifically permitted by this clause.
(b) acquire any immovable property in India other than agricultural land/farm
house/plantation property by way of gift from a person resident in India or from a
person resident outside India who is a citizen of India or from a person of Indian
origin resident outside India;
(c) acquire any immovable property in India by way of inheritance from a person resident
outside India who had acquired such property in accordance with the provisions of the
foreign exchange law in force at the time of acquisition by him or the provisions of
these Regulations or from a person resident in India;
(d) transfer any immovable property in India other than agricultural land/farm
house/plantation property, by way of sale to a person resident in India;
(e) transfer agricultural land/farm house/plantation property in India, by way of gift or sale
to a person resident in India who is a citizen of India;
(f) transfer residential or commercial property in India by way of gift to a person resident
in India or to a person resident outside India who is a citizen of India or to a person of
Indian Origin resident outside India.
5. Acquisition of Immovable Property for carrying on a permitted activity
A person resident outside India who has established in India in accordance with the Foreign
Exchange Management (Establishment in India of Branch or Office or other Place of Business)
Regulations, 2000, a branch, office or other place of business for carrying on in India any
activity, excluding a liaison office, may —
(a) acquire any immovable property in India, which is necessary for or incidental to
carrying on such activity: Provided that —
(i) all applicable laws, rules, regulations or directions for the time being in force are
duly complied with; and
(ii) the person files with the Reserve Bank a declaration in the Form IPI annexed to
these regulations, not later than ninety days from the date of such acquisition;
(b) transfer by way of mortgage to an authorised dealer as a security for any borrowing,
the immovable property acquired in pursuance of clause (a).
5A. Purchase/Sale of Immovable Property by Foreign Embassies/Diplomats/Consulate

Generals
A Foreign Embassy/Diplomat/Consulate General may purchase/sell immovable property
in India other than agricultural land/plantation property/farm house provided (i) clearance from
Government of India, Ministry of External Affairs is obtained for such purchase/sale, and (ii) the
consideration for acquisition of immovable property in India is paid out of funds remitted from
abroad through banking channel.
6. Repatriation of sale proceeds

(a) A person referred to in sub-section (5) of section 6 of the Act, or his successor shall
not, except with the prior permission of the Reserve Bank, repatriate outside India the sale
proceeds of any immovable property referred to in that sub-section;
(b) In the event of sale of immovable property other than agricultural land/farm
house/plantation property in India by a person resident outside India who is a citizen of India or a
person of Indian origin, the authorised dealer may allow repatriation of the sale proceeds outside
India, provided the following conditions are satisfied, namely:
(i) the immovable property was acquired by the seller in accordance with the
provisions of the foreign exchange law in force at the time of acquisition by him or
the provisions of these Regulations;
(ii) [* * *]
(ii) the amount to be repatriated does not exceed (a) the amount paid for
acquisition of the immovable property in foreign exchange received through normal
banking channels or out of funds held in Foreign Currency Non- Resident Account or
(b) the foreign currency equivalent, as on the date of payment, of the amount paid where
such payment was made from the funds held in Non-Resident External account for
acquisition of the property; and
(iii) in the case of residential property, the repatriation of sale proceeds is
restricted to not more than two such properties.]
(c) In the event of failure in repayment of external commercial borrowing availed by a
person resident in India under the provisions of the Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000, (Notification No. FEMA
3/2000-RB, dated 3-5-2000) a bank which is an authorised dealer may permit the overseas
lender or the security trustee (in whose favour the charge on immovable property has been
created to secure the ECB) to sell the immovable property on which the said loan has been
secured only to a (by the) person resident in India and to repatriate the sale proceeds towards
outstanding dues in respect of the said loan and not any other loan.
7. Prohibition on acquisition or transfer of immovable property in India by citizens of

certain countries
No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran,
Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer
immovable property in India, other than lease, not exceeding five years.
8. Prohibition on transfer of immovable property in India

Save as otherwise provided in the Act or Regulations, no person resident outside India shall
transfer any immovable property in India:
Provided that the Reserve Bank may, for sufficient reasons, permit the transfer, subject to
such conditions as may be considered necessary.
Provided further that a bank which is an authorised dealer may, subject to the directions
issued by the Reserve Bank in this behalf, permit a person resident in India or on behalf of
such person to create charge on his immovable property in India in favour an overseas lender
or security trustee, to secure an external commercial borrowing availed under the provisions of
the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations,
2000 (Notification No. FEMA 3/2000-RB, dated 3-5-2000).
FORM IPI*
(See Regulation 5)
Declaration of immovable property acquired in India by a person resident outside India
Instructions
The declaration should be completed in duplicate and submitted directly to the Chief
General Manager, Exchange Control Department (Foreign Investment Division - III), Reserve
Bank of India, Central Office, Bombay - 400 001 within 90 days from the date of acquisition of
the immovable property.
Documentation
Certified copies of letter of approval from Reserve Bank obtained under section 6(6) of FEMA,
1999 (42 of 1999).
1. Full name and address of the acquirer who has
acquired the immovable property
2. (a) Description of immovable property (a)
(b) Details of its exact location stating the name of the
state, town and municipal/survey number, etc. (b)
3. (a) Purpose for which the immovable property has been acquired (a)
(b) Number and date of Reserve Bank’s permission, if any (b)
4. Date of acquisition of the immovable property
5. (a) How the immovable property was acquired i.e.,
whether by way of purchase of lease (a)
(b) Name, citizenship and address of the seller/lessor (b)

(c) Amount of purchase price and sources of funds. (c)
I/We hereby declare that—

(a) the particulars given above are true and correct to the best of my/our knowledge and
belief;
(b) no portion of the said property has been leased/rent to, or is otherwise being allowed to
be used by, any other party.
Encls :..........................................................
(Signature of Authorised official)
Stamp
Place :................. Name : ..............................................
Date :.................. Designation.........................................
THE FOREIGN EXCHANGE MANAGEMENT (ESTABLISHMENT IN INDIA OR
BRANCH OR OFFICE OR OTHER PLACE OF BUSINESS) REGULATIONS, 2000
Notification No. FEMA 22/2000-RB, dated 3rd May, 2000 as amended byNotification No.FEMA
95/2003-RB dated 2-7-2003, Notification No.FEMA 102 dated 3rd October, 2003, Notification No.
FEMA.134/2005/RB dated 7.5.2005 andNotification No. FEMA 218/2011-RB dated 19.1.2011
G.S.R. 408(E), dated 3-5-2000.— In exercise of the powers conferred by sub-section (6) of
section 6 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes
the following regulations to prohibit, restrict and regulate establishment in India of a branch or
office or other place of business by a person resident outside India, namely:

(i) These Regulations may be called the Foreign Exchange Management (Establishment in
India of Branch or Office or other Place of Business) Regulations, 2000.
2. Definitions
In these regulations, unless the context otherwise requires —
(aa) “authorized dealer” means a person authorized as an authorized dealer under sub-
section (1) of section 10 of the Act.
(b) ‘foreign company’ means a body corporate incorporated outside India, and includes a
firm or other association of individuals;
(c) ‘Branch’ shall have the meaning assigned to it in sub-section (9) of section 2 of the
Companies Act, 1956 (1 of 1956),
(d) ‘Form’ means a Form annexed to these Regulations;
(e) ‘Liaison Office’ means a place of business to act as a channel of communication
between the Principal place of business or Head Office by whatever name called and
entities in India but which does not undertake any commercial/trading/industrial
activity, directly or indirectly, and maintains itself out of inward remittances received
from abroad through normal banking channel;
(f) ‘Project Office’ means a place of business to represent the interests of the foreign
company executing a project in India but excludes a Liaison Office;
(g) ‘Site Office’ means a sub-office of the Project Office established at the site of a project
but does not include a Liaison Office;
(h) ‘Stand alone basis’ means such branch offices would be isolated and restricted to the
Special Economic Zone alone and no business activity/transaction will be allowed
outside the Special Economic Zones in India which includes branches/subsidiaries of its
parent office in India;
(i) the words and expressions used but not defined in these Regulations, shall have the same
3. Prohibition against establishing branch or office in India

No person resident outside India shall, without prior approval of the Reserve Bank, establish
in India a branch or a liaison office [***] or any other place of business by whatever name
called:
Provided that no approval shall be necessary for a banking company, if such company
has obtained necessary approval under the provisions of the Banking Regulation Act, 1949.
Provided further that no approval shall be necessary from RBI for a company to establish a
branch/unit in Special Economic Zones (SEZs) to undertake manufacturing and service
activities.
Provided also that :
(I) such units are functioning in those sectors where 100 per cent FDI is permitted.
(II) such units comply with part XI of the Companies Act (Section 592 to 602),
(III) such units function on a stand-alone basis,
(V) in the event of winding-up of business and for remittance of winding-up proceeds, the
branch shall approach an Authorised Dealer in Foreign Exchange with the documents
except (A) listed in Regulation 6(l)(iii) of Notification No. FEMA 13/2000-RB dated
3rd May, 2000:
Provided further that no approval shall be necessary for an insurance company, if such
company has obtained approval from the Insurance Regulatory and Development Authority
established under section 3 of the Insurance Regulatory and Development Authority Act,
1999, for establishing a Liaison Office in India.
4. Prohibition against establishing a branch or office in India by citizens of certain

countries
No person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China,
Hong Kong or Macau], without prior permission of the Reserve Bank, shall establish in India, a
branch or a liaison office or a project office or any other place of business by whatever name
called.
5. Application to Reserve Bank for opening branch or liaison office

(i) A person resident outside India desiring to establish a branch or liaison office in India
shall apply to the Reserve Bank through an Authorised Dealer, in Form FNC as amended
by Reserve Bank of India from time to time.
(ia) A person resident outside India permitted by the Reserve Bank under this regulation
to establish a liaison office in India, may apply to the authorised dealer concerned for
extension of the validity period of approval, and upon receipt of such an application, the
authorised dealer concerned may extend the validity period of approval subject to such
directions issued by the Reserve Bank in this regard, from time to time.]
(ii) A foreign Company may open a Project Office/s in India provided it has secured from
an Indian company, a contract to execute a project in India, and
(a) the project is funded directly by inward remittance from abroad; or
(b) the project is funded by a bilateral or multilateral International Financing
Agency; or
(c) the project has been cleared by an appropriate authority; or
(d) a company or entity in India awarding the contract has been granted Term
Loan by a Public Financial institution or a bank in India for the project.
(iii) The Foreign Company shall furnish a report to the concerned Regional Office of
Reserve Bank of India under whose jurisdiction the Project Office is set up, giving details as
under:
(a) Name and address of the foreign company
(b) Reference No. and date of letter awarding the contract referred to in clause
(ii) of Regulation 5
(c) Total amount of contract
(d) Address and tenure of Project Office
(e) Nature of Project undertaken
[***]
Explanation.— For the purpose of this Regulation,
(i) ‘a bilateral or multilateral International Financing Agency’ means the World Bank or
the International Monetary Fund or similar other body;
(ii) ‘Public Financial Institution’ is a public financial institution as defined in section
4A of the Companies Act, 1956.
6. Activities which may be undertaken by the branch or office in India

(i) A person resident outside India permitted by the Reserve Bank under Regulation 5, to
establish a branch or a liaison office in India may undertake or carry on any activity
specified in Schedule I or, as the case may be, in Schedule II, but shall not undertake
or carry on other activity unless otherwise specifically permitted by the Reserve Bank.
(ii) Opening of project office under clause (ii) of Regulation 5 is permitted in India and
such project office shall not undertake or carry on any other activity other than the
activity relating and incidental to execution of the project.
7. Remittance of profit or surplus

A person resident outside India permitted by the Reserve Bank under Regulation 5, to
establish a branch or Project Office in India may remit outside India the profit of the branch or
surplus of the Project on its completion, net of applicable Indian taxes, on production of the
following documents, and establishing the net profit or surplus, as the case may be, to the
satisfaction of the authorised dealer through whom the remittance is effected.
(I) For remittance of profit of a branch,–
(a) certified copy of the audited balance sheet and profit and loss account
for the relevant year;
(b) A Chartered Accountant’s certificate certifying,–
(i) the manner of arriving at the remittable profit,
(ii) that the entire remittable profit has been earned by undertaking the permitted
activities, and
(iii) that the profit does not include any profit on revaluation of the assets of the
branch.
(II) For remittance of surplus on completion of the Project, —
(a) certified copy of the final audited Project accounts;
(b) a Chartered Accountant’s certificate showing the manner of arriving at the
remittable surplus;
(c) income tax assessment order or either documentary evidence showing payment of
income tax and other applicable taxes, or a Chartered Accountant’s certificate
stating that sufficient funds have been set aside for meeting all Indian tax
liabilities; and
(d) auditor’s certificate stating that no statutory liabilities in respect of the Project are
outstanding.
Schedule I
[See Regulation 6(i)]
Permitted activities for a branch in India of a person resident outside India
(i) Export/Import of goods.

(ii) Rendering professional or consultancy services.
(iii) Carrying out research work, in which the parent company is engaged.
(iv) Promoting technical or financial collaborations between Indian companies and
parent or overseas group company.
(v) Representing the parent company in India and acting as buying/selling agent in India.
(vi) Rendering services in Information Technology and development of software in India.
(vii) Rendering technical support to the products supplied by parent/group companies.
(viii) Foreign airline/shipping company.
Schedule II
[See Regulation 6(i)]
Permitted activities for a Liaison office in India of a person resident outside India
(i) Representing in India the parent company/group companies.

(ii) Promoting export import from/to India.
(iii) Promoting technical/financial collaborations between parent/group companies and
companies in India.
(iv) Acting as a communication channel between the parent company and Indian companies.
FORM FNC
(See regulation 5)
(The application form shall be completed and submitted to the AD Category-I bank designated by the
applicant, for onward transmission to the Chief General Manager-in-Charge, Reserve Bank,
Foreign Exchange Department, Foreign Investment Division, Central Office, Fort, Mumbai - 400
001 along with the documents mentioned in item (viii) of the Declaration).
No. Details Particulars

1. Full name and address of the
applicant Date and Place of
incorporation/registration
Telephone Number(s)
Fax
Number(s)
E-mail ID.
2. Details of capital
(i) Paid-up capital
(ii) Free Reserves/Retained earnings as per last audited
Balance Sheet/Financial Statement
(iii) Intangible assets, if any.
3. Brief description of the activities of the applicant.
No. Details Particulars
4. (i) Value of goods imported from and/or
exported to India by the applicant during each
of the last three years :
(a) Imports from India
(b) Exports to India
(ii) Particulars of existing arrangements if any, for
representing the company in India.
(iii) Particulars of the proposed Liaison/Branch Office :
(a) Details of the activities/services proposed to be
undertaken/rendered by the office
(b) Place where the office will be located
(c) Phone number
(d) E-mail ID
(e) Expected number of employees
(with number of foreigners).
5. (i) Name and address of the Banker of the
applicant in the home country
(ii) Telephone & Fax Number
(iii) E-mail ID.
6. Any other information which the
applicant company wishes to furnish in
support of this application.
7. For Non-profit/Non-Government Organisations:
(i) Details of activities carried out in the host
country and other countries by the applicant
organisation.
(ii) Expected level of funding for perations
in India.
(iii) Copies of the bye-laws, Articles of
Association of the organisation.
DECLARATION
We hereby declare that:

(i) The particulars given above are true and correct to the best of our knowledge and belief.
(ii) Our activities in India would be confined to the activities indicated in column 4(iii)(a) above.
(iii) If we shift the office to another place within the city, we shall intimate the designated AD
Category-I bank and the Reserve Bank. In the event of shifting the Office to any other city in
India, prior approval of the Reserve Bank will be obtained.
(iv) We will abide by the terms and conditions that may be stipulated by the Government of
India/Reserve Bank/ designated AD Category-I bank from time to time.
(v) We, hereby commit that we are agreeable to a report/opinion sought from our bankers
abroad by the Government of India /Reserve Bank.
(vi) We understand that the approval, if granted, is from FEMA angle only. Any other
approvals/clearances, statutory or otherwise, required from any other Government
Authority/Department/Ministry will be obtained before commencement of operations in India.
(vii) We have no objection to the Reserve Bank placing the details of approval in public domain.
(viii) We enclose the following documents :
1. Copy of the Certificate of Incorporation/Registration attested by the Notary
Public in the country of registration.
[If the original Certificate is in a language other than in English, the same may
be translated into English and notarised as above and cross verified/attested by the
Indian Embassy/Consulate in the home country.
2. Latest Audited Balance sheet of the applicant company
If the applicants’ home country laws/regulations do not insist on auditing of
accounts, an Account Statement certified by a Certified Public Accountant (CPA)
or any Registered Accounts Practitioner by any name, clearly showing the net
worth may be submitted.
3. Bankers’ Report from the applicant’s banker in the host country/country of
registration showing the number of years the applicant has had banking relations
with that bank.
(Signature of Authorised Official

of the Applicant Company)
Name:
Designation:
Place:
Date:
THE FOREIGN EXCHANGE MANAGEMENT (E X PORT OF GOODS AND
SERVICES) REGU L ATI ON S, 2000
Notification No. FEMA 23/2000-RB dated 3rd May, 2000 as amended by Notification No. FEMA
36/2001-RB dated 27th February, 2001,Notification No. FEMA 57/2002-RB dated 1st April, 2002,
Notification No. FEMA 99/2003-RB
dated 27th August 2003, Notification FEMA No. 107/2003-RB dated 29-10-2003, Notification
FEMA No. 114/2004-RB, dated 13-3-2004, Notification FEMA No. 116/2003-RB dated 25-03-
2004 and Notification No. FEMA. 176-2008-RB dated July 23, 2008, Notification No.241/2012-RB
dated 25.09.2012, Notification No.FEMA 273-2013/RB dated 25-4-2013.
G.S.R. 409(E), dated 3-5-2000.—In exercise of the powers conferred by clause (a) of
sub-section (1) and sub- section (3) of section 7, sub-section (2) of section 47 of the Foreign
Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following
regulations relating to export of goods and services from India, namely:

(i) These Regulations may be called the Foreign Exchange Management (Export of
Goods and Services) Regulations, 2000.
2. Definitions
In these Regulations, unless the context requires otherwise,–
section (1) of section 10 of the Act, and includes a person carrying on business as a
factor and authorised as such under the said section 10;
(iii) ‘Exim Bank’ means the Export-Import Bank of India established under the Export-
Import Bank of India Act, 1981 (28 of 1981);
(iv) ‘export’ includes the taking or sending out of goods by land, sea or air, on
consignment or by way of sale, lease, hire-purchase, or under any other arrangement
by whatever name called, and in the case of software, also includes transmission
through any electronic media;
(v) ‘export value’ in relation to export by way of lease or hire-purchase or under any other
similar arrangement, includes the charges, by whatever name called, payable in respect
of such lease or hire-purchase or any other similar arrangement;
(vi) ‘form’ means form annexed to these Regulations;
(vii) ‘schedule’ means schedule appended to these Regulations;
(viii) ‘software’ means any computer programme, database, drawing, design, audio/video
signals, any information by whatever name called in or on any medium other than in or
on any physical medium;
(ix) ‘specified authority’ means the person or the authority to whom the declaration as
specified in Regulation 3 is to be furnished;
(x) ‘Working Group’ means the Group constituted by the Reserve Bank for the purpose
of considering proposals of export of goods and services on deferred payment terms
or in execution of a turnkey project or a civil construction contract;
(xi) the words and expressions used but not defined in these Regulations shall have the same
3. Declaration as regards export of goods and services

(1) Every exporter of goods or software in physical form or through any other form, either
directly or indirectly, to any place outside India, other than Nepal and Bhutan, shall furnish to
the specified authority, a declaration in one of the forms set out in the Schedule and supported
by such evidence as may be specified, containing true and correct material particulars including
the amount representing —
(i) the full export value of the goods or software; or
(ii) if the full export value is not ascertainable at the time of export, the value which
the exporter, having regard to the prevailing market conditions expects to receive
on the sale of the goods or the software in overseas market, and affirms in the
said declaration that the full export value of goods (whether ascertainable at the
time of export or not) or the software has been or will within the specified period
be, paid in the specified manner.
(2) Declarations shall be executed in sets of such number as specified.
(3) For the removal of doubt, it is clarified that, in respect of export of services to
which none of the Forms specified in these Regulations apply, the exporter may export such
services without furnishing any declaration, but shall be liable to realise the amount of foreign
exchange which becomes due or accrues on account of such export, and to repatriate the same
to India in accordance with the provisions of the Act, and these Regulations, as also other rules
and regulations made under the Act.
4. Exemptions
Notwithstanding anything contained in Regulation 3, export of goods or services may be made
without furnishing the declaration in the following cases, namely:—
(a) trade samples of goods and publicity material supplied free of payment; (b) personal
effects of travellers, whether accompanied or unaccompanied;
(c) ship’s stores, trans-shipment cargo and goods supplied under the orders of Central
Government or of such officers as may be appointed by the Central Government in
this behalf or of the military, naval or air force authorities in India for military, naval
or air force requirements;
(d) goods or software accompanied by a declaration by the exporter that they are not
more than twenty five thousand [USD] in value;
(e) by way of gift of goods accompanied by a declaration by the exporter that they are not
more than [five] lakh rupees in value;
(f) aircrafts or aircraft engines and spare parts for overhauling and/or repairs abroad
subject to their re-import into India after overhauling/repairs, within a period of six
months from the date of their export;
(g) goods imported free of cost on re-export basis;
(h) goods not exceeding U.S.$ 1000 or its equivalent in value per transaction exported
to Myanmar under the Barter Trade Agreement between the Central Government and
the Government of Myanmar;
(i) the following goods which are permitted by the Development Commissioner of the
Export Processing Zones, Electronic Hardware Technology Parks, Electronic Software
Technology Parks or Free Trade Zones to be re- exported, namely:
(1) imported goods found defective, for the purpose of their replacement by the foreign
suppliers/collaborators;
(2) goods imported from foreign suppliers/collaborators on loan basis;
(3) goods imported from foreign suppliers/collaborators free of cost, found surplus after
production operations;
(ia) goods listed at items (1), (2) and (3) of clause (i) to be re-exported by units in Special
Economic Zones, under intimation to the Development Commissioner of Special
Economic Zones/concerned Assistant Commissioner or Deputy Commissioner of
Customs.
(j) replacement goods exported free of charge in accordance with the provisions of Exim
Policy in force, for the time being.
(k) goods sent outside India for testing subject to re-import into India;
(l) defective goods sent outside India for repair and re-import provided the goods are
accompanied by a certificate from an authorised dealer in India that the export is for
repair and re-import and that the export does not involve any transaction in foreign
exchange.
(m) exports permitted by the Reserve Bank, on application made to it, subject to the terms
and conditions, if any, as stipulated in the permission.
5. Indication of importer-exporter code number

The importer-exporter code number allotted by the Director General of Foreign Trade under
section 7 of the Foreign Trade (Development & Regulation) Act, 1992 (22 of 1992) shall be
indicated on all copies of the declaration forms submitted by the exporter to the specified
authority and in all correspondence of the exporter with the authorised dealer or the Reserve
Bank, as the case may be.
6. Authority to whom declaration is to be furnished and the manner of dealing with the
declaration
A. Declaration in Form GR/SDF
(1) (i) The declaration in form GR/SDF shall be submitted in duplicate to the ommissioner
of Customs.
(ii) After duly verifying and authenticating the declaration Form, the Commissioner of
Customs shall forward the original declaration Form/data to the nearest office of the
Reserve Bank and hand over the duplicate Form to the exporter for being submitted
to the authorised dealer.
B. Declaration in Form PP
(2) (i) The declaration in Form PP shall be submitted in duplicate to the authorised dealer
named in the form. (ii) The authorised dealer shall, after countersigning the declaration
Form, hand over the original Form to
the exporter who shall submit it to the postal authorities through which the goods
are being despatched. The postal authorities after despatch of the goods shall forward
the declaration Form to the nearest office of the Reserve Bank.
C. Declaration in Form SOFTEX
(3) (i) The declaration in Form SOFTEX in respect of export of computer software and
audio/video/television software shall be submitted in triplicate to the designated
official of Ministry of Information Technology, Government of India at the
Software Technology Parks of India (STPIs) or at the Free Trade Zones (FTZs)
or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) in India.
(ii) After certifying all three copies of the SOFTEX form, the said designated official shall
forward the original directly to the nearest office of the Reserve Bank and return the
duplicate to the exporter. The triplicate shall be retained by the designated official for
record.
D. Duplicate Declaration Forms to be retained with Authorised Dealers
On the realisation of the export proceeds, the duplicate copies of export declaration forms,
viz., GR, PP and SOFTEX and Exchange Control copies of the shipping bills together with
related Statutory Declaration Forms shall be retained by the Authorised Dealers.
7. Evidence in support of declaration

The Commissioner of Customs or the postal authority or the official of Department of
Electronics, to whom the declaration Form is submitted, may, in order to satisfy themselves of
due compliance with section 7 of the Act and these regulations, require such evidence in support
of the declaration as may establish that —
(a) the exporter is a person resident in India and has a place of business in India;
(b) the destination stated on the declaration is the final place of the destination of the
goods exported;
(c) the value stated in the declaration represents —
(1) the full export value of the goods or software; or
(2) where the full export value of the goods or software is not ascertainable at the time
of export, the value which the exporter, having regard to the prevailing market
conditions expects to receive on the sale of the goods in the overseas market.
Explanation.— For the purpose of this regulation, ‘final place of destination’ means a place
in a country in which the goods are ultimately imported and cleared through Customs of
that country.
8. Manner of payment of export value of goods

Unless otherwise authorised by the Reserve Bank, the amount representing the full
export value of the goods exported shall be paid through an authorised dealer in the manner
specified in the Foreign Exchange Management (Manner and Receipt and Payment)
Regulations, 2000.
Explanation.— For the purpose of this regulation, re-import into India, within the period
specified for realisation of the export value, of the exported goods in respect of which a
declaration was made under Regulation 3, shall be deemed to be realisation of full export value
of such goods.
9. Period within which export value of goods/software to be realised

(1) The amount representing the full export value of goods or software exported shall be
realised and repatriated to India within twelve months from the date of export :
Deleted
Provided that where the goods are exported to a warehouse established outside India with
the permission of the Reserve Bank, the amount representing the full export value of goods
exported shall be paid to the authorised dealer as soon as it is realised and in any case within
fifteen months from the date of shipment of goods:
Provided further that the Reserve Bank, or subject to the directions issued by that Bank
in this behalf, the authorised dealer may, for a sufficient and reasonable cause shown, extend
the said period of twelve months or fifteen months, as the case may be.
Explanation.— For the purpose of this regulation, the “date of export” in relation to the
export of software in other than physical form, shall be deemed to be the date of invoice
covering such export.
(2) (a) Where the export of goods or software has been made [***] by a Status Holder
exporter as defined in the Exim Policy in force, then notwithstanding anything contained in
sub-regulation (1), the amount representing the full export value of goods or software shall be
realised and repatriated to India within twelve months from the date of export:
Provided that the Reserve Bank may for a sufficient and reasonable cause shown,
extend the said period of twelve months.
(b) The Reserve Bank may for reasonable and sufficient cause direct that the said
exporter(s) shall cease to be governed by sub-regulation (2);
Provided that no such direction shall be given unless the said exporter(s) has been
given a reasonable opportunity to make a representation in the matter.
(c) On such direction, the said exporter(s)] shall be governed by the provisions of sub-
regulation (1), until directed otherwise by the Reserve Bank.
10. Export on Elongated Credit Terms

No person shall enter into any contract to export goods on the terms which provide for a
period longer than twelve months for payment of the value of the goods to be exported:
Provided that the Reserve Bank may, for reasonable and sufficient cause shown, grant
approval to enter into a contract on such terms.
11. Submission of export documents

The documents pertaining to export shall, within 21 days from the date of export, as the
case may be, from the date of certification of SOFTEX Form, be submitted to the authorised dealer
mentioned in the relevant declaration Form:
Provided that, subject to the directions issued by the Reserve Bank from time to time, the
authorised dealer may accept the documents pertaining to export submitted after the expiry of the
specified period of 21 days, for reasons beyond the control of the exporter.
12. Transfer of documents

Without prejudice to Regulation 3, an authorised dealer may accept, for negotiation or collection,
shipping documents including invoice and bill of exchange covering exports, from his
constituent (not being a person who has signed the declaration in terms of Regulation 3) :
Provided that before accepting such documents for negotiation or collection, the authorised
dealer shall —
(a) where the value declared in the declaration does not differ from the value shown in
the documents being negotiated or sent for collection, or
(b) where the value declared in the declaration is less than the value shown in the
documents being negotiated or sent for collection,
require the constituent concerned also to sign such declaration and thereupon such constituent
shall be bound to comply with such requisition and such constituent signing the declaration shall
be considered to be the exporter for the purposes of these Regulations to the extent of the full
value shown in the documents being negotiated or sent for collection and shall be governed by
these Regulations accordingly.
13. Payment for the Export

In respect of export of any goods or software for which a declaration is required to
be furnished under Regulation 3, no person shall except with the permission of the Reserve
Bank or, subject to the directions of the Reserve Bank, permission of an authorised dealer, do
or refrain from doing anything or take or refrain from taking any action which has the effect of
securing –
(i) that the payment for the goods or software is made otherwise than in the specified
manner; or
(ii) that the payment is delayed beyond the period specified under these Regulations; or
(iii) that the proceeds of sale of the goods or software exported do not represent the full
export value of the goods or software subject to such deductions, if any, as may be
allowed by the Reserve Bank or, subject to the directions of the Reserve Bank, by an
authorised dealer:
Provided that no proceedings in respect of contravention of these provisions shall be
instituted unless the specified period has expired and payment for the goods or software
representing the full export value, or the value after deductions allowed under clause (iii), has not
been made in the specified manner within the specified period.
14. Certain Exports requiring prior approval

A. Export of goods on lease, hire, etc.—
No person shall, except with the prior permission of the Reserve Bank, take or send
out by land, sea or air any goods from India to any place outside India on lease or
hire or under any arrangement or in any other manner other than sale or disposal of
such goods.
B. Exports under trade agreement/rupee credit etc.—
(i) Export of goods under special arrangement between the Central Government and
Government of a foreign state, or under rupee credits extended by the Central
Government to Government of a foreign state shall be governed by the terms and
conditions set out in the relative public notices issued by the Trade Control Authority
in India and the instructions issued from time to time by the Reserve Bank.
(ii) An export under the line of credit extended to a bank or a financial institution
operating in a foreign state by the Exim Bank for financing exports from India,
shall be governed by the terms and conditions advised by the Reserve Bank to the
authorised dealers from time to time.
C. Counter Trade—
Any arrangement involving adjustment of value of goods imported into India against
value of goods exported from India, shall require prior approval of the Reserve Bank.
15. Delay in Receipt of Payment

Where in relation to goods or software export of which is required to be declared on the
specified Form, the specified period has expired and the payment therefor has not been made as
aforesaid, the Reserve Bank may give to any person who has sold the goods or software or
who is entitled to sell the goods or software or procure the sale thereof, such directions as
appear to it to be expedient, for the purpose of securing, (a) the payment therefor if the goods
or software has been sold and (b) the sale of goods and payment thereof, if goods or software
has not been sold, or re-import thereof into India as the circumstances permit, within such period
as the Reserve Bank may specify in this behalf:
Provided that omission of the Reserve Bank to give directions shall not have the effect
of absolving the person committing the contravention from the consequences thereof.
16. Advance payment against exports
(1) Where an exporter receives advance payment (with or without interest), from a
buyer outside India, the exporter shall be under an obligation to ensure that —
(i) the shipment of goods is made within one year from the date of receipt of advance
payment;
(ii) the rate of interest, if any, payable on the advance payment does not exceed London
Inter-Bank Offered Rate (LIBOR) + 100 basis points, and
(iii) the documents covering the shipment are routed through the authorised dealer
through whom the advance payment is received:
Provided that in the event of the exporter’s inability to make the shipment, partly or
fully, within one year from the date of receipt of advance payment, no remittance
towards refund of unutilised portion of advance payment or towards payment of
interest, shall be made after the expiry of the said period of one year, without the prior
approval of the Reserve Bank.
Notwithstanding anything contained in clause (i) of sub-regulation (1), an exporter may
receive advance payment where the export agreement itself duly provides for shipment of goods
extending beyond the period of one year from the date of receipt of advance payment.
17. Issue of directions by Reserve Bank in certain cases

(1) Without prejudice to the provisions of Regulation 3 in relation to the exports of
goods or software which is required to be declared, the Reserve Bank may, for the purpose of
ensuring that the full export value of the goods or, as the case may be, the value which the
exporter having regard to the prevailing market conditions expects to receive on the sale of
goods or software in the overseas market, is received in proper time and without delay, by
general or special order, direct from time to time that in respect of export of goods or software
to any destination or any class of export transactions or any class of goods or software or class
of exporters, the exporter shall, prior to the export, comply with the conditions as may be
specified in the order, namely :
(a) that the payment of the goods or software is covered by an irrevocable letter of
credit or by such other arrangement or document as may be indicated in the order;
(b) that any declaration to be furnished to the specified authority shall be submitted to
the authorised dealer for its prior approval, which may, having regard to the
circumstances, be given or withheld or may be given subject to such conditions as may
be specified by the Reserve Bank by directions issued from time to time.
(c) that a copy of the declaration to be furnished to the specified authority shall be
submitted to such authority or organisation as may be indicated in the order for
certifying that the value of goods or software specified in the declaration represents the
proper value thereof.
(2) No direction under sub-regulation (1) shall be given by the Reserve Bank and no
approval under clause (b) of that sub-regulation shall be withheld by the Authorised Dealer,
unless the exporter has been given a reasonable opportunity to make a representation in the
matter.
18. Project exports

Where an export of goods or services is proposed to be made on deferred payment terms or
in execution of a turnkey project or a civil construction contract, the exporter shall, before
entering into any such export arrangement, submit the proposal for prior approval of the
approving authority, which shall consider the proposal in accordance with the guidelines issued by
Explanation: For the purpose of this Regulation, ‘approving authority’ means the Working
Group or the Exim Bank or the authorised dealer.
Schedule
(Refer to Regulation 3)
Form GR : To be completed in duplicate for export otherwise than by Post including

export of software in physical form i.e. magnetic tapes/discs and paper
media.
Form SDF : To be completed in duplicate and appended to the shipping bill, for exports
declared to Customs Offices notified by the Central Government which have
introduced Electronic Data Interchange (EDI) system for processing shipping
bills notified by the Central Government.
Form PP : To be completed in duplicate for export by Post.
Form SOFTEX : To be completed in triplicate for declaration of export of software
otherwise than in Physical form i.e. magnetic tapes/discs and paper media.
THE FOREIGN EXCHANGE MANAGEMENT (INVESTMENT IN FIRM OR
PROPRIETARY CONCERN IN INDIA) REGULATIONS, 2000
Notification No. FEMA 24/2000-RB, dated 3rd May, 2000 Notification No. FEMA 50/2002-RB,
dated 2nd February, 2001
G.S.R. 410(E), dated 3-5-2000.—In exercise of the powers conferred by clause (h) of sub-
section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the
Reserve Bank makes the following regulations to regulate investment by a person resident
outside India in a partnership firm or a proprietary concern in India, namely:—

(i) These Regulations may be called the Foreign Exchange Management (Investment in
Firm or Proprietary Concern in India) Regulations, 2000.
(ii) They shall come into force on the 1st day of June, 2000.
2. Definitions
In these regulations, unless the context requires otherwise,–
(ii) ‘authorised bank’ means a bank including a co-operative bank (other than an
authorised dealer) authorised by the Reserve Bank to maintain an account of a person
resident outside India;
(iii) ‘authorised dealer’ means a person authorised as an authorised dealer under sub-
(iv) ‘Non-Resident Indian (NRI)’ means a person resident outside India who is a citizen of
India or is a person of Indian origin;
(v) ‘NRSR account’ shall have the same meaning as assigned to it in the Foreign
Exchange Management (Deposit) Regulations, 2000.
(vi) ‘Person of Indian Origin’ means a citizen of any country other than Bangladesh or
Pakistan or Sri Lanka, if — (a)he at any time held Indian passport; or
(b) he or either of his parents or any of his grandparents was a citizen of India by virtue
of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
or (b);
(vii) the words and expressions used but not defined in these Regulations shall have the
same meanings respectively assigned to them in the Act.
3. Restrictions on investment in a firm or a proprietary concern in India by a person
Save as otherwise provided in the Act or rules or regulations made or directions or orders
issued thereunder, no person resident outside India shall make any investment by way of
contribution to the capital of a firm or a proprietary concern or any association of persons in
India:
Provided that the Reserve Bank may, on an application made to it, permit a person resident
outside India subject to such terms and conditions as may be considered necessary to make an
investment by way of contribution to the capital of a firm or a proprietary concern or any
association of persons in India.
4. Permission for investment in certain cases

A non-resident Indian or a Person of Indian Origin resident outside India may invest by way
of contribution to the capital of a firm or a proprietary concern in India, provided that —
(a) the amount invested is received either by inward remittance through normal banking
channels or out of an account maintained with an authorised dealer/authorised bank
by the non-resident Indian or the person of Indian origin in accordance with the
relevant Regulations;
(b) the firm or the proprietary concern is not engaged in any agricultural/plantation activity
or real estate business, i.e. dealing in land and immovable property with a view to earning
profit or earning income therefrom;
(c) the amount invested shall not be eligible for repatriation outside India;
(d) where investment is made out of NRSR account of the non-resident investor, the income
earned on investment or proceeds of investment shall be credited only to the NRSR
account of the investor.
(e) the firm or the proprietary concern is not engaged in print media.
5. Permission to a firm or a proprietary concern to make payment to a non-resident

Indian or a person of Indian origin who has made investment
A firm or a proprietary concern in India may make payment to or for the credit of a non-
resident Indian or a person of Indian origin the sum invested by such person in that firm or the
proprietary concern or the income accruing to such person by way of profit on such investment.
FOREIGN EXCHANGE MANAGEMENT (ENCASHMENT OF DRAFT, CHEQUE,
INSTRUMENT AND PAYMENT OF INTEREST) RULES, 2000
G.S.R. 379(E), dated 3-5-2000.— In exercise of the powers conferred by section 46 of the Foreign
Exchange Management Act, 1999 (42 of 1999), the Central Government hereby makes the following
rules, namely:–
(1) These rules may be called the Foreign Exchange Management (Encashment of Draft, Cheque,
Instrument and payment of interest) Rules, 2000.
(2) They shall come into force on the 1st day of June, 2000.
2. Definitions
In these rules, unless the context otherwise requires:–
(a) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) "Adjudicating Authority" means an officer appointed by the Central Government under sub-
(c) "Authorised Person" means a person as defined in clause (c) of section 2 of the Act;
(d) "Cheque" includes a traveller’s cheque;
(e) "Investigation" means an investigation as envisaged under section 37 of the Act;
(f) "Special Director (Appeals)" means Special Director (Appeals) appointed by the Central
Government under sub-section (1) of section 17 of the Act;
(g) "Appellate Tribunal" means the Appellate Tribunal for Foreign Exchange established under
section 18 of the Act.
3. Delivery of Draft, Cheque and other Instrument for Encashment
Where investigation referred to in section 37 is being taken up into any alleged contravention of any
provision of the Act or of any rule, regulation, direction or order, or violation of any condition subject
to which Reserve Bank of India gives authorisation, made thereunder, and any draft, cheque of other
instrument relevant for such investigation such officer shall cause such draft, cheque or other
instrument to be delivered for encashment to Reserve Bank of India or an authorised person as the
officer may specify.
4. Encashment of draft, cheque or other instrument
The Reserve Bank of India or an authorised person shall take steps without delay for encashing the
draft, cheque or other instrument and, on such encashment, shall credit the proceeds realised (less any
commission and expenses incurred for such encashment) to a separate account in the name of the
Directorate of Enforcement.
5. Opening an Account
Where Investigation referred to in section 37 of the Act is being taken up into any alleged
contravention of any provision of the Act or any rule, regulation or direction or order, or violation of
any condition subject to which Reserve Bank of India gives authorisation, the Indian currency
relevant to such investigation is in the custody of an officer of Enforcement Directorate, then, such
officer shall deposit the Indian currency in a nationalised bank to a separate account in the name of
Directorate of Enforcement.
6. Indemnity
The Central Government shall indemnify the Reserve Bank of India or an authorised person against
any liability which the Reserve Bank of India or an authorised person may incur by reason of, or in
connection with, the encashment of the draft, cheque or other instrument delivered to it.
7. Direction for Payment of the Proceeds
(i) Where it has been found during the course of investigation or adjudication that, any draft, cheque
or other instrument is not relevant for such investigation, the Investigating Officer or the Adjudicating
Authority, as the case may be, pass such order that the person to whom the proceeds of such draft,
cheque or other instrument may be paid.
(ii) Where it has been found during the course of appeal before the Special Director (Appeals) or the
Appellate Tribunal or the High Court, as the case may be, that, any draft, cheque or other instrument
is not considered relevant for such appeal, then, the Special Director (Appeals) or the Appellate
Tribunal or the High Court, as the case may be, pass such order specifying the person to whom the
proceeds of the draft, cheque or other instruments may be paid.
8. Payment of interest on the seized Indian Currency
(i) Where it is found after completion of the investigation that the Indian currency seized under
section 37 of the Act is not involved in the contravention and is to be returned, the same shall be
returned to such person together with interest at the rate of 6% per annum from the date of seizure till
the date of payment.
(ii) Where it has been found during the course of adjudication that the seized Indian currency is not
relevant for such adjudication, the Adjudicating Authority may pass such order returning such Indian
currency together with interest at the rate of 6% per annum to such person.
FOREIGN EXCHANGE MANAGEMENT (CURRENT ACCOUNT TRANSACTIONS)
RULES, 2000
G.S.R..381(E), dated 3rd May 2000 — In exercise of the powers conferred by section 5 and sub-
section (1) and Clause (a) of sub-section (2) of section 46 of the Foreign Exchange Management Act,
1999, and in consultation with the Reserve Bank, the Central Government having considered it
necessary in the public interest, makes the following rules, namely:—
i. These rules may be called the Foreign Exchange Management (Current Account Transactions)
Rules, 2000.
ii. They shall come into effect on the 1st day of June, 2000.
2. Definitions
In these rules, unless the context otherwise requires;—
a. "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999);
b. "Drawal" means the drawal of foreign exchange from an authorised person and includes
opening of Letter of Credit or use of International Credit Card or International Debit Card or
ATM Card or any other thing by whatever name called which has the effect of creating foreign
exchange liability.
c. "Schedule" means a schedule appended to these rules.
The word and expressions not defined in these rules but defined in the Act shall have the same
3. Prohibition on drawal of Foreign Exchange
Drawal of foreign exchange by any person for the following purpose is prohibited, namely:
a. a transaction specified in the Schedule I; or

b. a travel to Nepal and/or Bhutan; or
c. a transaction with a person resident in Nepal or Bhutan:
Provided that the prohibition in clause (c) may be exempted by RBI subject to such terms and
conditions as it may consider necessary to stipulate by special or general order.
4. Prior approval of Government of India
No person shall draw foreign exchange for a transaction included in the Schedule II without prior
approval of the Government of India:
Provided that this Rule shall not apply where the payment is made out of funds held in Resident
Foreign Currency (RFC) Account 1[* * *] of the remitter.
5. Prior approval of Reserve Bank
No person shall draw foreign exchange for a transaction included in the Schedule III without prior
approval of the Reserve Bank:
Provided that this Rule shall not apply where the payment is made out of funds held in Resident
Foreign Currency (RFC) Account 1[* * *] of the remitter.
6. Restrictions on EEFC Account holders
1. Nothing contained in rule 4 or rule 5 shall apply to drawal made out of funds held in Exchange
Earners’ Foreign Currency (EEFC) account of the remitter.
2. Notwithstanding anything contained in sub-rule (1), restrictions imposed under rule 4 or rule 5
shall continue to apply where the drawal of foreign exchange from the Exchange Earners'
Foreign Currency (EEFC) account is for the purpose specified in Items 10 and 11 of Schedule
II, or Items 3, 4, 11, 16 & 17 of Schedule III as the case may be
7. Use of International Credit Card while outside India
Nothing contained in rule 5 shall apply to the use of International Credit Card for making payment by
a person towards meeting expenses while such person is on a visit outside India.
SCHEDULE I
[See Rule 3]
1
[Transactions which are prohibited
1. Remittance out of lottery winnings.

2. Remittance of income from racing/riding etc, or any other hobby.
3. Remittance for purchase of lottery tickets, banned/prescribed magazines, football pools,
sweepstakes etc.
4. Payment of commission on exports made towards equity investment in Joint Ventures/Wholly
Owned Subsidiaries abroad of Indian companies.
5. Remittance of dividend by any company to which the requirement of dividend balancing is
applicable.
6. 2Payment of commission on exports under Rupee State Credit Route, except commission up to
10% of invoice value of exports of tea and tobacco.]
7. Payment related to "Call Back Services" of telephones.
8. Remittance of interest income on funds held in Non-resident Special Rupee Scheme Account.
SCHEDULE II
[See Rule 4]
1
[Transactions which require prior approval of the Central Government]
Ministry/Department of
Purpose of Remittance Government of India whose
Approval is required
Ministry of Human Resources
Development
1. Cultural Tours
(Department of Education
and Culture)
2.
Advertisement in foreign print
media for the purposes other than
promotion of
Ministry of Finance Department of
tourism, foreign investments and
Economic Affairs
International bidding (exceeding
US$ 10,000) by a State Government
and its Public Sector Undertakings.
3. Remittance of freight of vessel Ministry of Surface Transport

charted by a PSU. (Chartering Wing)
4. Payment of import 3[through

ocean transport] by a Government
Ministry of Surface Transport
Department or a PSU on c.i.f. basis
(Chartering Wing)
(i.e., other than f.o.b. and f.a.s.
basis)
5. Multi-model transport operators Registration Certificate from the

making remittance to their agents Director General of Shipping.
abroad.
6. 4
[6. Remittance of hiring charges
of transponders by,
Ministry of Information and
(a) TV Channels Ministry of
Broadcasting Ministry of
Information and Broadcasting
Communication and Information
(b) Internet Service Providers Technology
Ministry of Communication
and Information Technology]
7. Remittance of container
Ministry of Surface Transport
detention charges exceeding the rate
(Director General of
prescribed by Director General of
Shipping)
Shipping.
8. [Omitted] [Omitted]
9. Remittance of prize
money/sponsorship of sports Ministry of Human Resources
activity abroad by a person other Development (Department of
than International/ National/State Youth Affairs and Sports)
Level sports bodies, if the amount
involved exceeds US$ 1,00,000.
9. [***]
11. Remittance for membership of Ministry of Finance (Insurance

P&I Club. Division)
SCHEDULE III
[See Rule 5]
1. [***]
2. Release of exchange exceeding US$ 10,000 or its equivalent in one financial year for one or more
private visits to any country (except Nepal and Bhutan).
3. Gift remittance exceeding US$ 5,000 per financial year per remitter or donor other than resident
individual.
4. (i) Donation exceeding US$ 5,000 per financial year per remitter or donor other than resident
individual;
(ii) Donations by corporate, exceeding one per cent of their foreign exchange earnings during the
previous three financial years or US$ 5,000,000, whichever is less, for,—
(a) creation of Chairs in reputed educational institutes;
(b) to funds (not being an investment fund) promoted by educational institutes; and
(c) to a technical institution or body or association in the field of activity of the donor company.
Explanation.—For the purposes of these item numbers 3 and 4, remittance of gift and donation by
resident individuals are subsumed under the Liberalised Remittance Scheme.]
5. Exchange facilities exceeding US $ 2[100,000] for persons going abroad for employment.
6. Exchange facilities for emigration exceeding US $ 2[100,000] or amount prescribed by country of

emigration.
7. Remittance for maintenance of close relatives abroad,
(i) exceeding net salary (after deduction of taxes, contribution to provident fund and other
deductions) of a person who is resident but not permanently resident in India and—
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in
India of such foreign company,]
(ii) exceeding US$ 2[100,000] per year per recipient, in all other cases.
Explanation : For the purpose of this item, a person resident in India on account of his employment
or deputation of a specified duration (irrespective of length thereof) or for a specific job or
assignment, the duration of which does not exceed three years, is a resident but not permanently
resident
8. Release of foreign exchange, exceeding US $ 25,000 to a person, irrespective of period of stay, for
business travel, or attending a Conference or specialised training or for maintenance expenses of a
patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a
patient going abroad for medical treatment/check-up.
9. Release of exchange for meeting expenses for medical treatment abroad exceeding the estimate
from the doctor in India or hospital/doctor abroad.
10. Release of exchange for studies abroad exceeding the estimates from the institution abroad or US
$ [100,000] [per academic year], whichever is higher.
11. Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in
India exceeding US $ 25,000 or 5% of the inward remittance whichever is more.]
12. [***]
13. [***]
14. [***]
15. Remittances exceeding US$ 10,000,000 per project, for any consultancy services in respect of
infrastructure projects and US$ 1,000,000 per project for other consultancy services procured from
outside India.
Explanation.—For the purposes of this item number ‘infrastructure project’ is those related to—
(i) Power,
(ii) Telecommunication,
(iii) Railways,
(iv) Roads including bridges,
(v) Sea port and airport,
(vi) Industrial parks, and
(vii) Urban infrastructure (water supply, sanitation and sewage).]
16. [***]
17. Remittances exceeding five per cent of the investment brought into India or US$ 1,00,000
whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.
18. [***]
FOREIGN EXCHANGE MANAGEMENT (ADJUDICATION PROCEEDINGS AND
APPEAL) RULES, 2000
G.S.R. 382(E), dated 3-5-2000.— In exercise of the powers conferred by section 46 read with sub-
section (1) of section 16, sub-section (3) of section 17 and sub-section (2) of section 19 of the Foreign
Exchange Management Act, 1999 (42 of 1999), the Central Government hereby makes the following
rules for holding enquiry for the purpose of imposing penalty and appeals under Chapter V of the
said Act, namely:–
(1) These rules may be called the Foreign Exchange Management (Adjudication Proceedings and
Appeal) Rules, 2000.
2. Definitions
In these rules, unless the context otherwise requires—
(b) "Adjudicating Authority" means an officer appointed by the Central Government under sub-
(c) "applicant" means an aggrieved person who makes an appeal before Special Director (Appeals) or
Appellate Tribunal, as the case may be;
(d) "Appellate Tribunal" means the Appellate Tribunal for Foreign Exchange established under
section 18 of the Act;
(e) "Form" means form appended to these rules;
(f) "Section" means a section of the Act;
(g) "Special" Director (Appeals) means Special Director (Appeals) appointed by the Central
Government under sub-section (1) of section 17 of the Act;
(h) all other words and expressions used in these rules and not defined but defined in the Act, shall
have the meaning respectively assigned to them in the act.
3. Appointment of Adjudicating Authority
The Central Government may, by an order published in the Official Gazette, appoint as many officers
of the Central Government as it may think fit, as the Adjudicating Authorities for holding inquiry
under the provisions of Chapter IV of the Act.
4. Holding of inquiry
(1) For the purpose of adjudicating under section 13 of the Act whether any person has committed
any contravention as specified in that section of the Act, the Adjudicating Authority shall, issue a
notice to such person requiring him to show cause within such period as may be specified in the
notice (being not less than ten days from the date of service thereof) why an inquiry should not be
held against him.
(2) Every notice under sub-rule (1) to any such person shall indicate the nature of contravention
alleged to have been committed by him.
(3) After considering the cause, if any, shown by such person, the Adjudicating Authority is of the
opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of that
person either personally or through his legal practitioner or a chartered accountant duly authorised by
him.
(4) On the date fixed, the Adjudicating Authority shall explain to the person proceeded against or his
legal practitioner or the chartered accountant, as the case may be, the contravention, allowed to have
been committed by such person indicating the provisions of the Act or of rules, regulations,
notifications, directions or orders or any condition subject to which an authorisation is issued by the
Reserve Bank of India in respect of which contravention is alleged to have taken place.
(5) The Adjudicating Authority shall, then, given an opportunity to such person to produce such
documents or evidence as he may consider relevant to the inquiry and if necessary, the hearing may
be adjourned to a future date and in taking such evidence the Adjudicating Authority shall not be
bound to observe the provisions of the Indian Evidence Act, 1872 (1 of 1872).
(6) While holding an inquiry under this rule the Adjudicating Authority shall have the power to
summon and enforce attendance of any person acquainted with the facts and circumstances of the
case to give evidence or to produce any document which in the opinion of the Adjudicating Authority
may be useful for or relevant to the subject matter of the inquiry.
(7) If any person fails, neglects or refuses to appear as required by sub-rule (3) before the
Adjudicating Authority, the Adjudicating Authority may proceed with the adjudication proceedings in
the absence of such person after recording the reasons for doing so.
(8) If, upon consideration of the evidence produced before the Adjudicating Authority, the
Adjudicating Authority is satisfied that the person has committed the contravention, he may, by order
in writing, impose such penalty as he thinks fit, in accordance with the provisions of section 13 of the
Act.
(9) Every order made under sub-rule (8) of the rule 4 shall specify the provisions of the Act or of the
rules, regulations, notifications, directions or orders or any condition subject to which an
authorisation is issued by the Reserve Bank of India in respect of which contravention has taken place
and shall contain 1[***] reasons for such decisions.
(10) Every order made under sub-rule (8) shall be dated and signed by the Adjudicating Authority.
(11) A copy of the order made under sub-rule (8) of rule 4 shall be supplied free of charge to the
person against whom the order is made and all other copies of proceedings shall be supplied to him
on payment of copying fee @ Rs. 2 per page.
(12) The copying fee referred to in sub-rule (11) shall be paid in cash or in the form of demand draft
in favour of the Adjudicating Authority.
5. Appeal to Special Director (Appeals)
Form of appeal —
(1) Every appeal presented to the Special Director (Appeals) under section 17 of the Act shall be in
the Form I signed by the applicant. The appeal shall be filed in triplicate and accompanied by three
copies of the order appealed against. Every appeal shall be accompanied by a fee of Rupees five
thousand in the form of cash or demand draft payable in favour of the Special Director (Appeals).
(2) The appeal shall set forth concisely and under distinct heads the grounds of objection to the order
appealed against without any argument of narrative and such grounds shall be numbered
consecutively; and shall specify the address for service at which notice or other processes may be
served on the applicant, the date on which the order appealed against was served on the applicant.
(3) Where the appeal is presented after the expiry of the period of forty five days referred to in sub-
section (3) of section 17, it shall be accompanied by a petition, in triplicate, duly verified and
supported by the documents, if any, relied upon by the applicant, showing cause how the applicant
had been prevented from preferring the appeal within the said period of forty five days.
(4) Any notice required to be served on the applicant shall be served on him in the manner specified
in rule 9 at the address for service specified in the appeal.
6. Procedure before Special Director (Appeals)
(1) On receipt of an appeal under rule 5, the Special Director (Appeals) shall send a copy of the
appeal, together with a copy of the order appealed against, to the Director of Enforcement.
(2) The Special Director (Appeals) shall, then, issue notices to the applicant and the Director of
Enforcement fixing a date for hearing of the appeal.
(3) On the date fixed for hearing of the appeal or any other day to which the hearing of the appeal
may be adjourned, the applicant as well as the presenting officer of the Directorate of Enforcement
shall be heard.
(4) Where on the date fixed, or any other day to which the hearing of the appeal may be adjourned,
the applicant or the presenting officer fail to appeal when the appeal is called for hearing, the Special
Director (Appeals) may decide the appeal on the merits of the case 1[within one hundred and eighty
days from the date of such appeal].
7. Contents of the Order in appeal
(1) The order of Special Director (Appeals) shall be in writing and shall state briefly the grounds for
the decision.
(2) The order referred to in sub-rule (1) shall be signed by the Special Director (Appeals) hearing the
appeal.
8. Representation of party
Any applicant who has filed an appeal before the Special Director (Appeals) under section 17 of the
Act, may appoint a legal practitioner or a chartered accountant to appear and plead and act on his
behalf before the Special Director (Appeal) under the Act.
9. Service of notices, requisitions or orders
A notice, requisition or an order issued under these rules shall be served on any person in the
following manner, that is to say,—
(a) by delivering or tendering the notice or requisition or order to that person or his duly authorised
person,
(b) by sending the notice or requisition or order to him by registered post with acknowledgment due
to the address of his place of residence or his last known place or residence or the place where he
carried on or last carried on, business or personally works or last worked for gain, or
(c) by affixing it on the outer door or some other conspicuous part of the premises in which the person
resides or is known to have last resided or carried on business or personally works or last worked for
gain and that written report thereof should be witnesses by two persons; or
(d) if the notice or requisition or order cannot be served under clause (a) or clause (b) or clause (c), by
publishing in a leading newspaper (both in vernacular and in English) having wide circulation of area
or jurisdiction in which the person resides or is known to have last resided or carried on business or
personally works or last worked for gain.
10. Appeal to the Appellate Tribunal
Form of appeal —
(1) Every appeal presented to the Appellate Tribunal under section 19 of the Act shall be in the Form
II signed by the applicant. The appeal shall be sent in triplicate and accompanied by three copies of
the order appealed against. Every appeal shall be accompanied by a fee of Rupees ten thousand in the
form of cash or demand draft payable in favour of the Registrar, Appellate Tribunal for Foreign
Exchange, New Delhi:
Provided that the applicant shall deposit the amount of penalty imposed by the Adjudicating
Authority or the Special Director (Appeals) as the case may be, to such authority as may be notified
under the first proviso to section 19 of the Act:
Provided further that where in a particular case, the Appellate Tribunal is of the opinion that the
deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may
dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard
the realisation of penalty.
(2) The appeal shall set forth concisely and under distinct head the grounds of objection to the order
appealed against without any argument of narrative and such grounds shall be numbered
consecutively; and shall specify the address for service at which notice or other processes may be
served on the applicant, the date on which the order appealed against was served on the applicant; and
the sum imposed by way of penalty under section 13 and the amount of fee prescribed in sub-rule (1)
has been deposited or not.
(3) Where the appeal is presented after the expiry of the period of forty five days referred to in sub-
section (2) of section 19, it shall be accompanied by a petition, in triplicate, duly verified and
supported by the documents, if any, relied upon by the applicant, showing cause how the applicant
had been prevented from preferring the appeal within the said period of forty five days.
(4) Any notice required to be served on the applicant shall be served on him in the manner prescribed
in rule 14 at the address for service specified in the appeal.
11. Procedure before Appellate Tribunal
(1) On receipt of an appeal under rule 10, the Appellate Tribunal shall send a copy of the appeal
together with a copy of the order appealed against, to the Director of Enforcement.
(2) The Appellate Tribunal shall, then, issue notices to the applicant and the Director of Enforcement
fixing a date for hearing of the appeal.
(3) On the date fixed for hearing of the appeal, or any other day to which the hearing of the appeal
may be adjourned, the applicant as well as the presenting officer of the Directorate of Enforcement
shall be heard.
(4) Where on the date fixed, or any other day to which the hearing of the appeal may be adjourned the
applicant or the presenting officer fail to appeals when the appeal is called on for hearing, the
Appellate Tribunal may decide the appeal on the merits of the case.
12. Contents of the Order in appeal
(1) The order of Appellate Tribunal shall be in writing and shall state briefly the grounds for the
decision.
(2) The order referred to in sub-rule (1) shall be signed by the Chairman or Member of the Appellate
Tribunal hearing the appeal.
13. Representation of party
Any applicant who has filed an appeal before the Appellate Tribunal under section 19 of the Act may
appoint a legal practitioner or a chartered accountant to appeals and plead and act on his behalf before
the Special Director (Appeals) under the Act,
14. Service of notices, requisitions or orders
A notice, requisition or an order issued under these rules shall be served on any person in the
following manner, that is to say,—
(a) by delivering or tendering the notice or requisition or order to that person or his duly authorised
person,
(b) by sending the notice or requisition or order to him by registered post with acknowledgment due
to the address of his place of residence or his last known place or residence or the place where he
carried on, or last carried on, business or personally works or last worked for gain, or
(c) by affixing it on the outer door or some other conspicuous part of the premises in which the person
resides or is known to have last resided or carried on business or personally works or has worked for
gain and that written report thereof should be witnesses by two persons; or
(d) if the notice or requisition or order cannot be served under clause (a) or clause (b) or clause (c), by
publishing in a leading newspaper (both in vernacular and in English) having wide circulation or area
or jurisdiction in which the person resides or is known to have last resided or carried on business or
personally works or last worked for gain.
Form–I
(See rule 5)
Form of Appeal
From ________________________________________________________________________
(Mention the name and address of the applicant here)
To
The Special Director (Appeals)
(Address)
Sir,
The applicant named above, begs to prefer this appeal under section 17 of the Foreign Exchange
Management Act, 1999 against order No. _____________ dated____________passed by the
Adjudicating Authority under the said Act on the following facts and grounds.
FACTS
(Mention briefly the facts of the case here. Enclose copy of the order passed by the Adjudicating
Authority and copies of other relevant documents, if any)
Grounds
(Mention here the grounds on which the appeal is made)
PRAYER
In the light of what is stated above, the applicant prays that he/she it may be granted the following
relief.
Relief Sought
(Specify the relief sought)
The fee of Rs. ________________________________________________________ for this appeal

has been deposited in ______________________________________ vide receipt
No._____________dated________
Place (Signature of the applicant
Date or his authorised representative)
(Signature of the applicant or his authorised representative)
List of documents attached:

Form– II
(See rule 10)
Form of Appeal
From ________________________________________________________________________
(Mention the name and address of the applicant here)
To
The Registrar
Appellate Tribunal for Foreign Exchange
(Address)
Sir,
The applicant named above, begs to prefer this appeal under section 17 of the Foreign Exchange
Management Act, 1999 against order No. _________________ dated__________________ passed by
the Adjudicating Authority under the said Act on the following facts and grounds.
FACTS
(Mention briefly the facts of the case here. Enclose copy of the order passed by the Adjudicating
Authority and copies of other relevant documents, if any)
Grounds
(Mention here the grounds on which the appeal is made)
PRAYER
In the light of what is stated above, the applicant prays that he/she it may be granted the following
relief.
Relief Sought
(Specify the relief sought)
1. The fee of Rs. _____________________________________ for this appeal has been deposited in
_________vide receipt No. __________dated_________.
2. The amount of penalty imposed by Adjudicating Authority or Special Director (Appeals), as the
case may be, Rs. ____________ for this appeal has been deposited in _________vide receipt No.
_________________dated________.
Place (Signature of the applicant Date or his authorised representative)
(Signature of the applicant or his authorised representative)
List of documents attached:

FOREIGN EXCHANGE MANAGEMENT (COMPOUNDING PROCEEDINGS) RULES,
2000
G.S.R.383 (E) dated 3rd May 2000 – In exercise of the powers conferred by section 46 read with sub-
section (1) of section 15 of the Foreign Exchange Management Act, 1999 (42 of 1999) the Central
Government hereby makes the following rules relating to compounding contraventions under chapter
IV of the said Act, namely:—
(1) These rules may be called the Foreign Exchange (Compounding Proceedings) Rules, 2000.
2. Definitions
In these rules, unless the context otherwise requires —
(b) "Authorised officer" means an officer authorised under sub-rule (1) of rule 3;
(c) "Applicant" means a person who makes an application under section 15 (1) of the Act to the
compounding authority;
(d) "Compounding Order" means an order issued under sub-section (1) of Section 15 of the Act;
(e) "Form" means a form appended to these rules;
(f) "Section" means a section of the Act;
(g) All other words and expressions used in these rules and not defined but defined in the Act, shall
have the meaning respectively assigned to them in the Act.
3. Compounding Authority
(1) "Compounding Authority" means the persons authorised by the Central Government under sub-
section (1) of section 15 of the Act, namely;
(a) An officer of the Enforcement Directorate not below the rank of Deputy Director or
Deputy Legal Adviser (DLA).
(b) An officer of the Reserve Bank of India not below the rank of the Assistant General
Manager.
4. Power of Reserve Bank to compound contravention
(1) If any Person contravenes any provisions of Foreign Exchange Management Act, 1999 (42 of
1999) except clause (a) of Section 3 of the Act.
(a) in case where the sum involved in such contravention is 2[ten] lakh rupees or below,
by the Assistant General Manager of the Reserve Bank of India;
(b) in case where the sum involved in such contravention is more than rupees 2[ten]
lakhs but less than rupees 3[forty] lakhs, by the Deputy General Manager of Reserve
Bank of India ;
(c) in case where the sum involved in the contravention is rupees 3[forty] lakhs or more
but less than rupees 4[one hundred lakhs by the General Manager of Reserve Bank of
India;
(d) in case the sum involved in such contravention is rupees 4[one hundred lakhs or
more, by the Chief General Manager of the Reserve Bank of India;
Provided further that no contravention shall be compounded unless the amount involved
in such contravention is quantifiable.
(2) Nothing contained in sub-section (1) shall apply to a contravention committed by any person
within a period of three years from the date on which a similar contravention committed by him was
compounded under these rules.
Explanation.— For the purposes of this rule, any second or subsequent contravention committed after
the expiry of a period of three years from the date on which the contravention was previously
compounded shall be deemed to be a first contravention.
(3) Every officer specified under sub-rule (1) of rule 4 of the Reserve Bank of India shall exercise the
powers to compound any contravention subject to the direction, control and supervision of the
Governor of the Reserve Bank of India.
(4) Every application for compounding any contravention under this rule shall be made in Form to the
Reserve Bank of India, Exchange Control Department, Central Office, Mumbai along with a fee of
Rs. 5000/- by Demand Draft in favour of compounding authority.
5. The power of Enforcement Directorate to compound contraventions

1
[(1) If any person contravenes provisions of the section 3(a) of the Foreign Exchange Management
Act:
(a) in case where the sum involved in such contravention is five lakhs rupees or below, by the Deputy
Director of the Directorate of Enforcement;
(b) in case where the sum involved in such contravention is more than rupees five lakhs but less than
rupees ten lakhs, by the Additional Director of the Directorate of Enforcement;
(c) in case where the sum involved in the contravention is rupees ten lakhs or more but less than fifty
lakh rupees by the Special Director of the Directorate of Enforcement;
(d) in case where the sum involved in the contravention is rupees fifty lakhs or more but less than one
crore rupees by the Special Director with Deputy Legal Adviser of the Directorate of Enforcement;
(e) in case the sum involved in such contravention is one crore rupees or more, by the Director of
Enforcement with Special Director of the Enforcement Directorate:
Provided further that no contravention shall be compounded unless the amount involved
in such contravention is quantifiable.
(2) Nothing contained in sub-section (1) shall apply to a contravention committed by any person
within a period of three years from the date on which a similar contravention committed by him was
compounded under these rules.
Explanation:– For the purpose of this rule, any second or subsequent contravention committed after
the expiry of a period of three years from the date on which the contravention was previously
compounded shall be deemed to be a first contravention.
(3) Every officer of the Directorate of Enforcement specified under sub-rule (1) of this rule shall
exercise the powers to compound any contravention subject to the direction, control and supervision
of the Director of Enforcement.
(4) Every application for compounding any contravention under this rule shall be made in Form to the
Director, Directorate of Enforcement, New Delhi, along with a fee of Rs. 5,000 by DD in favour of
the Compounding Authority.
6. Effect of compounding before adjudication
Where any contravention is compounded before the adjudication of any contravention under section
16, no inquiry shall be held for adjudication of such contravention in relation to such contravention
against the person in relation to whom the contravention is so compounded.
7. Effect of compounding after complaint under section 16(3)
Where the compounding of any contravention is made after making of a complaint under sub-section
(3) of section 16, such compounding shall be brought by the authority specified in rule 4 or rule 5 in
writing to the notice of the Adjudicating Authority and on such notice of the compounding of the
contravention being given, the person in relation to whom the contravention is so compounded shall
be discharged.
8. Procedure for compounding
(1) The Compounding Authority may call for any information, record or any other documents
relevant to the compounding proceedings.
(2) The Compounding Authority shall pass an order of compounding after affording an opportunity of
being heard to all the concerned as expeditiously as possible and not later than 180 days from the date
of application.
9. Payment of amount compounded
The sum for which the contravention is compounded as specified in the order of compounding under
sub-rule (2) of rule 8, shall be paid by demand draft in favour of the Compounding Authority within
fifteen days from the date of the order of compounding of such contravention.
10. Consequence of failure to pay the compounded sum
In case a person fails to pay the sum compounded in accordance with rule 9 within the time specified
in that rule, he shall be deemed to have never made an application for compounding of any
contravention under these rules and the provisions of the Act for contravention shall apply to him.
11. Bar on compounding
No contravention shall be compounded if an appeal has been filed under section 17 or section 19 of
the Act.
12. Contents of the order of the Compounding Authority
(1) Every order shall specify the provisions of the Act or of the rules, directions, requisitions or orders
made thereunder in respect of which contravention has taken place alongwith details of the alleged
contravention.
(2) Every such order shall be dated and signed by the Compounding Authority under his seal.
13. Copy of the order
One copy of the order made under rule 8(2) shall be supplied to the applicant and the Adjudicating
Authority as the case may be.
Form
[See Rule 4 or 5]
(To be filed in duplicate and shall be accompanied by certified copy of the Memorandum issued)
1. Name of the Applicant (In block letters) :
2. Full address of the applicant :
3. Whether the applicant is resident in

India or resident outside
India [Please refer to section 2(v) of the Act] :
4. Name of the Adjudicating Authority before

whom the case is pending :
5. Nature of the contravention (according to

sub-section (1) of section 13 :
6. Brief facts of the case :
7. Details of fee for application of compounding :
8. Any other information relevant to the case :
I/we declare that the particulars given above are true and correct to the best of my/our knowledge and
belief and that I/we am/are willing to accept any direction/order of the Compounding Authority in
connection with compounding of my/our case.
Dated
(Signature of applicant)
FOREIGN EXCHANGE MANAGEMENT (Authentication of Documents) Rules, 2000
G.S.R. 380(E), dated 3-5-2000.— In exercise of the powers conferred by section 46 read with
section 39 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government
hereby makes the following rules to govern the procedure of authentication of documents, namely:–
1. Short title
(1) These rules may be called the Foreign Exchange (Authentication of Documents) Rules, 2000.
(2) They shall come into force on 1st day of June, 2000.
2. Authority for authentication and the manner of authentication of documents

Any document received from any place outside India purporting to have affixed, impressed or
submitted thereon or thereto the seal and signature of any person who is authorised by section 3 of the
Diplomatic and Consular Officer (Oaths and Fees) Act, 1948 (41 of 1948) to do any notarial acts shall
be deemed duly authenticated for the purpose of section 39 of the Act.

Foreign Exchange Management Act Rules PDF

Uploaded by

Copyright:

Available Formats

Foreign Exchange Management Act Rules PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Foreign Exchange Management Act Rules PDF

Uploaded by

Copyright:

Available Formats

TH E FORE I GN E XCH AN GE MAN AGE ME N T (PE RMI SS I B L E CAPITAL

ACCOU N T TRAN SAC TI ON S) REGU L ATI ON S, 2000

1. Short title and commencement

3. Permissible Capital Account Transactions

5. Method of payment for investment

(a) Investment by a person resident in India in foreign securities.

(a) Investment in India by a person resident outside India, that is to say,—

FEMA 2/2000-RB, dated 3rd M ay, 2000

1. Short title and commencement

3. Prohibition on transfer or issue of security

4. Transfer or Issue of Security with the permission of Reserve Bank

1. Short Title and Commencement

3. Prohibition to Borrow or Lend in Foreign Exchange

4. Borrowing and Lending in Foreign Exchange by an Authorised dealer

(iv) Purpose (End-use)

2. Refinancing of existing borrowing in foreign exchange

(ii) Lenders — The borrowings in foreign currency by way of issue of bonds,

(iii) Purpose (End-use).-

1. Short title and commencement

4. Borrowing in rupees by persons other than companies in India

5. Borrowing in rupees by Indian companies

6. Restriction on use of borrowed funds

7. Loans in rupees to non-residents

8. Providing housing loan in rupees to a non-resident

8A. Rupee Loans to NRI/PIO employees of India body corporate

8B. Rupee loans to non-resident Indian by Resident

9. Continuance of rupee loan/overdraft to resident who becomes a person resident outside

1. Short title and commencement

3. Restrictions on deposits between a person resident in India and a person resident

6. Other deposits made or held by authorised dealer

7. Acceptance of deposits by persons other than authorised dealer/authorised bank

8. Deposits in certain other cases

6. Loans against security of funds held in the account

7. Change of resident status of the account holder

8. Repatriation of funds to non-resident nominee

7. Inland Movement of Funds

8. Manner of Payment of Interest

9. Loans/overdrafts against security of funds held in the account

10. Change of resident status of the account holder

11. Joint account, repatriation of balances, etc.

13. Other features

4. Remittance of funds held in NRO accounts

6. Treatment of Loans/Overdrafts in the event of change in the resident status of the

7. Joint Accounts with Residents

8. Change of Resident Status of Account holder

9. Payment of funds to Non-resident Nominee

10. Reporting of transactions

7. Joint Accounts with residents

6. Change of resident status of the account holder

8. Overdrafts in NRSR account

A company incorporated in India (including a non-banking finance company registered with

A proprietorship concern or a firm in India, may accept deposits on non-repatriation basis

1. Acquisition/Transfer of shares shall be strictly in accordance with the provisions of

1. Short title and commencement

3. Export and Import of Indian currency and currency notes

4. Prohibition on Export of Indian coins

5. Prohibition on export and import of foreign currency

6. Import of foreign exchange into India

7. Export of foreign exchange and currency notes