RBI notifies provision regarding Transfer of Capital Instrument by FPI and NRI/OCI under FEMA 20(R)

By July 18, 2018 December 20th, 2019 No Comments

The Reserve Bank of India has
notified the remaining provisions of the Foreign Exchange Management (Transfer
or Issue of Security by a person resident outside India) Regulations, 2017 on
June 1, 2018. The notified provisions shall give effect to the applicable
sectoral limit on acquisition of capital instruments by Foreign Portfolio
Investors (FPI) or Non-Resident Indian (NRI).

The notified provisions provide
for transfer of capital instruments to person residing in India within period
stipulated by RBI (currently within 5 trading days of settlement) in case of
breach of sectoral or FPI or NRI/OCI limits. The breach of aggregate/ sectoral
limit for the period between acquisition and sale of capital instruments will
not be considered as a contravention under the regulations. 
Currently, the individual and
aggregate limit in case of FPI is 10% and 24% respectively. The individual and
aggregate limit in case of NRI/OCI is 5% and 10% respectively.

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