RBI allows foreign investors to invest on repatriation basis

The Reserve Bank of India on Friday allowed a host of foreign portfolio investors to invest in non-convertible / redeemable preference shares or debentures issued by a listed Indian company, on repatriation basis.

Foreign portfolio investors who can invest in non-convertible / redeemable preference shares or debentures include all Sebi-registered foreign institutional investors (FIIs) and other qualified foreign investors (QFIs).

Long-term investors registered with Sebisuch as sovereign wealth funds, multilateral agencies, pension/ insurance/ endowment funds, foreign central banks will also be considered as eligible investors.

RBI said in a statement "Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (the Principal Regulations) notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms of which SEBI registered Foreign Institutional investors (FIIs), qualified foreign investors (QFIs), registered foreign portfolio investors (FPIs) and long term investors registered with SEBI, may purchase, on repatriation basis, government securities and non-convertible debentures (NCDs) / bonds issued by an Indian company subject to such terms and conditions as mentioned therein and limits as prescribed for the same by RBI and SEBI from time to time.''

Further, RBI said, non-resident Indians may also invest, both on repatriation and non-repatriation basis.

However, RBI said, the overall limit for investments by FIIs/FPIs, QFIs and long term investors registered with SEBI in corporate debt stands at $51 billion.

At present an Indian company is permitted to issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR/GDR holders by way of distribution as bonus from its general reserves under a scheme of arrangement approved by a court in India under the provisions of the Companies Act, subject to no-objection from the income tax authorities.