Reserve Bank of India
Exchange Control Department
Central Office
Mumbai – 400 001

A.P.(DIR Series) Circular No.13

September 1, 2003

To

All Authorised Dealers in Foreign Exchange

Madam/Sirs,

Attention of Authorised Dealers is invited to Regulation 5 of Notification No. FEMA 20/2000-RB dated 3^rd May 2000 conveying permission for purchase of shares by certain persons resident outside India.

2. As part of the measures for further liberalisation, it has been decided that::-

1. A registered Foreign Institutional Investor (FII) having valid approval under FERA, 1973 or under FEMA, 1999 may trade in all exchange traded derivative contracts approved by SEBI from time to time subject to the limits prescribed by SEBI.
2. 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 however not be eligible for repatriation benefits.

3. The necessary amendment to the Foreign Exchange Management Act (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 referred to above has been notified vide Notification No. FEMA 85/2003-RB dated 17^th January 2003.

4. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).

Yours faithfully,

Notification No. FEMA 85/2003-RB

dated January 17, 2003

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) and in partial modification of its Notification No.FEMA 20/2000-RB dated 3^rd May 2000, the Reserve Bank of India makes the following Regulation to amend the Foreign Exchange Management ( Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, namely:-

1. These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (First Amendment) Regulations, 2003.
2. They shall come into force on their publication in the Official Gazette.

In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000, ( herein after referred to as "the Principal Regulations") in Regulation 5, after Sub-Regulation (5), the following Sub-Regulations shall be added, namely- "(6) A registered Foreign Institutional Investor (FII) having valid approval under FERA,1973 or under FEMA, 1999 may trade in all exchange traded derivative contracts approved by SEBI from time to time subject to the limits as prescribed in by SEBI. (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."

K.J.Udeshi
Executive Director