Registration of Designated Branches
10C.20 Portfolio investments in shares/debentures by NRIs/OCBs are permitted
only through designated branches of authorised dealers preferably located at
centres having stock exchanges. Authorised dealers should inform the names of
such branches to Central Office of Reserve Bank and obtain approval. The Code
number allotted by Reserve Bank should be quoted in all correspondence undertaken
with Reserve Bank in this regard. Non-resident investors can also authorise
Indian residents or stock exchange brokers as their agents in India to purchase/sell
shares on their behalf under the schemes but all transactions should be routed
through the designated branch of authorised dealer.
General Conditions for Purchase with Repatriation or Non-Repatriation rights
10C.21 (i) NRIs/OCBs will be permitted to make portfolio investment
in shares/debentures (convertible and non-convertible) of Indian companies,
with or without repatriation benefits provided the purchase is made through
a stock exchange and also through designated branch of an authorised dealer.
NRIs/OCBs are required to designate only one branch authorised by Reserve Bank
for this purpose.
(ii) Investment in equity shares and convertible debentures
will be permitted subject to an overall ceiling of (a) 10 per cent of the total
paid-up equity capital of the company concerned; and (b) 10 per cent of the
total paid-up value of each series of the convertible debentures issued by the
company concerned for all NRIs/OCBs taken together both on repatriation and
on non-repatriation basis. [See paragraph 10C.23(ii) in respect of investments
in excess of the limit of 10%].
(iii) The purchase of shares and debentures under the scheme
is required to be made at the ruling market price.
10C.21(iv) NRIs/OCBs intending to invest on non-repatriation
basis should submit their applications in Form NRI and NRC respectively, through
a designated branch of an authorised dealer, to Reserve Bank (Central Office).
Reserve Bank will grant general permission to the concerned authorised dealer
to purchase shares/debentures of Indian companies, securities (other than bearer
securities) of the Central or any State Government and Treasury Bills on behalf
of the NRI/OCB subject to the condition that the payment for such investment
is received through inward remittance or from the investor's NRE/FCNR/NRO/NRSR
account. The general permission granted by Reserve Bank would be initially valid
for a period of five years. Authorised dealers may themselves renew the permission
granted by Reserve Bank to individual NRIs as well as OCBs for a period of five
years at a time.
(v) NRIs and OCBs intending to invest with repatriation benefits
should submit their applications through a designated branch of an authorised
dealer in Form RPI and RPC respectively. Reserve Bank will grant general permission
to the designated branch for purchase of shares/debentures of Indian companies,
securities (other than bearer securities) of the Central or any State Government
and Treasury Bills subject to the conditions that - the payment is received
through an inward remittance in foreign exchange or by debit to the investor's
NRE/FCNR account investment made by any single NRI/OCB investor in equity/preference
shares and convertible debentures of any listed Indian company does not exceed
5% of its total paid-up equity or preference capital or 5% of the total paid-up
value of each series of convertible debentures issued by it.
NRIs/OCBs take delivery of the shares/convertible debentures
purchased and give delivery of the shares/convertible debentures sold under
the Scheme.
The general permission granted by Reserve Bank will be valid
initially for a period of five years. Authorised dealers may themselves renew
the permission granted by Reserve Bank to individual NRIs as well as OCBs for
a further period of five years at a time. Authorised dealers may note to obtain
the latest OAC/OAC 1 certificate from the OCB concerned before renewing the
permission.
(vi) NRIs/OCBs intending to invest in the units of domestic
mutual funds on non-repatriation/repatriation basis under the Portfolio Investment
Scheme should apply to Reserve Bank (Central Office) in the manner indicated
in sub-paragraphs (iv) and (v) above. However, approvals already granted for
portfolio investment in shares/debentures of Indian companies will also be valid
for purchase of units of domestic mutual funds.
Registration of Shares & Investment in Joint Names
10C.22 (i) Shares/debentures purchased by NRIs/OCBs should
be held and registered in the names of either the investor himself or an authorised
dealer or the latter's nominee/s.
(ii) Shares/debentures can be purchased by NRIs in joint names
with other NRIs with permission of Reserve Bank. In such cases, if the investment
is with repatriation benefits, the first holder is to be treated as investor
for the purpose of 5% ceiling. The second or third holder will be eligible to
invest separately in the same company in his own name as the first holder in
joint holdings up to the limit of 5%. Reserve Bank will also permit investment
jointly with residents. However, if the resident joint holder inherits the shares/debentures,
he/she will not be entitled to repatriation benefits.
Procedure for Monitoring the Overall Ceilings
10C.23 (i) Reserve Bank (Central Office) will monitor the overall
ceiling of 10% on the acquisition of shares/debentures by NRIs/OCBs under the
Portfolio Investment Scheme with the assistance of link offices of authorised
dealers in Mumbai. The link offices should submit a statement in form LEC (NRI)
giving details of purchases/sales of shares/debentures (company-wise) made by
all designated branches on daily basis. The daily statement should be serially
numbered. All purchase and sale transactions for which commitments have been
made(as evidenced by contract notes issued by recognised stock exchange brokers)
irrespective of whether the actual deliveries have been effected or not should
be included in the daily statement. Sales where shares/debentures were originally
purchased by the NRI/OCB investors through stock exchange should only be included
in the statement. If no transactions are effected on any day, a 'nil' statement
need not be submitted.
(ii) Indian companies listed on recognised stock exchanges
in India may, however, resolve by a General Body Resolution to allow NRIs/OCBs
to acquire shares/debentures up to 24% instead of the 10% mentioned in paragraph
10C.21(ii). Indian companies desirous of exceeding the limit of 10% should,
therefore, forward the necessary resolution to Reserve Bank indicating that
the General Body has no objection to NRIs/OCBs purchasing shares/debentures
up to 24% of the paid up capital/paid up vakue of each series of convertible
debentures. On receipt of the resolution, the name of the company will be intimated
to all link offices of designated branches of authorised dealers to enable them
to make purchases on behalf of their clients up to the raised/revised limit
in respect of the company.
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