A.P. (DIR Series) Circular No. 27 [(1)/20(R)]
All Category – I Authorised
Monitoring of foreign investment
limits in listed Indian companies
Attention of Authorised Dealer
Category-I (AD Category-I) banks is invited to Foreign Exchange Management
(Transfer or Issue of Security by a person Resident outside India) Regulations,
2017 notified vide Notification No. FEMA
20(R)/2017-RB dated November 07, 2017 and as amended from time
to time, in terms of which the onus of compliance with the sectoral/
statutory caps on foreign investment lies with the Indian investee company.
2. Currently, Reserve Bank of
India receives data on investment made by Foreign Portfolio Investors (FPI)
and Non-resident Indians (NRI) on stock exchanges from the custodian banks
and Authorised Dealer Banks for their respective clients, based on which
restrictions beyond a threshold limit is imposed on FPI/ NRI investment in
listed Indian companies.
3. In order to enable listed
Indian companies to ensure compliance with the various foreign investment
limits, Reserve Bank in consultation with Securities and Exchange Board of
India (SEBI), has decided to put in place a new system for monitoring
foreign investment limits, for which the necessary infrastructure and systems
for operationalizing the monitoring mechanism, shall be made available by
the depositories. The same has been notified by SEBI vide
Circular-IMD/FPIC/CIR/P/2018/61 dated April 05, 2018 read with Circular-
IMD/FPIC/CIR/P/2018/74 dated April 27, 2018.
4. In terms of para 6 of
Annexure A of the circular dated April 05, 2018, all listed Indian
companies are required to provide the specified data/ information on
foreign investment to the depositories. The requisite information may be
provided before May 15, 2018. The listed Indian companies, in
non-compliance with the above instructions will not be able to receive
foreign investment and will be non-compliant with Foreign Exchange
Management Act, 1999 (FEMA) and regulations made thereunder.
5. All Authorised Dealer Banks
are advised to instruct their clients and respective Indian companies,
about the system requirement at para 4 of this circular.
6. Further, upon implementation
of the new monitoring system, all Authorised Dealer banks would be required
to provide the details of investment made by their respective NRI clients
to the depositories in the format as provided by the depositories/ SEBI. In
addition, the reporting to Reserve Bank in the existing system, viz., LEC
(NRI) and LEC (FII), would continue.
7. AD Category-I banks may bring
the contents of this circular to the notice of their customers /
8. The directions contained in
this circular have been issued under sections 10(4) and 11(1) of the
Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without
prejudice to permissions / approvals, if any, required under any other law.
Chief General Manager in Charge