FREQUENTLYASKEDQUESTIONSForeignInvestmentsinIndia

(UpdateduptoFebruary10,2015)Q.1.WhataretheformsinwhichbusinesscanbeconductedbyaforeigncompanyinIndia?Ans.AforeigncompanyplanningtosetupbusinessoperationsinIndiamay:

IncorporateacompanyundertheCompaniesAct,1956,asaJointVentureoraWhollyOwnedSubsidiary.Set up a LiaisonOffice / RepresentativeOffice or a Project Office or a BranchOffice of the foreign companywhich can undertake activities permitted under the Foreign Exchange Management (Establishment in India ofBranchOfficeorOtherPlaceofBusiness)Regulations,2000.

Q.2.WhatistheprocedureforreceivingForeignDirectInvestmentinanIndiancompany?Ans.AnIndiancompanymayreceiveForeignDirectInvestmentunderthetworoutesasgivenunder:i.AutomaticRouteFDIisallowedundertheautomaticroutewithoutpriorapprovaleitheroftheGovernmentortheReserveBankofIndiainallactivities/sectorsasspecifiedintheconsolidatedFDIPolicy,issuedbytheGovernmentofIndiafromtimetotime.ii.GovernmentRouteFDIinactivitiesnotcoveredundertheautomaticrouterequirespriorapprovaloftheGovernmentwhichareconsideredbytheForeign InvestmentPromotionBoard (FIPB),DepartmentofEconomicAffairs,MinistryofFinance.Applicationcanbe made in Form FCIL, which can be downloaded from http://www.dipp.gov.in. Plain paper applications carrying allrelevantdetailsarealsoaccepted.Nofeeispayable.TheIndiancompanyhavingreceivedFDIeitherundertheAutomaticrouteortheGovernmentrouteisrequiredtocomplywithprovisionsoftheFDIpolicyincludingreportingtheFDItotheReserveBankasstatedinQ4.Q.3.WhataretheinstrumentsforreceivingForeignDirectInvestmentinanIndiancompany?Ans. Foreign investment is reckoned as FDI only if the investment is made in equity shares, fully and mandatorilyconvertiblepreferencesharesandfullyandmandatorilyconvertibledebentureswiththepricingbeingdecidedupfrontasafigure or based on the formula that is decided upfront. Partly paid equity shares and warrants issued by an IndiancompanyinaccordancewiththeprovisionoftheCompaniesAct,2013andtheSEBIguidelines,asapplicable,shallbetreatedaseligibleFDIinstrumentsw.e.f.July8,2014subjecttocompliancewithFDIscheme.ThepricingandreceiptofbalanceconsiderationshallbeasstipulatedintermsofA.P.(DIRSeries)CircularNo.3datedJuly14,2014asmodifiedfromtimetotime.AnyforeigninvestmentintoaninstrumentissuedbyanIndiancompanywhich:

givesanoptiontotheinvestortoconvertornottoconvertitintoequityordoesnotinvolveupfrontpricingoftheinstrumentasadatewouldbereckonedasECBandwouldhavetocomplywiththeECBguidelines.

The FDI policy provides that the price/ conversion formula of convertible capital instruments should be determinedupfrontatthetimeofissueoftheinstruments.Thepriceatthetimeofconversionshouldnotinanycasebelowerthanthefairvalueworkedout,at thetimeof issuanceofsuchinstruments, inaccordancewiththeextantFEMAregulations[valuationasperanyinternationallyacceptedpricingmethodologyonarmslengthbasisfortheunlistedcompaniesandvaluationintermsofSEBI(ICDR)Regulations,forthelistedcompanies]withoutanyassuredreturn.Q.4.WhatarethemodesofpaymentallowedforreceivingForeignDirectInvestmentinanIndiancompany?Ans.An Indian company issuing shares /convertible debenturesunderFDIScheme toaperson resident outside Indiashallreceivetheamountofconsiderationrequiredtobepaidforsuchshares/convertibledebenturesby:(i)inwardremittancethroughnormalbankingchannels.(ii)debittoNRE/FCNRaccountofapersonconcernedmaintainedwithanADcategoryIbank.(iii)conversionofroyalty/lumpsum/technicalknowhowfeedueforpaymentorconversionofECB,shallbetreatedasconsiderationforissueofshares.(iv)conversionofimportpayables/preincorporationexpenses/shareswapcanbetreatedasconsiderationforissueofshareswiththeapprovalofFIPB.(v) debit to noninterest bearingEscrowaccount in IndianRupees in Indiawhich is openedwith the approval fromADCategory I bank and is maintained with the AD Category I bank on behalf of residents and nonresidents towardspaymentofsharepurchaseconsideration.Ifthesharesorconvertibledebenturesarenotissuedwithin180daysfromthedateofreceiptoftheinwardremittanceordate of debit toNRE / FCNR (B) / Escrowaccount, the amount shall be refunded. Further,ReserveBankmay on anapplicationmade to it and for sufficient reasons permit an IndianCompany to refund / allot shares for the amount of

considerationreceived towards issueofsecurity ifsuchamount isoutstandingbeyond theperiodof180days fromthedateofreceipt.Q.5.Whichare thesectorswhereFDI isnotallowed in India,bothunder theAutomaticRouteaswellasundertheGovernmentRoute?Ans.FDIisprohibitedundertheGovernmentRouteaswellastheAutomaticRouteinthefollowingsectors:i)AtomicEnergyii)LotteryBusinessiii)GamblingandBettingiv)BusinessofChitFundv)NidhiCompanyvi) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture andcultivation of vegetables,mushrooms, etc. under controlled conditions and services related to agro andallied sectors)andPlantationsactivities(otherthanTeaPlantations)(c.f.NotificationNo.FEMA94/2003RBdatedJune18,2003).vii) Housing and Real Estate business (except development of townships, construction of residential/commercialpremises,roadsorbridgestotheextentspecifiedinNotificationNo.FEMA136/2005RBdatedJuly19,2005).viii)TradinginTransferableDevelopmentRights(TDRs).ix)Manufactureofcigars,cheroots,cigarillosandcigarettes,oftobaccooroftobaccosubstitutes.(PleasealsoseethewebsiteofDepartmentofIndustrialPolicyandPromotion(DIPP),MinistryofCommerce&Industry,GovernmentofIndiaatwww.dipp.gov.infordetailsregardingsectorsandinvestmentlimitsthereinallowed,underFDI)Q.6. What is the procedure to be followed after investment is made under the Automatic Route or withGovernmentapproval?Ans.Atwostagereportingprocedurehastobefollowed:Onreceiptofshareapplicationmoney:Within30daysofreceiptofshareapplicationmoney/amountofconsiderationfromthenonresident investor, theIndiancompany is required to report to theForeignExchangeDepartment,RegionalOfficeconcernedof theReserveBankofIndia, under whose jurisdiction its RegisteredOffice is located, the Advance Reporting Form, containing the followingdetails:Nameandaddressoftheforeigninvestor/sDateofreceiptoffundsandtheRupeeequivalentNameandaddressoftheauthoriseddealerthroughwhomthefundshavebeenreceivedDetailsoftheGovernmentapproval,ifanyandKYCreportonthenonresidentinvestorfromtheoverseasbankremittingtheamountofconsideration.TheIndiancompanyhastoensurethatthesharesareissuedwithin180daysfromthedateof inwardremittancewhichotherwisewouldresultinthecontravention/violationoftheFEMAregulations.Uponissueofsharestononresidentinvestors:Within 30 days from the date of issue of shares, a report in Form FCGPR PART A together with the followingdocuments should be filedwith theForeignExchangeDepartment,RegionalOffice concernedof theReserveBankofIndia. Certificate from the Company Secretary of the company accepting investment from persons resident outside Indiacertifyingthat:Thecompanyhascompliedwith theprocedure for issueofsharesas laiddownunder theFDIschemeas indicated intheNotificationNo.FEMA20/2000RBdated3rdMay2000,asamendedfromtimetotime.Theinvestmentiswithinthesectoralcap/statutoryceilingpermissibleundertheAutomaticRouteoftheReserveBankanditfulfillsalltheconditionslaiddownforinvestmentsundertheAutomaticRoute,

ORShareshavebeen issued in termsofSIA/FIPBapprovalNo. dated (enclosing theFIPBapprovalcopy)CertificatefromStatutoryAuditors/SEBIregisteredMerchantBanker/CharteredAccountant indicatingthemannerofarrivingatthepriceofthesharesissuedtothepersonsresidentoutsideIndia.Q.7.Whataretheguidelinesfor transferofexistingsharesfromnonresidentstoresidentsorresidentstononresidents?Ans.Thetermtransfer isdefinedunderFEMAasincluding"sale,purchase,acquisition,mortgage,pledge,gift, loanoranyotherformoftransferofright,possessionorlien{Section2(ze)ofFEMA,1999}.ThefollowingsharetransfersareallowedwithoutthepriorapprovaloftheReserveBankofIndiaA.TransferofsharesfromaNonResidenttoResidentundertheFDIschemewherethepricingguidelinesunderFEMA,

1999arenotmetprovidedthat:i.Theoriginalandresultant investmentare in linewiththeextantFDIpolicyandFEMAregulations in termsofsectoralcaps,conditionalities(suchasminimumcapitalization,etc.),reportingrequirements,documentation,etc.ii.Thepricingforthetransactioniscompliantwiththespecific/explicit,extantandrelevantSEBIregulations/guidelines(suchasIPO,Bookbuilding,blockdeals,delisting,exit,openoffer/substantialacquisition/SEBISAST,buyback)andiii. Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations / guidelines asindicatedaboveisattachedtotheformFCTRStobefiledwiththeADbank.B.TransferofsharesfromResidenttoNonResident:i)wherethetransferofsharesrequiresthepriorapprovaloftheFIPBaspertheextantFDIpolicyprovidedthat:a)therequisiteapprovaloftheFIPBhasbeenobtainedandb)thetransferofshareadhereswiththepricingguidelinesanddocumentationrequirementsasspecifiedbytheReserveBankofIndiafromtimetotime.ii)whereSEBI (SAST)guidelinesareattractedsubject to theadherencewith thepricingguidelinesanddocumentationrequirementsasspecifiedbyReserveBankofIndiafromtimetotime.iii)wherethepricingguidelinesundertheForeignExchangeManagementAct(FEMA),1999arenotmetprovidedthat:The resultant FDI is in compliance with the extant FDI policy and FEMA regulations in terms of sectoral caps,conditionalities(suchasminimumcapitalization,etc.),reportingrequirements,documentationetc.Thepricing for the transaction is compliantwith the specific/explicit, extant and relevantSEBI regulations / guidelines(suchasIPO,Bookbuilding,blockdeals,delisting,exit,openoffer/substantialacquisition/SEBISAST)andChartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations / guidelines asindicatedaboveisattachedtotheformFCTRStobefiledwiththeADbankiv)wheretheinvesteecompanyisinthefinancialsectorprovidedthat:

TheFDIpolicyandFEMA regulations in termsof entry route, sectoral caps, conditionalities (suchasminimumcapitalization,etc.),reportingrequirements,documentationetc.,arecompliedwith.

Transferofshares/fullyandmandatorilyconvertibledebenturesbywayofGift:ApersonresidentoutsideIndiacanfreelytransfershares/fullyandmandatorilyconvertibledebenturesbywayofgifttoapersonresidentinIndiaasunder:AnypersonresidentoutsideIndia,(notbeingaNRIoranerstwhileOCB),cantransferbywayofgifttheshares/fullyandmandatorilyconvertibledebenturestoanypersonresidentoutsideIndia(includingNRIsbutexcludingOCBs).Note:TransferofsharesfromorbyerstwhileOCBswouldrequirepriorapprovaloftheReserveBankofIndia.aNRImaytransferbywayofgift,theshares/convertibledebenturesheldbyhimtoanotherNRIonly,AnypersonresidentoutsideIndiamaytransfershare/fullyandmandatorilyconvertibledebenturestoapersonresidentinIndiabywayofgift.Q.8.CanapersonresidentinIndiatransfersecuritybywayofgifttoapersonresidentoutsideIndia?Ans.ApersonresidentinIndiawhoproposestotransfersecuritybywayofgifttoapersonresidentoutsideIndia[otherthananerstwhileOCBs]shallmakeanapplication to theCentralOfficeof theForeignExchangeDepartment,ReserveBankofIndiafurnishingthefollowinginformation,namely:NameandaddressofthetransferorandtheproposedtransfereeRelationshipbetweenthetransferorandtheproposedtransfereeReasonsformakingthegift.IncaseofGovernmentdatedsecurities,treasurybillsandbonds,acertificateissuedbyaCharteredAccountantonthemarketvalueofsuchsecurities.IncaseofunitsofdomesticmutualfundsandunitsofMoneyMarketMutualFunds,acertificatefromtheissuerontheNetAssetValueofsuchsecurity.Incaseofshares/fullyandmandatorilyconvertibledebentures,acertificatefromaCharteredAccountantonthevalueofsuchsecuritiesaccordingtotheguidelinesissuedbytheSecurities&ExchangeBoardofIndiaorthevaluationasperany internationally accepted pricing methodology on arms length basis with regard to listed companies and unlistedcompanies,respectively.CertificatefromtheIndiancompanyconcernedcertifyingthattheproposedtransferofshares/convertibledebentures,bywayofgift, fromresident to thenonresidentshallnotbreachtheapplicablesectoralcap/FDI limit in thecompanyandthat theproposednumberofshares/convertibledebenturestobeheldbythenonresident transfereeshallnotexceed5percentofthepaidupcapitalofthecompany.ThetransferofsecuritybywayofgiftmaybepermittedbytheReservebankprovided:(i)Thedonee iseligible toholdsuchsecurityunderSchedules1,4and5 toNotificationNo.FEMA20/2000RBdatedMay3,2000,asamendedfromtimetotime.

(ii)Thegiftdoesnotexceed5percentof thepaidupcapitalof the Indiancompany/eachseriesofdebentures/eachmutualfundscheme(iii)Theapplicablesectoralcap/foreigndirectinvestmentlimitintheIndiancompanyisnotbreached(iv)Thedonorandthedoneearerelativesasdefinedinsection6oftheCompaniesAct,1956.(v) The value of security to be transferred by the donor together with any security transferred to any person residingoutsideIndiaasgiftinthefinancialyeardoesnotexceedtherupeeequivalentofUSD50000.(vi)SuchotherconditionsasconsiderednecessaryinpublicinterestbytheReserveBank.Q.9.Whatifthetransferofsharesfromresidenttononresidentdoesnotfallundertheabovecategories?Ans.TransferofSharesbyResidentwhichrequiresGovernmentapprovalThe following instances of transfer of shares from residents to nonresidents by way of sale or otherwise requiresGovernmentapproval:(i)TransferofsharesofcompaniesengagedinsectorfallingundertheGovernmentRoute.(ii)TransferofsharesresultinginforeigninvestmentsintheIndiancompany,breachingthesectoralcapapplicable.PriorpermissionoftheReserveBankincertaincasesforacquisition/transferofsecurityi)Transferofsharesorconvertibledebentures fromresidents tononresidentsbywayofsalerequirespriorapprovalofReserveBank incasewhere thenonresidentacquirerproposesdefermentofpaymentof theamountofconsideration.Further,incaseapprovalisgrantedforthetransaction,thesameshouldbereportedinFormFCTRStotheADCategoryIbank,within60daysfromthedateofreceiptofthefullandfinalamountofconsideration.(ii)ApersonresidentinIndia,whointendstotransferanysecurity,bywayofgifttoapersonresidentoutsideIndia,hastoobtainpriorapprovalfromtheReserveBank.AnyothercasenotcoveredbyGeneralPermission.Q10.Whatarethereportingobligationsincaseoftransferofsharesbetweenresidentandnonresident?Ans.The transaction should be reported by submission of formFCTRS to theADCategory I bank,within 60 daysfrom thedateof receipt/remittanceof theamountofconsideration.Theonusofsubmissionof the formFCTRSwithinthegiventimeframewouldbeontheresidentinIndia,thetransferorortransferee,asthecasemaybe.Q.11.Whatisthemethodofpaymentandremittance/creditofsaleproceedsincaseoftransferofsharesbetweenresidentandnonresident?Ans.Thesaleconsideration in respectof thesharespurchasedbyaperson residentoutside Indiashallbe remitted toIndia through normal banking channels. In case the buyer is a Foreign Institutional Investor (FII), payment should bemadebydebit to itsSpecialNonResidentRupeeAccount. Incase thebuyer isaNRI, thepaymentmaybemadebywayofdebit tohisNRE/FCNR(B)accounts.However, if thesharesareacquiredonnonrepatriationbasisbyNRI, theconsiderationshallberemittedtoIndiathroughnormalbankingchannelorpaidoutoffundsheldinNRE/FCNR(B)/NROaccounts.The sale proceeds of shares (net of taxes) sold by a person resident outside India)may be remitted outside India. IncaseofFIIthesaleproceedsmaybecreditedtoitsspecialNonResidentRupeeAccount.IncaseofNRI,ifthesharessoldwereheldonrepatriationbasis,thesaleproceeds(netoftaxes)maybecreditedtohisNRE/FCNR(B)accountsandifthesharessoldwereheldonnonrepatriationbasis,thesaleproceedsmaybecreditedtohisNROaccountsubjecttopaymentof taxes.Thesaleproceedsofshares (netof taxes)soldbyanerstwhileOCBmaybe remittedoutside Indiadirectly if theshareswereheldonrepatriationbasisand if thesharessoldwereheldonnonrepatriationbasis, thesaleproceedsmay be credited to itsNRO (Current) Account subject to payment of taxes, except in the case of erstwhileOCBswhoseaccountshavebeenblockedbyReserveBank.Q.12.AretheinvestmentsandprofitsearnedinIndiarepatriable?Ans.Allforeigninvestmentsarefreelyrepatriable(netofapplicabletaxes)exceptincaseswhere:i) the foreign investment is in a sector like Construction and Development Projects and Defence wherein the foreigninvestmentissubjecttoalockinperiodandii)NRIschoosetoinvestspecificallyundernonrepatriableschemes.Further,dividends(netofapplicabletaxes)declaredonforeigninvestmentscanberemittedfreelythroughanAuthorisedDealerbank.Q.13.Whataretheguidelinesonissueandvaluationofsharesincaseofexistingcompanies?Ans.A.ThepriceofsharesissuedtopersonsresidentoutsideIndiaundertheFDISchemeshallnotbelessthan:(i)thepriceworkedoutinaccordancewiththeSEBIguidelines,asapplicable,wherethesharesofthecompanyislistedonanyrecognisedstockexchangeinIndia(ii) the fairvaluationofsharesdoneasperSEBIguidelines for listedcompaniesorasperany internationallyacceptedpricingmethodologyonarmslengthbasis,forunlistedcompaniesB.Thepriceofsharestransferredfromresidenttoanonresidentandviceversashouldbedeterminedasunder:

i)Transferofsharesfromaresidenttoanonresident:a)Incaseoflistedshares,atapricewhichisnotlessthanthepriceatwhichapreferentialallotmentofshareswouldbemadeunderSEBIguidelines.b)Incaseofunlistedsharesatapricewhichisnotlessthanthefairvaluationasperanyinternationallyacceptedpricingmethodology on arms length basis to be determined by a SEBI registered CategoryI Merchant Banker/CharteredAccountant.ii)TransferofsharesfromanonresidenttoaresidentThepriceshouldnotbemorethantheminimumpriceatwhichthetransferofshareswouldhavebeenmadefromaresidenttoanonresident.Inanycase,thepricepersharearrivedataspertheabovemethodshouldbecertifiedbyaSEBIregisteredCategoryIMerchantBanker/CharteredAccountant.Q.14.WhataretheregulationspertainingtoissueofADRs/GDRsbyIndiancompanies?Ans. i. In termsofSchedule 10 toNotificationNo. FEMA.20/2000RB datedMay 3, 2000, a personwill be eligible toissueortransfereligiblesecuritiestoaforeigndepository,forthepurposeofconvertingthesecuritiessopurchasedintodepository receipts in terms of DepositoryReceipts Scheme, 2014 and guidelines issued by theGovernment of Indiathereunder from time to time.DepositoryReceipts issued under the Issue of ForeignCurrencyConvertibleBonds andOrdinaryShares (ThroughDepositoryReceiptMechanism)Scheme,1993 shall bedeemed tohavebeen issuedunderthecorrespondingprovisionsof DRScheme,2014andhave to complywith theprovisions laidout inSchedule10ofNotificationibid.ii. A company can issue DRs, if it is eligible to issue eligible instruments to person resident outside India underSchedules1,2,2A,3,5and8ofNotificationNo.FEMA20/2000RBdatedMay3,2000,asamendedfromtimetotime.iii. The aggregate of eligible securities which may be issued or transferred to foreign depositories, along with eligiblesecurities already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligiblesecuritiesundertherelevantregulationsframedunderFEMA,1999.iv.Theeligiblesecuritiesshallnotbe issuedor transferredtoa foreigndepository for thepurposeof issuingdepositoryreceipts at a price less than the price applicable to a corresponding mode of issue or transfer of such securities todomesticinvestorsundertherelevantregulationsframedunderFEMA,1999.v.ThedomesticcustodianshallreporttheissueofdepositoryreceiptsasperDRScheme2014totheReserveBankasperthereportingguidelinesforDRScheme2014.Q.15.CanIndiancompaniesissueForeignCurrencyConvertibleBonds(FCCBs)?Ans.FCCBs canbe issuedby Indian companies in theoverseasmarket in accordancewith theScheme for IssueofForeignCurrencyConvertibleBondsandOrdinaryShares(ThroughDepositoryReceiptMechanism)Scheme,1993.TheFCCBbeingadebtsecurity,theissueneedstoconformtotheExternalCommercialBorrowingguidelines,issuedbyRBIvideNotificationNo.FEMA3/2000RBdatedMay3,2000,asamendedfromtimetotime.Q.16.Can a foreign investor invest inPreferenceShares?What are the regulations applicable in caseof suchinvestments?Ans.Yes.Foreigninvestmentthroughpreferencesharesistreatedasforeigndirectinvestment.However,thepreferencesharesshouldbe fullyandmandatorily convertible intoequity shareswithinaspecified time tobe reckonedaspartofsharecapitalunderFDI.InvestmentinotherformsofpreferencesharesrequirestocomplywiththeECBnorms.Q.17.CanacompanyissuedebenturesaspartofFDI?Ans.Yes.Debentureswhichare fullyandmandatorilyconvertible intoequitywithinaspecified timewouldbereckonedaspartofsharecapitalundertheFDIPolicy.Q.18. Can shares be issued against Lumpsum Fee, Royalty, ECB , Import of capital goods/ machineries /equipments (excluding secondhand machine) and Preoperative/preincorporation expenses (includingpaymentsofrent)?Ans.An Indiancompanyeligible to issuesharesunder theFDIpolicyandsubject topricingguidelinesasspecifiedbytheReserveBankfromtimetotime,mayissuesharestoapersonresidentoutsideIndia:

a. beingaprovideroftechnology/technicalknowhow,againstRoyalty/Lumpsumfeesdueforpaymentb. againstExternalCommercialBorrowing(ECB)(otherthanimportduesdeemedasECBorTradeCreditasperRBI

Guidelines).c. WithpriorapprovalfromFIPBforagainstimportofcapitalgoods/machineries/equipmentsandPreoperative/pre

incorporationexpensessubject to thecompliancewith theextantFEMAregulationsandAPDirSeries74datedJune30,2011.

Provided,thattheforeignequityinthecompany,aftersuchconversion,iswithinthesectoralcap.Further,onareviewinSeptember2014, ithasbeendecidedthatanIndianinvesteecompanymayissueequitysharesagainst anyother fundspayable by them, remittanceofwhichdoesnot require prior permissionof theGovernment ofIndia or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder,providedthat:

i. The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricingguidelinesetc.asamendedbyReservebankofIndia,fromtimetotime

Explanation:Issueofshares/convertibledebenturesthatrequireGovernmentapprovalintermsofparagraph3ofSchedule1ofFEMA20orimportduesdeemedasECBortradecreditorpayableagainstimportofsecondhandmachineryshallcontinuetobedealtinaccordancewithextantguidelines

ii. heissueofequitysharesunderthisprovisionshallbesubjecttotaxlawsasapplicabletothefundspayableandtheconversiontoequityshouldbenetofapplicabletaxes.

Q.19. What are the other modes of issues of shares for which general permission is available underRBINotificationNo.FEMA20datedMay3,2000?Ans.

Issue of shares underESOPby Indian companies to its employees or employees of its joint venture orwhollyownedsubsidiaryabroadwhoareresidentoutsideIndiadirectlyorthroughaTrustupto5%ofthepaidupcapitalofthecompany.IssueandacquisitionofsharesbynonresidentsaftermergerordemergeroramalgamationofIndiancompanies.Issue shares or preference shares or convertible debentures on rights basis by an Indian company to a personresidentoutsideIndia.

Q.20.CanaforeigninvestorinvestinsharesissuedbyanunlistedcompanyinIndia?Ans.Yes.Asper the regulations/guidelines issuedby theReserveBankof India/Governmentof India, investmentcanbemadeinshares issuedbyanunlistedIndiancompanysubject tocompliancewithFEMAprovisionssuchaspricing,reporting,etc.Q.21.Canaforeignersetupapartnership/proprietorshipconcerninIndia?Ans.No.OnlyNRIs/PIOsareallowedtosetuppartnership/proprietorshipconcernsinIndiaonnonrepatriationbasis.Q.22.CanaforeigninvestorinvestinRightssharesissuedbyanIndiancompanyatadiscount?Ans.TherearenorestrictionsunderFEMAforinvestmentinRightssharesissuedatadiscountbyanIndiancompany,providedtherightssharessoissuedarebeingofferedatthesamepricetoresidentsandnonresidents.TheofferonrightbasistothepersonsresidentoutsideIndiashallbe:(a) inthecaseofsharesofacompanylistedonarecognizedstockexchangeinIndia,atapriceasdeterminedbythecompanyand(b) in thecaseofsharesofacompanynot listedonarecognizedstockexchange in India,atapricewhich isnot lessthanthepriceatwhichtheofferonrightbasisismadetoresidentshareholders.Q.23.CananADbankallowpledgeofsharesofanIndiancompanyheldbynonresidentinvestorinfavourofanIndianbankoranOverseasbankorNBFC?Ans.Yes,thesamehasbeenallowedvidetheinstructionsandsubjecttocompliancewiththetermsandconditionsasmentionedintheAP(Dir.Series)CircularNo57datedMay2,2011andA.P.(DIRSeries)CircularNo.141datedJune6,2014.Q.24.Whatdeclaration/certificateneedstobeobtainedbytheADinrespectofutilizationofloanproceedsforthedeclaredpurpose,consequenttopledgeofshares,tocomplywithpara.2(i)(b)oftheA.P.(DIRSeries)CircularNo.57datedMay2,2011?Ans.TheADmayobtainaboardresolutionexantepassedbytheBoardofDirectorsoftheinvesteecompany,thattheloan proceeds received consequent to pledge of shares, will be utilised by the investee company for the declaredpurpose.TheADmayalsoobtainacertificatefromthestatutoryauditorexpostoftheinvesteecompany,thattheloanproceedsreceivedconsequenttopledgeofshares,havebeenutilisedbytheinvesteecompanyforthedeclaredpurpose.Q.25.IsanonresidentpermittedtoacquireshareonstockexchangeunderFDIscheme?Ans:Prior to issuanceofA.P(DIRSeries)CircularNo.38,datedSeptember6,2013,noperson residentoutside Indiaexceptaportfolioinvestorwasallowedtoacquiresharesonstockexchange.Portfolio Investors registered with SEBI namely FII and QFI were eligible to acquire shares on stock exchange inaccordance with the requirements. Further, NRIs were also permitted to acquire shares on stock exchange, onrepatriationandnonrepatriationbasis,inaccordancewithportfolioinvestmentschemeforthem.WitheffectfromAugust5,2013(dateofpublicationofrelevantnotification),anonresident,otherthanportfolioinvestor,iseligibletoacquiresharesonstockexchangethrougharegisteredbrokersubjecttotheconditionthatthenonresidentinvestor has already acquired and continues to hold the control in accordance with SEBI (Substantial Acquisition ofSharesandTakeover)Regulationsi.e.hehascompliedwiththeminimumstakerequirementunderSEBIRegulations.Q.26.WhatwillbethepricingnormsforanonresidentpermittedtoacquireshareonstockexchangeunderFDIscheme?

Ans:Heshallacquiresharesattherulingmarketprice.Q.27.Whetherthenonresident,permittedtoacquiresharesonstockexchangeunderFDIscheme,cansellthoseshares?Ans: NonResidents were already permitted to sell the shares on the recognised stock exchange in accordance withRegulation9(2)(iii(b)ofNotificationFEMANo.20datedMay3,2000.Yes, the nonresident shall be at liberty to sell those shares as applicable under FDI guidelines. The shares acquiredunderthepresentschemeshallbetreatedasacquisitionunderFDIschemeandassuchallrequirementnamely,sectoralcap,entryroute,pricing,reporting,documentationetc.wouldhavetobecompliedwith.Thus,nonresidenthavingacquiredsharesundertheschemecansubsequentlytransfersharesunderFDIscheme.Q28.WhatwillbemodeofpaymentforthenonresidentpermittedtoacquireshareonstockexchangeunderFDIscheme?Ans:TheNonResidentpermittedtoacquiresharesundertheschemecanusefollowingmodeforpaymentofshares:

bywayofinwardremittancethroughnormalbankingchannels,orbywayofdebittotheNRE/FCNRaccountofthepersonconcernedmaintainedwithanauthoriseddealer/bankby debit to noninterest bearing Escrow account (in Indian Rupees) maintained in India with the AD bank inaccordancewithForeignExchangeManagement(Deposit)Regulations,2000theconsiderationamountmayalsobepaidoutofthedividendpayablebyIndianinvesteecompany,inwhichthesaidnonresidentholdscontrol,providedtherighttoreceivedividendisestablishedandthedividendamounthasbeencredited tospeciallydesignatednoninterestbearing rupeeaccount foracquisitionofshareson the floorofstockexchange.

Q.29.CananescrowaccountbeopenedwithoutRBIpermissionforthenonresidentpermittedtoacquireshareonstockexchangeunderFDIscheme?Ans:Yes,anescrowaccountforthepurposecanbeopenedunderGeneralPermissionunderRegulation5(5)ofForeignExchangeManagement(Deposit)Regulations.[c.f.FEMANotificationNo.280datedJuly10,2013]Q.30.WhatisthemeaningofIndiancompany?Ans:AnIndianCompanymeansacompanyregisteredundertheCompaniesAct,1956/2013.Q.31.Whatistheconceptofdownstreaminvestment?Ans:Incommonunderstanding,downstreaminvestmentwouldmeaninvestmentbyacompany inanothercompanybyway of subscription or acquisition of shares or acquisition of control. The investment in another Indian company(downstream) by an Indian company already having foreign investment is called downstream investment subject toconditionsofownershipandcontrol.Thus,therewillbetwoIndianCompanies,afirstlevelcompanywhichhasacceptedforeign investmentand in turnhasmade investment inasecond levelcompany i.e.another Indiancompany. [c.f.A.P.(DIRSeries)CircularNumbers 1, 42 and44respectively dated July 4, 2013, September 13, 2013 andSeptember 13,2013].Q.32.Whatwillbethecompositionofdirectforeigninvestment?Ans:Theconcept direct foreign investmentmeans foreign investment inany Indiancompanymadedirectly in formofForeign Direct Investment (FDI), Portfolio investment from Foreign Institutional Investment (FII), NonResident Indian,Qualified Foreign Investor (QFI), Registered Foreign Portfolio Investor and Foreign Venture Capital Investor i.e. underSchedule1,2,2A,3,6and8of theNotificationNo.FEMA.20/2000RBdatedMay3,2000, asamended from time totime.Thus,theinvestment intheabovemannerwillbeaggregatedinfirst levelIndianCompany.Suchfirst levelIndianCompanyobviouslycannothaveindirectforeigninvestment.Q.33.WhataboutforeigninvestmentinsecondlevelIndianCompany?Ans: The second level Indian Company can have direct foreign investment as explained above and also haveinvestmentfromanotherIndiancompanywhichisnotresidentownedandcontrolledi.e.indirectforeigninvestment.Further,themethodologyforcalculationoftotalforeigninvestmenti.e.directaswellasindirectforeigninvestmentwouldapplyateverystageofinvestmentinIndiancompaniesandthusineachandeveryIndiancompany.Q.34.WhatisthemeaningofresidentownedIndianCompany?Ans: An Indian company be treated as Owned by resident Indian citizens if more than 50% of the capital in it isbeneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled byresident Indian citizens. Thus, computation of such percentage would require ascertaining shareholding by residentIndian citizens and if the shareholding of such company is held by another Indian companies each of such IndiancompaniesareultimatelyownedandcontrolledbyresidentIndiancitizens.It isclarifiedthatsuchIndianownersarenotonlyresidentwithinmeaningofSection2(v)ofFEMA,1999butarealsocitizensofIndia.TheshareholdingofaforeigncitizenwhohasbecomeresidentwithinmeaningofSection2(v)ibidwillnotbeaggregatedforthebenchmarkof50%andabove.Further, for Information&Broadcastinganddefencesector ifadeclaration ismadebypersonsaspersection187Cofthe Indian Companies Act about a beneficial interest being held by a nonresident entity, then even though the

investmentmaybemadebyaresidentIndiancitizen,thesameshallbecountedasforeigninvestment.Q.35.Whatismeaningofcontrol?Ans:'Control'shallincludetherighttoappointamajorityofthedirectorsortocontrolthemanagementorpolicydecisionsincluding by virtue of their shareholding or management rights or shareholders agreements or voting agreements. ForascertainingcontrolbyresidentIndiancitizenstheabovenormsshallbeapplied.Q.36.Whatwillbethecompositionofindirectforeigninvestment?Ans:IndirectforeigninvestmentmeansentireinvestmentinotherIndiancompaniesbyanIndiancompany(IC),havingforeign investment in it provided IC is not owned and controlled by resident Indian citizens and/or IndianCompanieswhich are owned and controlled by resident Indian citizens or where the IC is owned or controlled by nonresidents.However, as an exception, the indirect foreign investment in the 100% owned subsidiaries of operatingcuminvesting/investing companies will be limited to the foreign investment in the operatingcuminvesting/ investingcompany. Thus, if an Indian companyA has 60%FDI/ Portfolio investment/FCCB/FVCI/DepositoryReceipts (issuedunder Schedule 10 of Notification No. FEMA.20/2000RB dated May 3, 2000 with equity shares or compulsorily andmandatorilyconvertiblepreferencesharesorcompulsoryandmandatorilyconvertibledebenturesorwarrantoranyothersecurityinwhichforeigndirectinvestmentcanbemadeintermsofSchedule1oftheNotificationibid,asunderlying)init,investsin100%oftheshareholdingofanotherIndiancompanyB,itwillbetakenasBhasindirectforeigninvestmentof60%.But,foreignownedIndiancompanyA,havingforeigninvestmentofmorethan50%butlessthan100%,investsin20%oftheshareholdingofanotherIndiancompanyB,itwillbetakenasBhasindirectforeigninvestmentof20%.Q.37.Arethereanyexceptiononapplicationofdownstreaminvestment?Ans:Thedownstreamrulemaynotbeappliedinfollowingcases:WherethefirstlevelIndiancompanyisownedandcontrolledbyresidentIndiancitizenswherefor investment insectors it isspecified inastatuteorarule thereunder.TheabovemethodologyofdeterminingdirectandindirectforeigninvestmentthereforedoesnotapplytotheinsurancesectorwhichwillcontinuetobegovernedbytherelevantRegulationDownstreaminvestment/smadebyabankingcompany,asdefinedinclause(c)ofSection5oftheBankingRegulationAct, 1949, incorporated in India, which is owned and/or controlled by nonresidents/ a nonresident entity/nonresidententities, under Corporate Debt Restructuring (CDR), or other loan restructuringmechanism, or in trading books, or foracquisitionofsharesduetodefaultsinloans,shallnotcounttowardsindirectforeigninvestment.Q.38.Whatareimplicationsofapplicabilityofdownstreamrule:Ans: While the norms of foreign investment for first level Indian company were already in place, the downstreaminvestmentinsecondlevelIndiancompanieswouldnowhavetobeinaccordance/compliancewiththerelevantsectoralconditionsonentryroute,conditionalitiesandcaps.SuchacompanyhastonotifySecretariatforIndustrialAssistance,DIPPandFIPBofitsdownstreaminvestmentintheformavailableathttp://www.fipbindia.comwithin30daysofsuch investment,even ifcapital instrumentshavenotbeenallottedalongwiththemodalityofinvestmentinnew/existingventures(with/withoutexpansionprogramme).ThedownstreaminvestmentbywayofinductionofforeignequityinanexistingIndianCompanytobedulysupportedbyaresolutionofitsBoardofDirectorsasalsoaShareholdersAgreement,ifanyTheissue/transfer/pricing/valuationofsharesshallcontinuetobeinaccordancewithextantSEBI/RBIguidelinesFor the purposeof downstream investment, the Indian companiesmaking the downstream investmentswould have tobring in requisite funds from abroad and not use funds borrowed in the domestic market. This would, however, notprecludedownstreamoperatingcompanies, fromraisingdebt in thedomesticmarket.Downstreaminvestments throughinternalaccrualsarepermissible.Q.39.As portfolio investmentmay undergo change quite frequently, itwill be difficult tomonitor downstreaminvestment?Ans:To facilitate such computation, for the purpose portfolio investments either by FIIs, NRIs orQFIs holding as onMarch31of thepreviousyearwouldbe taken intoaccount.e.g. formonitoring foreign investment for the financialyear201112,portfolioinvestmentasonMarch31,2011wouldbetakenintoaccount.Q.40.Whatistheproceduretoensurecompliancewiththedownstreaminvestmentguidelines?Ans: The FDI recipient Indian company at the first level which is responsible for ensuring compliance with the FDIconditionalities likeno indirect foreign investment inprohibitedsector,entry route,sectoralcap/conditionalities,etc. forthedownstreaminvestmentmadebyinthesubsidiarycompaniesatsecondlevelandsoonandsoforthwouldobtainacertificatetothiseffectfromitsstatutoryauditoronanannualbasisasregardsstatusofcompliancewiththeinstructionsondownstream investmentandcompliancewithFEMAprovisions.The fact thatstatutoryauditorhascertified that thecompanyis incompliancewiththeregulationsasregardsdownstreaminvestmentandotherFEMAprescriptionswillbedulymentionedintheDirectorsreportintheAnnualReportoftheIndiancompany.Incasestatutoryauditorhasgivenaqualified report, the same shall be immediately brought to the notice of theReserveBank of India, ForeignExchangeDepartment(FED),RegionalOffice(RO)oftheReserveBankinwhosejurisdictiontheRegisteredOfficeofthecompanyislocated.Q.41.WhatwillbetheroleofRegionalOfficeofRBI?Ans:Where the statutory auditor hasgivenqualified report about thedownstream investment,ROshall takeaction to

ensurecomplianceinconsultationwiththeCentralOffice.Q.42.SincetheinstructionswereissuedbyRBIin2013fortheperiodcommencingfromFebruary13,2009,howtoensurecomplianceretrospectively?Ans:AsregardsinvestmentsmadebetweenFebruary13,2009andthedateofpublicationoftheFEMAnotificationi.e.June21,2013, Indiancompaniesshallberequired to intimate,within90days fromthedateof thiscircular, throughanADCategoryIbanktotheconcernedRegionalOfficeoftheReserveBank,inwhosejurisdictiontheRegisteredOfficeofthe company is located, detailed position where the issue/transfer of shares or downstream investment is not inconformity with the regulatory framework now being prescribed. Reserve Bank shall consider treating such cases ascompliantwiththeseguidelineswithinaperiodofsixmonthsorsuchextendedtimeasconsideredappropriatebyRBIinconsultationwithGovernmentofIndia.ROsshall forwardsuchconsolidatedstatement to theCentralOfficewith theircomments forensuringcompliancewiththeinstructions.Q.43.IsfirstlevelIndianinvesteecompanymakingdownstreaminvestmentrequiredtofileFCGPR?Ans:No, it isnot required.FCGPR isnot tobe filedby the first level Indian InvesteeCompanyat the timeofmakingdownstreaminvestmentinsecondlevelIndianInvesteeCompany.However,compliancehastobeensuredasexplainedunderQ41.Q.44.WhataretheextantpricingguidelinesforFDIinstruments?Ans:IntermsofextantFEMAregulations,foreigninvestmentinanIndianinvesteecompanyshouldbesubjecttopricingguidelinesasstipulatedbyRBI/SEBIfromtimetotime.Earlier,thepricingguidelinesforFDIinstrumentswithoptionalityclauseswasdecidedintermsofA.P.(DIRSeries)CircularNo.86datedJanuary9,2014.

Theextantpricingguidelines forFDI investmenthassincebeen reviewedvideA.P. (DIRSeries)CircularNo.4datedJuly15,2014asunder:(i)IncaseoflistedcompaniestheissueandtransferofsharesincludingcompulsorilyconvertiblepreferencesharesandcompulsorilyconvertibledebenturesshallbeaspertheSEBIguidelinesandforFDIinstrumentswithoptionalityclausesshall continue tobe inaccordancewithA.P. (DIRSeries)CircularNo.86datedJanuary9,2014, i.e., thenonresidentinvestorshallbeeligibletoexitatthemarketpriceprevailingontherecognisedstockexchangessubjecttolockinperiodasstipulated,withoutanyassuredreturn.(ii) Incaseofunlistedcompanies,theissueandtransferofsharesincludingcompulsorilyconvertiblepreferencesharesand compulsorily convertible debentures with or without optionality clauses shall be at a price worked out as per anyinternationallyacceptedpricingmethodologyonarmslengthbasis.Q.45.The instructionsprescribe that incaseofa listedcompany, thenonresident investorshallbeeligible toexitat themarketpriceobtainingonrecognisedstockexchanges.Doesitmeanthatallexit frominvestment incaseofalistedcompanyhavingFDIwithoptionalityaretohappenonthefloorofstockexchange?Ans: The optionality clause creates an obligation for the investee to buy the shares from the investor at the priceprevailingonthestockmarketattherelevanttime.

II.ForeignTechnologyCollaborationAgreementQ.46. Whether the payment in terms of foreign technology collaboration agreement' can be made by anAuthorisedDealer(AD)bank?Ans.Yes, RBI has delegated the powers, tomake payments for royalty, lumpsum fee for transfer of technology andpayment for use of trademark/brand name in terms of the foreign technology collaboration agreement entered by theIndiancompanywithitsforeignpartners,totheADbankssubjecttocompliancewiththeprovisionsofForeignExchangeManagement(CurrentAccountTransactions)Rules,2000.Further, therequirementofregistrationoftheagreementwiththeRegionalOfficeofReserveBankofIndiahasalsobeendoneawaywith.

III.ForeignPortfolioInvestmentQ.1.WhataretheregulationsregardingPortfolioInvestmentsbyregisteredForeignPortfolioInvestors(RFPIs)?Ans. InvestmentbyRFPI registered inaccordancewithSEBIguidelines includingdeemedRFPI [erstwhileFII,QFI) ispermitted.RFPImay includeAssetManagementCompanies,PensionFunds,MutualFunds,andInvestmentTrustsasNomineeCompanies,Incorporated/InstitutionalPortfolioManagersortheirPowerofAttorneyholders,UniversityFunds,EndowmentFoundations,CharitableTrustsandCharitableSocieties.InvestmentbyRFPIscannotexceed10percentof thepaidupcapitalof the Indiancompany.AllRFPI/FII/QFI takentogethercannotacquiremorethan24percentofthepaidupcapitalofanIndianCompany.RFPIcaninvestinprimaryissuesofNonConvertibleDebentures(NCDs)/bondsonlyif listingofsuchbonds/NCDsiscommitted to be donewithin 15 days of such investment. In case theNCDs/bonds issued to theSEBIRFPI are notlistedwithin15daysof issuance, foranyreason, thentheRFPIshall immediatelydisposeof thesebonds/NCDseitherbywayofsaletoathirdpartyortotheissuerandthetermsofoffertoRFPIshouldcontainaclausethattheissuerofsuchdebtsecuritiesshallimmediatelyredeem/buybackthesaidsecuritiesfromtheRFPIinsuchaneventuality.Q.2.IsanIndianInvesteeCompanyeligibletoraisetheaggregatecapof24%forRFPI?Ans. An Indian company can raise the 24 per cent ceiling to the sectoral cap / statutory ceiling, as applicable, bypassinga resolutionby itsBoardofDirectors followedbypassingaSpecialResolution to that effect by theirGeneral

Body.IndiancompanyraisingtheaggregateRFPIinvestmentlimitof24percenttothesectoralcap/statutorylimit,asapplicable to the respective Indian company, should necessarily intimate the same to the Reserve Bank of India,immediately,ashitherto,alongwithaCertificate fromtheCompanySecretarystating thatall therelevantprovisionsoftheextantForeignExchangeManagementAct,1999regulationsandtheForeignDirectPolicy,asamendedfromtimetotime,havebeencompliedwith.The IndianCompany thusraising theaggregatecap forRFPI investmentshould informReserveBankof India,ForeignExchange Department, Central Office, Shahid Bhagat Singh Marg, Fort, and Mumbai 400001. The intimation shouldnecessarily be accompanied by (a) a resolution passed by Board of Directors of the Company enhancing the FIIaggregatecap, (b)AspecialResolution to theeffectpassedby theshareholdersof theCompany(c)acertificate fromtheCompanySecretarystating thatall the relevantprovisionsof theextantForeignExchangeManagementAct,1999regulationsandtheForeignDirectPolicy,asamendedfromtimetotime,havebeencompliedwith,(d)acertificatefromtheCompanySecretarystatingthatalltheresidentshareholdersoftheinvesteecompanyareownedandcontrolledbyresidents.ToavoidinconveniencetotheRFPIinvestors/Indiancompany,suchintimationshouldbewellinadvanceelseRBIshallcaution list thecompanyonFII investment in thecompany reaching22%ofpaidupcapitalorpaidupcapitalofeachseriesofconvertibledebenturesissuedbythecompany.Q.3.WhataretheregulationsregardingPortfolioInvestmentsbyNRIs/PIOs?Ans.NonResidentIndian(NRIs)andPersonsofIndianOrigin(PIOs)canpurchaseorsellshares/fullyandmandatorilyconvertible debenturesof Indian companieson theStockExchangesunder thePortfolio InvestmentScheme.For thispurpose, the NRI/ PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment. All sale/purchasetransactionsaretoberoutedthroughthedesignatedbranch.AnNRIoraPIOcanpurchasesharesupto5percentofthepaidupcapitalofanIndiancompany.AllNRIs/PIOstakentogethercannotpurchasemorethan10percentofthepaidupvalueofthecompany.The sale proceeds of the repatriable investments can be credited to the NRE/ NRO, etc. accounts of the NRI/ PIO,whereasthesaleproceedsofnonrepatriableinvestmentcanbecreditedonlytoNROaccounts.Thesaleofshareswillbesubjecttopaymentofapplicabletaxes.Q.4. Is Indian InvesteeCompany eligible to raise the aggregate cap of 10% for Portfolio Investments by SEBIregisteredNRI/PIO?Ans.This limit for investmentbyNRI/PIOunderPortfolio investmentschemecanbe increasedby the Indiancompanyfrom 10 per cent to 24 per cent by passing a General Body resolution. Indian company raising the aggregate NRIinvestment limit of 10 per cent to 24 per cent, should necessarily intimate the same immediately toReserveBank ofIndia,ForeignExchangeDepartment,CentralOffice,ShahidBhagatSinghMarg,Fort,Mumbai400001.The intimationshouldnecessarilybeaccompaniedby(a)aresolutionpassedbyBoardofDirectorsoftheCompanyenhancingtheFIIaggregatecap, (b)AspecialResolution to theeffectpassedby theshareholdersof theCompany(c)acertificate fromtheCompanySecretarystating thatall the relevantprovisionsof theextantForeignExchangeManagementAct,1999regulationsandtheForeignDirectPolicy,asamendedfromtimetotime,havebeencompliedwith,(d)acertificatefromtheCompanySecretarystatingthatalltheresidentshareholdersoftheinvesteecompanyareownedandcontrolledbyresidentsTo avoid inconvenience to the company such intimation should be well in advance else RBI shall caution list thecompanyonFIIinvestmentinthecompanyreaching8%ofpaidupcapitalorpaidupcapitalofeachseriesofconvertibledebenturesissuedbythecompany.Q.5.WithReference to instructions issued forNRIPISScheme inPara.2 (i)and (ii)of theA.P. (DIRSeries)CircularNo.29datedAugust20,2013whetherRBIwillallotseparate/newUniqueCodeNo.totheLinkOfficeoftheADbankorwilltheCurrentCodeNo.allocatedwillcontinuetobetheUniqueCodeNo.?Ans.IftheADbanksLinkOfficealreadyhasaCodeNo.allottedbyRBI,itwillcontinuetobetheUniqueCodeNumberforreportingthetransactionsofNRIPIStoRBIandthebankneednotapplyfornewcode.Q.6.CananADbankdebitinvestmentadvisoryfees,charteredaccountantsfeesforissueof15CA/CBcertificatestoNRE/NROPISaccount,asthepermissibledebitundertheheadAnychargesonaccountofsale/purchaseofsharesorconvertibledebenturesunderPIS?Ans.Thechargestowardsinvestmentadvisoryfees,charteredaccountantfeesforissueof15CA/CBcertificates,etc.related to the transactionsof sale/purchaseof shares /debenturesunderPIS,maybedebited to theNRE /NROPISaccounts.Q.7.UnderFERA1973, in termsofpara.2of theA.D.(M.A.Series)Cir.No.32datedNovember1,1999,powerswere delegated to theADs, to grant permissions to theNRIs/OCBswhomadeportfolio investments through adesignatedbranchofanAD,onrepatriationornonrepatriationbasis.Theinvestmentcouldbemadeinshares,debentures,Govt.securities(otherthanbearersecurities),treasurybills,unitsofMFs,etc.Hence,theprescribedformatforpermissionletterforinvestmentonrepatriationbasisviz.RBIRPConrepatriationbasis[availableatpage nos. 37 to 40 of theA.P. (DIRSeries)CircularNo. 29, datedAugust 20, 2013 onRBIwebsite] includes areferencetoallsuchinvestmentsbesidesequitysharesandconvertibledebentures.WhetherthesameformatisapplicableunderFEMAalso?Ans.UnderFEMA, thePIS includes investmentonly inequitysharesandconvertibledebenturesof Indiancompanies,on repatriation or nonrepatriation basis. Hence, while issuing the approval letter to their NRI clients for undertaking

investmentsunderPIS, the relevantparagraphs in the formatofpermission letterviz. RBIRPCon repatriationbasis,willberequiredtobesuitablymodifiedbytheADs.Inthisconnection,attentionoftheADisalsoinvitedtopara.2(iii)oftheA.P.(DIRSeries)CircularNo.29,datedAugust20,2013.Q.8.Whether the transfer of funds fromNRE PIS andNROPIS accounts toNRE /NROaccountsof theNRI(openedunderprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000amendedfromtimetotime),isallowedonaccountofsale/maturityproceedsofequitysharesandconvertibledebenturespurchasedandsoldunderPortfolioInvestmentScheme(PIS)throughNREPISandNROPISaccounts?Ans.ItisclarifiedthatNREPISandNROPISareessentiallyNREandNROaccountsrespectivelyandsodesignatedtokeep the portfolio investment related operations of the account holder segregated for facilitating identification andcompliance.Assuch,thereisnoprohibitionontransferofanybalancesheldinaNREPISaccounttoaNREaccountorinaNROPISaccounttoaNROaccount,subjectofcoursetopaymentoftaxes,ifandasapplicable.Q.9.WhethertransferoffundsisallowedfromNREPISaccountoftheNRItohisNROaccountopenedundertheprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000,amendedfromtimetotime?Ans.Itisclarifiedthatthetransferoffundsonaccountofnetsale/maturityproceedsofshares/debentures(netofallapplicabletaxes),maybeallowedbytheADBankfromNREPISaccountofaNRItothesaidNRIsNROaccount.Q.10.WhethertransferoffundsisallowedfromNROPISaccountoftheNRItohisNREaccountopenedundertheprovisionsofNotificationNo.FEMA.5/2000RBdatedMay3,2000,amendedfromtimetotime?Ans. It isclarified that the transferof fundsonaccountofnetsale /maturityproceeds (netofallapplicable taxes),ofshares/debenturesmaybeallowedbytheADBankfromNROPISaccountofaNRItothesaidNRIsNREaccount,subjecttothefollowingconditions:

suchtransferoffundsshouldbewithintheoverallceilingofUSDonemillionperfinancialyearsubjecttopaymentoftax,asapplicable(i.e.asapplicableiffundswereremittedabroad)andTheADshouldensurethecompliancewiththelimitofUSDonemillionfortransferoffundsbytheNRI.

IV.InvestmentinothersecuritiesQ.1.CanaNonresidentIndian(NRI)andSEBIregisteredForeignInstitutionalInvestor(FII)investinGovernmentSecurities/TreasurybillsandCorporatedebt?Ans. Under the FEMA Regulations, only NRIs and SEBI registered FIIs are permitted to purchase GovernmentSecurities/TreasurybillsandCorporatedebt.Thedetailsareasunder:A.ANonresidentIndiancanpurchasewithoutlimit,(1)onrepatriationbasisi)DatedGovernmentsecurities(otherthanbearersecurities)ortreasurybillsorunitsofdomesticmutualfundsii)Bondsissuedbyapublicsectorundertaking(PSU)inIndiaandiii)SharesinPublicSectorEnterprisesbeingdisinvestedbytheGovernmentofIndia.(2)onnonrepatriationbasisi)DatedGovernmentsecurities(otherthanbearersecurities)ortreasurybillsorunitsofdomesticmutualfundsii)UnitsofMoneyMarketMutualFundsinIndiaandiii)NationalPlan/SavingsCertificates.B.ASEBI registeredFIImay purchase, on repatriation basis, datedGovernment securities/ treasury bills, listed nonconvertibledebentures/bondsissuedbyanIndiancompanyandunitsofdomesticmutualfundseitherdirectlyfromtheissuerofsuchsecuritiesorinanymanneraspertheprevalent/approvedmarketpractice.Purchase of debt instruments includingUpper Tier II instruments issued by banks in India and denominated in IndianRupees by FIIs are subject to limits notified by SEBI and theReserve Bank from time to time. The present limit forinvestment in Corporate Debt Instruments like nonconvertible debentures / bonds by RFPI/FII/QFI and long terminvestorsisUSD51billion.FPIsshallnotbeallowedtomakeanyfurtherinvestmentinCPs.The present limit for investment by SEBI registered Foreign Institutional Investors (FIIs), SEBI registered QualifiedForeignInvestors(QFIs)andlongterminvestorsregisteredwithSEBIandRegisteredForeignPortfolioInvestor(RFPI)inGovernmentSecuritiesisUSD30billion.Q.2.CanaNRIandSEBIregisteredFIIinvestinTierIandTierIIinstrumentsissuedbybanksinIndia?Ans.RFPIandNRIshavebeenpermittedtosubscribetothePerpetualDebtinstruments(eligibleforinclusionasTierIcapital) and Debt Capital instruments (eligible for inclusion as upper Tier II capital), issued by banks in India anddenominatedinIndianRupees,subjecttothefollowingconditions:

InvestmentbyallRFPIinRupeedenominatedPerpetualDebtinstruments(TierI)shouldnotexceedanaggregateceilingof49percentofeachissueandinvestmentbyindividualFIIshouldnotexceedthelimitof10percentofeachissue.Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed anaggregateceilingof24percentofeach issueand investmentsbyasingleNRIshouldnotexceed5percentof

eachissue.InvestmentbyRFPIsinRupeedenominatedDebtCapitalinstruments(TierII)shallbewithinthelimitsstipulatedbySEBIforRFPI/FII/QFIinvestmentincorporatedebtinstruments.Investment by NRIs in Rupee denominated Debt Capital instruments (Tier II) shall be in accordance with theextantpolicyforinvestmentbyNRIsinotherdebtinstruments.InvestmentbyRFPIs inRupeedenominatedUpperTier II Instruments raised in IndianRupeeswillbewithin thelimitprescribedbytheSEBIforinvestmentincorporatedebtinstruments.

Thedetailsof thesecondarymarketsales /purchasesbyRFPIsand theNRIs in these instrumentson the floorof thestock exchange are to be reported by the custodians and designated Authorised Dealer banks respectively, to theReserveBankthroughthesoftcopyoftheFormsLEC(FII)andLEC(NRI).Q.3.CanaNRIandRFPIinvestinIndianDepositoryReceipts(IDRs)?Ans.NRI and RFPIs have been permitted to invest, purchase, hold and transfer IDRs of eligible companies residentoutsideIndiaandissuedintheIndiancapitalmarket,subjecttothefollowingconditions:(i)Thepurchase,holdandtransferofIDRsis inaccordancewiththeForeignExchangeManagement(TransferorIssueof Security by a PersonResidentOutside India) Regulations, 2000 notified videNotification No. FEMA 20 / 2000RBdatedMay3,2000,asamendedfromtimetotime.AlimitedtwowayfungibilityforIDRssubjecttothefollowingtermsandconditions:

Theconversionof IDRs intounderlyingequityshareswouldbegovernedby theconditionsmentioned inparas6and7ofA.P.(DIRSeries)CircularNo.5datedJuly22,2009.FreshIDRswouldcontinuetobeissuedintermsoftheprovisionsofA.P.(DIRSeries)CircularNo.5datedJuly22,2009.The reissuanceof IDRswould beallowedonly to theextent of IDRs that havebeen redeemed /converted intounderlyingsharesandsold.There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs by eligible foreigncompanies in Indianmarkets.Thiscapwouldbeakin to thecaps imposed forFII investment indebt securitiesandwouldbemonitoredbySEBI.IDRsshallnotberedeemable intounderlyingequitysharesbefore theexpiryofoneyearperiodfromthedateofissueoftheIDRs.Atthetimeofredemption/conversionofIDRsintotheunderlyingshares,theIndianholders(personsresidentinIndia)of IDRsshall complywith theprovisionsof theForeignExchangeManagement (Transferor IssueofAnyForeign Security) Regulations, 2004 notified vide Notification No. FEMA 120 / RB2004 dated July 7 2004, asamendedfromtimetotime.

TheFEMAprovisionsshallnotapplytotheholdingoftheunderlyingshares,onredemptionofIDRsbytheFIIsincludingSEBI approved subaccounts of the FIIs and NRIs. The issuance, redemption and fungibility of IDRs would also besubjecttotheSEBI(IssueofCapitalandDisclosureRequirements)Regulations,2009,asamendedfromtimetotimeaswellasotherrelevantguidelinesissuedinthisregardbytheGovernment,theSEBIandtheRBIfromtimetotime.Q.4. Can a person resident in India invest in Indian Depository Receipts (IDRs)? What is the procedure forredemptionofIDRsheldbypersonsresidentinIndia?Ans.Aperson resident in Indiamaypurchase,holdand transfer IDRsofeligiblecompanies residentoutside IndiaandissuedintheIndiancapitalmarket.TheFEMARegulationsshallnotbeapplicabletopersonsresidentinIndiaasdefinedunder section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of a transaction on arecognizedStockExchangeinIndia.However,atthetimeofredemption/conversionofIDRsintounderlyingshares,theIndianholders(personsresidentinIndia)ofIDRsshallcomplywiththeprovisionsoftheForeignExchangeManagement(Transferor IssueofAnyForeignSecurity)Regulations,2004notifiedvideNotificationNo.FEMA120/RB2004datedJuly72004,asamendedfromtimetotime.ThefollowingguidelinesshallbefollowedonredemptionofIDRsbypersonsresidentinIndia:i.ListedIndiancompaniesmayeithersellorcontinuetoholdtheunderlyingsharessubjecttothetermsandconditionsasperRegulations6Band7ofNotificationNo.FEMA120/RB2004datedJuly7,2004,asamendedfromtimetotime.ii. IndianMutual Funds, registeredwith SEBImay either sell or continue to hold the underlying shares subject to thetermsandconditionsasperRegulation6CofNotificationNo.FEMA120/RB2004datedJuly7,2004,asamendedfromtimetotime.iii.Other persons resident in India including resident individuals are allowed to hold the underlying shares only for thepurposeofsalewithinaperiodof30daysfromthedateofconversionoftheIDRsintounderlyingshares.

V.ForeignVentureCapitalInvestmentWhataretheregulationsforForeignVentureCapitalInvestment?Ans.

ASEBIregisteredForeignVentureCapitalInvestorhasgeneralpermissionfromtheReserveBankofIndiatoinvestinaVentureCapitalFund(VCF)oranIndianVentureCapitalUndertaking(IVCU),inthemannerandsubjecttothetermsandconditionsspecifiedinSchedule6ofRBINotificationNo.FEMA20/2000RBdatedMay3,2000,asamendedfromtimetotime.TheseinvestmentsbySEBIregisteredFVCI,wouldbesubjecttotheSEBIregulationandsectorspecificcapsofFDI.FVCIs can purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCUor of aVCFthrough initial public offer or private placement in units of schemes / funds set up by a VCF. At the time of grantingapproval, the Reserve Bank permits the FVCI to open a Foreign Currency Account and/ or a Rupee Account with adesignatedbranchofanADCategoryIbank.FVCIsallowedtoinvestintheeligiblesecurities(equity,equitylinkedinstruments,debt,debtinstruments,debenturesofanIVCUorVCF,unitsofschemes/fundssetupbyaVCF)bywayofprivatearrangement/purchasefromathirdpartyalso.FVCIsarealsoallowedtoinvestinsecuritiesonarecognizedstockexchange.Thepurchase/saleofshares,debenturesandunitscanbeataprice that ismutuallyacceptable to thebuyerandtheseller.ADCategoryIbankscanoffer forwardcover toFVCIsto theextentof total inwardremittance. IncasetheFVCIhasmade any remittance by liquidating some investments, original cost of the investments has to be deducted from theeligiblecovertoarriveattheactualcoverthatcanbeoffered.

VI.InvestmentbyQFIsQ.1.WhatareQFIsandwhataretheinvestmentstheycanundertake?Ans:QFIsmeanapersonwhofulfilsthefollowingcriteria:(a)Resident in a country that is amember of Financial Action taskForce (FATF) or amember of a groupwhich is amemberofFATFand(b)ResidentinacountrythatisasignatorytoIOSCOsMMoU(AppendixASignatories)orasignatoryofabilateralMoUwithSEBIPROVIDEDthatthepersonisnotresidentinacountrylistedinthepublicstatementsissuedbyFATFfromtimetotimeon jurisdictions having a strategic AML/CFT deficiencies to which counter measures apply or that have not madesufficientprogress inaddressing thedeficienciesorhavenotcommitted toanactionplandevelopedwith theFATF toaddressthedeficienciesFurther such person is not resident in India and is not registeredwithSEBI as aForeign Institutional Investor (FII) orSubAccountofanFIIorForeignVentureCapitalInvestor(FVCI).Explanation:bilateralMoUwithSEBIshallmeanabilateralMoUbetweenSEBIandtheoverseasregulatorthat, interalia,providesforinformationsharingarrangements.MemberofFATFshallnotmeananassociatememberofFATF.Q.2.WhataretheinvestmentsQFIscanundertakeandwhataretheapplicablecapsforsuchinvestment?Ans:QFIsarenowbeingtreatedasdeemedRFPIandrulesasapplicabletoRFPIsshallbeapplicable.Q.3. What are the reporting requirements for acquisition/transfer of shares by nonresidents under respectiveschedulestoFEMA20:Ans:Followingarethereportingrequirements(A)ReportingofFDIforfreshissuanceofshares(i)Reportingofinflow(a)Theactual inflowsonaccountofsuchissuanceofsharesshallbereportedbytheADbranchintheRreturnsinthenormalcourse.(b)An Indiancompany receiving investment fromoutside India for issuingshares /convertibledebentures /preferencesharesundertheFDIScheme,shouldreportthedetailsoftheamountofconsiderationtotheRegionalOfficeconcernedof theReserveBank through itsADCategory I bank, not later than 30 days from the date of receipt in theAdvanceReportingFormenclosed inAnnex 6.Noncompliancewith theaboveprovisionwouldbe reckonedasacontraventionunderFEMA,1999andcouldattractpenalprovisions.TheFormcanalsobedownloadedfromtheReserveBank'swebsitehttp://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx(c)Indiancompaniesarerequiredtoreportthedetailsofthereceiptoftheamountofconsiderationforissueofshares/convertibledebentures,throughanADCategoryIbank,togetherwithacopy/iesoftheFIRC/sevidencingthereceiptoftheremittancealongwiththeKYCreportonthenonresidentinvestorfromtheoverseasbankremittingtheamount.ThereportwouldbeacknowledgedbytheRegionalOfficeconcerned,whichwillallotaUniqueIdentificationNumber(UIN)fortheamountreported.(ii)TimeframewithinwhichshareshavetobeissuedTheequityinstrumentsshouldbeissuedwithin180daysfromthedateofreceiptoftheinwardremittanceorbydebittotheNRE/FCNR(B) /Escrowaccountof thenonresident investor. Incase, theequity instrumentsarenot issuedwithin

180daysfromthedateofreceiptoftheinwardremittanceordateofdebittotheNRE/FCNR(B)account,theamountofconsideration so received should be refunded immediately to the nonresident investor by outward remittance throughnormalbankingchannelsorbycredit totheNRE/FCNR(B)/Escrowaccount,asthecasemaybe.NoncompliancewiththeaboveprovisionwouldbereckonedasacontraventionunderFEMAandcouldattractpenalprovisions.Inexceptionalcases, refund / allotmentof shares for theamountof considerationoutstandingbeyondaperiodof 180days from thedateofreceiptmaybeconsideredbytheReserveBank,onthemeritsofthecase.(iii)Reportingofissueofshares(a)After issueofshares (includingbonusandshares issuedon rightsbasisandshares issuedonconversionofstockoption under ESOP scheme)/ convertible debentures / convertible preference shares, the Indian company has to fileFormFCGPR, through itsADCategory Ibank,not later than30days fromthedateof issueofshares.TheFormcanalsobedownloadedfromtheReserveBank'swebsitehttp://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspxNoncompliance with the above provision would be reckoned as a contravention under FEMA and could attract penalprovisions.(b) Form FCGPR has to be duly filled up and signed by Managing Director/Director/Secretary of the Company andsubmittedtotheAuthorisedDealerof thecompany,whowill forwardit totheconcernedRegionalOfficeof theReserveBank.ThefollowingdocumentshavetobesubmittedalongwithFormFCGPR:(i)AcertificatefromtheCompanySecretaryofthecompanycertifyingthat:a)alltherequirementsoftheCompaniesAct,1956havebeencompliedwithb)termsandconditionsoftheGovernmentsapproval,ifany,havebeencompliedwithc)thecompanyiseligibletoissuesharesundertheseRegulationsandd)thecompanyhasalloriginalcertificatesissuedbyADbanksinIndiaevidencingreceiptofamountofconsideration.(ii)Acertificate fromSEBIregisteredMerchantBankerorCharteredAccountant indicatingthemannerofarrivingat thepriceofthesharesissuedtothepersonsresidentoutsideIndia.(c)ThereportofreceiptofconsiderationaswellasFormFCGPRhavetobesubmittedbytheADbanktotheRegionalOfficeconcernedoftheReserveBankunderwhosejurisdictiontheregisteredofficeofthecompanyissituated.d)Issueofbonus/rightssharesorsharesonconversionofstockoptionsissuedunderESOPtopersonsresidentoutsideIndiadirectlyoronamalgamation/mergerwithanexistingIndiancompany,aswellasissueofsharesonconversionofECB/royalty / lumpsumtechnicalknowhowfee/ importofcapitalgoodsbyunits inSEZshastobereported inFormFCGPR.B.ReportingofFDIforTransferofsharesroute(i)Theactual inflowsandoutflowsonaccountof such transferof sharesshallbe reportedby theADbranch in theRreturnsinthenormalcourse.(ii)ReportingoftransferofsharesbetweenresidentsandnonresidentsandviceversaistobemadeinFormFCTRS.The Form FCTRS should be submitted to the AD Category I bank, within 60 days from the date of receipt of theamount of consideration. The onus of submission of the Form FCTRS within the given timeframe would be on thetransferor/transferee,residentinIndia.(iii)Thesaleconsideration in respectofequity instrumentspurchasedbyaperson residentoutside India, remitted intoIndia throughnormalbankingchannels,shallbesubjected toaKYCcheck(Annex9ii)by theremittancereceivingADCategoryIbankatthetimeofreceiptoffunds.Incase,theremittancereceivingADCategoryIbankisdifferentfromthe AD Category I bank handling the transfer transaction, the KYC check should be carried out by the remittancereceiving bank and the KYC report be submitted by the customer to the AD Category I bank carrying out thetransactionalongwiththeFormFCTRS.(iv)TheADbankshouldscrutinisethetransactionsandonbeingsatisfiedaboutthetransactionsshouldcertifytheformFCTRSasbeinginorder.(v) The AD bank branch should submit two copies of the Form FCTRS received from their constituents/customerstogetherwith thestatementof inflows/outflowsonaccountof remittances received/made inconnectionwith transferofshares,bywayofsale,toIBD/FED/orthenodalofficedesignatedforthepurposebythebankintheproforma(whichistobepreparedinMSExcelformat).TheIBD/FEDorthenodalofficeofthebankwillconsolidatereportinginrespectofall the transactions reported by their branches into two statements inflow and outflow statement. These statements(inflowandoutflow) shouldbe forwardedonamonthlybasis toForeignExchangeDepartment,ReserveBank,ForeignInvestmentDivision,CentralOffice,Mumbaiinsoftcopy(inMSExcel)byemail.ThebankshouldmaintaintheFCTRSformswithitandshouldnotforwardthesametotheReserveBankofIndia.(vi)Thetransferee/hisdulyappointedagentshouldapproachthe investeecompanytorecordthetransfer intheirbooksalong with the certificate in the Form FCTRS from the AD branch that the remittances have been received by thetransferor/paymenthasbeenmadebythetransferee.OnreceiptofthecertificatefromtheAD,thecompanymayrecordthetransferinitsbooks.(vii)On receipt of statements from theADbank , theReserveBankmay call for such additional details or give suchdirectionsasrequiredfromthetransferor/transfereeortheiragents,ifneedbe.C.ReportingofconversionofECBintoequityDetails of issue of shares against conversion of ECB have to be reported to the Regional Office concerned of the

ReserveBank,asindicatedbelow:IncaseoffullconversionofECBintoequity,thecompanyshallreporttheconversioninFormFCGPRtotheRegionalOffice concerned of the Reserve Bank as well as in Form ECB2 to the Department of Statistics and InformationManagement(DSIM),ReserveBankofIndia,BandraKurlaComplex,Mumbai400051,withinsevenworkingdaysfromthecloseofmonthtowhichitrelates.Thewords"ECBwhollyconvertedtoequity"shallbeclearlyindicatedontopoftheFormECB2.Oncereported,filingofFormECB2inthesubsequentmonthsisnotnecessary.Incaseofpartial conversionofECB, thecompanyshall report theconvertedportion inFormFCGPR to theRegionalOfficeconcernedaswellas inFormECB2clearlydifferentiating theconvertedportion from thenonconvertedportion.Thewords"ECBpartiallyconvertedtoequity"shallbe indicatedontopof theFormECB2. In thesubsequentmonths,theoutstandingbalanceofECBshallbereportedinFormECB2toDSIM.TheSEZunit issuing equity asmentioned in para (iii) above, should report the particulars of the shares issued in theFormFCGPR.D.ReportingofESOPsforallotmentofequitysharesThe issuing company is required to report the details of issuance of ESOPs to its employees to the Regional OfficeconcernedoftheReserveBank,inplainpaperreporting,within30daysfromthedateofissueofESOPs.Further,atthetimeofconversionofoptionsintosharestheIndiancompanyhastoensurereportingtotheRegionalOfficeconcernedofthe Reserve Bank in form FCGPR, within 30 days of allotment of such shares. However, provision with regard toadvancereportingwouldnotbeapplicableforsuchissuances.E.Reportingofissue/transferofDRsThedomesticcustodianhastofurnish,fulldetailsofsuchissue/transferofdepositoryreceiptsasperDRScheme2014inFormDRRwithin30daysofcloseoftheissue/program.F.ReportingofRFPIinvestmentsunderPISscheme(i) RFPI reporting: The AD Category I banks have to ensure that the RFPI who are purchasing various securities(except derivative and IDRs) by debit to theSpecialNonResidentRupeeAccount should report all such transactionsdetails (exceptderivativeandIDRs) in theFormLECtoForeignExchangeDepartment,ReserveBankof India,CentralOfficebyuploadingthesametotheORFSwebsite(https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp).Itwouldbethebanksresponsibility toensurethat thedatasubmittedtoRBI isreconciledbyperiodically takingaFIIholdingreport fortheirbank.(iii) The Indian company which has issued shares to FIIs under the FDI Scheme (for which the payment has beenreceived directly into companys account) and the Portfolio Investment Scheme (for which the payment has beenreceived from FIIs' accountmaintainedwith an ADCategory I bank in India) should report these figures separatelyunder itemno.5ofFormFCGPR(Annex8) (Postissuepatternofshareholding)so that thedetailscouldbesuitablyreconciledforstatistical/monitoringpurposes.G.ReportingofNRIinvestmentsunderPISschemeThelinkofficeof thedesignatedbranchofanADCategoryIbankshall furnishto theReserveBank18,areportonadaily basis on PIS transactions undertaken by it, on behalf of NRIs. This report can be furnished on a floppy to theReserveBankandalsouploadeddirectly on theORFSwebsite (https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp). Itwould be the banks responsibility to ensure that the data submitted to RBI is reconciled by periodically taking a NRIholdingreportfortheirbank.H.Reportingofforeigninvestmentbywayofissue/transferofparticipatinginterest/rightinoilfields:Foreign investment byway of issue / transfer of participating interest/right in oil fields by Indian companies to a nonresident would be treated as an FDI transaction under the extant FDI policy and the FEMA regulations. Accordingly,transfer of participating interest/ rightswill be reportedas other category underPara7 of revisedFormFCTRSandissuanceofparticipatinginterest/rightswillbereportedasothercategoryofinstrumentsunderPara4ofFormFCGPR.