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Foreign Exchange Management (Insurance) Regulations, 2015 and Investment by FPI in corporate debt securities

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22 Nov 2016 News And Updates
RBI

RBI UPDATE

Foreign Exchange Management (Insurance) Regulations, 2015

RBI has revised the regulations issued under the Foreign Exchange Management (Insurance) Regulations, 2000 notified vide Notification No. FEMA. 12/2000 - RB dated May 03, 2000 c.f. G.S.R. No. 395(E) dated May 03, 2000. Accordingly, the said Regulations have been repealed in consultation with the Government of India and superseded by the Foreign Exchange Management (Insurance) Regulations, 2015 notified vide Notification No. FEMA. 12(R)/2015-RB dated December 29, 2015 c.f. G.S.R. No. 1007(E) dated December 29, 2015. The revised notification has come into force with effect from December 29, 2015.

Investment by Foreign Portfolio Investors (FPI) in corporate debt securities

In terms of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Foreign Portfolio Investors (FPI) are permitted to invest only in listed or to-be-listed debt securities.

Investment in unlisted debt securities is permitted only in case of companies in the infrastructure sector.

RBI has now been decided to expand the investment basket of eligible instruments for investment by FPIs under the corporate bond route whereby FPIs are allowed to invest in Unlisted corporate debt securities in the form of non-convertible debentures/bonds issued by public or private companies subject to minimum residual maturity of three years and end use-restriction on investment in real estate business, capital market and purchase of land. 

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