**Policy Summary: Foreign Exchange Management Debt Instruments Second Amendment Regulations, 2023**
This notification, No. FEMA.396/2023-RB, issued by the Reserve Bank of India (RBI) on October 16, 2023, introduces amendments to the Foreign Exchange Management (Debt Instruments) Regulations, 2019, Notification No. FEMA.396/2019-RB dated October 17, 2019. These amendments, titled the "Foreign Exchange Management Debt Instruments Second Amendment Regulations, 2023," take effect from the date of their publication in the Official Gazette.
The key change pertains to Schedule 1 of the Principal Regulation, specifically addressing persons resident outside India who maintain rupee accounts as per regulation 7(1) of the Foreign Exchange Management (Deposit) Regulations, 2016. The amendment grants these individuals permission to purchase and sell dated Government Securities/Treasury Bills, subject to terms and conditions specified by the RBI.
Specifically, the consideration for purchasing these securities must be paid from the funds held in their rupee accounts. Furthermore, the sale/maturity proceeds, net of applicable taxes, from these instruments will be credited to the same rupee accounts.
Dimple Bhandia, Chief General Manager, Financial Markets Regulation Department, Reserve Bank of India, is the contact person for this notification.
The Principal Regulation was initially published in the Official Gazette vide G.S.R. No. 796(E) dated October 17, 2019, and previously amended via Notification No. FEMA 396/2021-RB, dated October 13, 2021, published in the Gazette of India Extraordinary, Part III, Section 4, vide Gazette ID CGMHE/21102021/230591 dated 21.10.2021.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the financial markets and foreign exchange.
Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Foreign Exchange Management Debt Instruments Regulations, 2019: Regulations pertaining to the management of debt instruments under the Foreign Exchange Management Act.
Foreign Exchange Management Debt Instruments Second Amendment Regulations, 2023: Amendment regulations to the Foreign Exchange Management Debt Instruments Regulations, 2019.
Foreign Exchange Management Deposit Regulations, 2016: Regulations pertaining to deposits under the Foreign Exchange Management Act.
Government Securities: Debt instruments issued by the government.
Treasury Bills: Short-term debt instruments issued by the government.
Dimple Bhandia: Chief General Manager at Reserve Bank of India
RESERVE BANK OF INDIA
(Financial Markets Regulation Department)
(CENTRAL OFFICE)
NOTIFICATION
MUMBAI, the 16th October, 2023
Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations,
2023
No. FEMA.396(2)/2023-RB. — In exercise of the powers conferred by clause (a) of sub-section
(2) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of
1999), the Reserve Bank of India hereby makes the following amendments to the Foreign
Exchange Management (Debt Instruments) Regulations, 2019 (Notification No.
FEMA.396/2019-RB dated October 17, 2019) (hereinafter referred to as 'the Principal
Regulation'), namely:-
1. Short title and commencement
(i) These Regulations shall be called the Foreign Exchange Management (Debt Instruments)
(Second Amendment) Regulations, 2023.
(ii) They shall come into force with effect from the date of their publication in the Official
Gazette.
2. Amendment to Schedule 1 to the Principal Regulation
(i) In paragraph 1 of Schedule 1 to the Principal Regulation, after sub-paragraph D, the
following new sub-paragraph shall be inserted:-
“E. Permission to persons resident outside India maintaining rupee account in
terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations,
2016
Persons resident outside India that maintain a rupee account in terms of regulation 7(1)
of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell
dated Government Securities/treasury bills, as per terms and conditions specified by
the Reserve Bank.”
(ii) In paragraph 2 of Schedule 1 to the Principal Regulation, after clause (4) the following new
clause shall be inserted: -
“(4A) The amount of consideration for purchase of dated Government
Securities/treasury bills by persons resident outside India in terms of sub-paragraph
(E) of paragraph 1 of this Schedule shall be paid out of funds held in their rupee account
maintained in terms of regulation 7(1) of Foreign Exchange Management (Deposit)
Regulations, 2016.”
Page 1 of 2(iii) In paragraph 4 of Schedule 1 to the Principal Regulation, after clause (2) the following new
clause shall be inserted: -
“(2A) The sale/ maturity proceeds (net of taxes, as applicable) of instruments held by
persons resident outside India that maintain a rupee account in terms of regulation 7(1)
of Foreign Exchange Management (Deposit) Regulations, 2016 shall be credited to the
said rupee account.”
(Dimple Bhandia)
Chief General Manager
Foot Note:- The Principal Regulation was published in the Official Gazette vide
G.S.R.No.796(E) dated October 17, 2019 in Part II, Section 3, sub-Section (i) and amended,
vide:
1. Notification no. FEMA 396(1)/2021-RB [Foreign Exchange Management (Debt
Instruments) (First Amendment) Regulations, 2021] dated October 13, 2021 published
in the Gazette of India [Extraordinary, Part III–Section 4], vide Gazette ID CG-MH-E-
21102021-230591 dated 21.10.2021.
Published in the Official Gazette of Government of India Extraordinary Part III, Section
4, dated October 20, 2023
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