Executive Summary:
This notification from the Reserve Bank of India amends the Foreign Exchange Management Deposit Regulations of 2016. It addresses regulations for foreign portfolio investors, foreign venture capital investors, and citizens of Bangladesh or Pakistan belonging to minority communities residing in India. The regulations come into force from the date of their publication in the Official Gazette on November 9, 2018.
Key Points / Main Content:
Foreign Exchange Management Deposit Amendment Regulations, 2018
* These regulations may be called the Foreign Exchange Management Deposit Amendment Regulations, 2018.
Amendment to Regulation 7:
* Authorised Dealers in India may allow Foreign Portfolio Investors (FPI) and Foreign Venture Capital Investors (FVCI) registered with SEBI to open and maintain non-interest-bearing foreign currency accounts.
* The purpose is for making investments according to Foreign Exchange Management regulations.
Amendment to Schedule 3:
* Citizens of Bangladesh or Pakistan belonging to minority communities (Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians) residing in India with a Long Term Visa (LTV) can open one NRO account with an authorized dealer.
* The NRO account will be converted to a resident account once the person becomes an Indian citizen per the Citizenship Act of 1955.
* Individuals who have applied for an LTV which is under consideration of the Central Government is permitted to open with an authorised dealer only one NRO Account which will be opened for a period of six months and may be renewed at six monthly intervals subject to the condition that the individual holds a valid visa and valid residential permit issued by Foreigner Registration Office FRO Foreigner Regional Registration Office FRRO concerned.
Amendment to Schedule 4:
* The tenure of the SNRR account should be concurrent to the tenure of the contract period of operation the business of the account holder and in no case should exceed seven years.
* Approval of the Reserve Bank shall be obtained in cases requiring renewal.
* The seven-year restriction does not apply to SNRR accounts opened by individuals residing outside India for investment purposes as per Foreign Exchange Management regulations.
Amendment to Schedule 5:
* An Escrow account in INR can be opened jointly and severally with an Authorised Dealer in India as an Escrow Agent in the following cases subject to the terms and conditions specified in this schedule.
* Terms and conditions for opening of Escrow Accounts:
* Non-resident corporates and resident/non-resident acquirers are permitted to open Escrow accounts with specific credit and debit permissions for capital instrument/convertible note transactions.
* The terms outline permitted credits and debits, operational guidelines, and closure requirements.
* The escrow account shall remain operational for a maximum period of six months only
* Acquisition transfer shall be in accordance with the provisions of Foreign Exchange Management Transfer or Issue of Security by a person resident Outside India Regulation 2017, as amended from time to time and Security Exchange Board of India Substantial Acquisition of Shares and Takeover Regulations, 1997 SEBI SAST Regulations or other relevant regulations issued by the SEBI.
* The Escrow account shall be noninterest bearing.
* No fund or nonfund based facilities would be permitted against the balances in the Escrow account.
* Requirement of compliance with KYC guidelines issued by the Reserve Bank shall rest with the Authorised Dealer.
* Balance in the Escrow account, if any, may be repatriated at the then prevailing exchange rate
* In cases, where proposed acquisition transfer does not materialise, the authorised dealer may allow repatriation refund of the entire amount lying to the credit of the Escrow account on being satisfied with the bonafides of such remittances.
* For the purpose of FDI reporting, date of transfer of funds into the bank account of the issuer or transferor of capital instrumentsconvertible notes, as the case may be, shall be the relevant date of remittance.
Impact Analysis:
Authorised Dealers:
* Impact: Must adhere to the revised regulations for opening and maintaining accounts for FPIs, FVCIs, and specific individuals from Bangladesh and Pakistan. They must also adhere to revised Escrow account opening and maintenance guidelines.
* Action Required: Update internal policies and procedures to comply with these amendments. Ensure staff are trained on the new regulations. Implement necessary KYC guidelines.
Foreign Portfolio Investors and Foreign Venture Capital Investors:
* Impact: Can now open and maintain non-interest-bearing foreign currency accounts for investment purposes in India.
* Action Required: Work with Authorised Dealers to open and manage these accounts in accordance with the regulations.
Citizens of Bangladesh and Pakistan (Minority Communities):
* Impact: Eligible individuals with LTVs can open NRO accounts which can be converted to resident accounts upon gaining Indian citizenship.
* Action Required: Provide necessary documentation to Authorised Dealers to open NRO accounts and comply with visa and residential permit requirements.
Individuals/Corporates involved in capital instrument/convertible note transactions:
* Impact: The terms outline permitted credits and debits, operational guidelines, and closure requirements.
* Action Required: Work with Authorised Dealers to open and manage these accounts in accordance with the regulations.
Key Entities Referenced
Foreign Exchange Management Act, 1999: A law enacted by the parliament of India related to foreign exchange.
Foreign Exchange Management Deposit Regulations, 2016: Regulations pertaining to the management of foreign exchange deposits.
Reserve Bank of India: The central bank of India, responsible for regulating the monetary policy.
Foreign Exchange Management Deposit Amendment Regulations, 2018: Amendments made in the year 2018 to the Foreign Exchange Management Deposit Regulations.
Securities and Exchange Board of India: A regulatory body for the securities market in India.
Foreign Exchange Management Transfer or issue of security by a person resident outside India Regulations, 2017: Regulations governing the transfer or issuance of security by individuals residing outside India.
Citizenship Act, 1955: An act of the Parliament of India that defines Indian citizenship.
New Delhi, Delhi: The capital city of India, where the notification was issued.
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PART II—Section 3—Sub-section (i)
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No. 796] NEW DELHI, FRIDAY, NOVEMBER 9, 2018/KARTIKA 18, 1940
भभभभााााररररततततीीीीयययय (cid:8)(cid:8)(cid:8)(cid:8)ररररज़ज़ज़ज़वववव (cid:11)(cid:11) (cid:11)(cid:11)बबबबकक(cid:13)(cid:13)कक(cid:13)(cid:13)
((((ििििववववददददशशेेशशेे ीीीी मममम(cid:10)(cid:10)ुु(cid:10)(cid:10)ुु ाााा ििििववववभभभभाााागगगग))))
((((कककक(cid:15)(cid:15)(cid:15)(cid:15)(cid:10)(cid:10)(cid:10)(cid:10)ीीीीयययय ककककााााययययाााालल(cid:17)(cid:17)लल(cid:17)(cid:17) यययय))))
अअअअििििधधधधससससचचूूचचूू ननननाााा
मुंबई, 09 नव(cid:3)बर, 2018
सससस..ंं..ंं फफफफेेेेममममाााा.... 5555 ((((आआआआरररर)))) ((((1111))))//// 2222000011118888----आआआआररररबबबबीीीी
ििििववववददददेशेशेशेशीीीी मममम(cid:21)(cid:21)ुु(cid:21)(cid:21)ुु ाााा (cid:22)(cid:22)(cid:22)(cid:22)बबबबधधंंधधंं ((((जजजजममममाााा)))) ((((ससससशशंंशशंं ोोोोधधधधनननन)))) ििििववववििििननननययययममममााााववववललललीीीी,,,, 2222000011118888
ससससाााा....ककककाााा....ििििनननन.... 1111000099993333((((अअअअ))))....————िवदेशी मु(cid:10)ा (cid:12)बंध अिधिनयम, 1999 (1999 का 42) क(cid:26) धारा 6 क(cid:26) उप-धारा (3) के खंड
(एफ़) (cid:31)ारा (cid:12)द शि!य" का (cid:12)योग करत े &ए भारतीय )रज़व+ ब,क 1 अ(cid:12)लै 2016 क(cid:26) अिधसूचना सं. फेमा.5 (आर)/2016-
आरबी, िवदेशी मु(cid:10)ा (cid:12)बंध (जमा) िविनयमावली, 2016 म0 िन1िलिखत सशं ोधन करता ह,ै अथा+त ्:-
1111.... ससससंिंिंिंि(cid:29)(cid:29)(cid:29)(cid:29)(cid:30)(cid:30)(cid:30)(cid:30) ननननाााामममम एएएएवववव ंंंं(cid:22)(cid:22)(cid:22)(cid:22)ााााररररंंंंभभभभ::::----
i) ये िविनयम िवदेशी मु(cid:10)ा (cid:12)बधं (जमा) (संशोधन) िविनयमावली, 2018 कहलाएंगे।
ii) वे सरकारी राजप6 म0 उनके (cid:12)काशन क(cid:26) तारीख से लाग ू ह"गे ।
2222.... ििििववववििििननननययययमममम 7777 मममम """"ससससशशंंशशंं ोोोोधधधधनननन ::::
िविनयम 7 म0 मौजूदा उप-िविनयम (4) के बाद िन1िलिखत को जोड़ा जाएगा, अथा+त:्
“5. भारत म (cid:4) कोई (cid:8)ािधकृत (cid:13)ापारी, िवदेशी पोट(cid:22)फोिलयो िनवेशक तथा िवदेशी जोिखम पजूं ी िनवेशक, दोन भारतीय
(cid:8)ितभूित और िविनमय बोड(cid:22) (सेबी) म(cid:4) संबि(धत सेबी िविनयम के तहत पंजीकृत हो, को समय-समय पर यथासंशोिधत
िवदेशी मु+ा (cid:8)बंध (भारत स े बाहर के िनवासी ,कसी (cid:13)ि- .ारा (cid:8)ितभूित अंतरण अथवा िनग(cid:22)म) िविनयमावली, 2017
के अनुसार िनवेश करने के (cid:8)योजन से 2याज-रिहत िवदेशी मु+ा खाता खोलन े और रखने क3 अनुमित द े सकता ह।ै ”
6577 GI/2018 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
3333.... अअअअननननससुुससुु चचूूचचूू ीीीी 3333 मममम """"ससससशशंंशशंं ोोोोधधधधनननन ::::
अनुसूची-3 के पैरा-1 म,0 “वत+मान पैरा----डडडडीीीी के प=ात >दये गए शीष+क “)टAपिणया”ँ म0 िन1िलिखत को जोड़ा जाएगा, अथा+त:्
ईईईई.... कोई (cid:13)ि-, जो बां6लादेश अथवा पा,क7तान का नाग8रक ह,ै और जो उन दशे के अ:पसं;यक समुदाय, जैसे :
िह(द,ू िसख, बौ=, जैन, पारसी और ईसाई, आ,द से संबि(धत ह,ै और जो भारत म(cid:4) िनवास कर रहा ह ै तथा िजसे भारत
सरकार .ारा दीघ(cid:22)कािलक वीज़ा (LTV) (cid:8)दान ,कया गया ह,ै उसे ,कसी (cid:8)ािधकृत (cid:13)ापारी के पास केवल एक अिनवासी
सामा(य (NRO) खाता खोलन े क3 अनुमित ह।ै नाग8रकता अिधिनयम,1955 के आशय के अंतगत(cid:22) वह (cid:13)ि- भारत का
नाग8रक बन जान े के पBात उसके उ- खात े को िनवासी खाते म (cid:4) प8रवCतत कर ,दया जाएगा। इस (cid:8)कार के खाते केवल
(cid:8)ािधकृत (cid:13)ापा8रय .ारा खोले जा सकत े ह।E
““““एएएएफ़फ़फ़फ़.... कोई (cid:13)ि-, जो बां6लादशे अथवा पा,क7तान का नाग8रक ह,ै और जो उन दशे के अ:पसं;यक समुदाय, जैसे :
िह(द,ू िसख, बौ=, जैन, पारसी और ईसाई, आ,द स े संबि(धत ह,ै और जो भारत म (cid:4) िनवास कर रहा ह ै तथा िजसन े
दीघ(cid:22)कािलक वीज़ा (LTV) के िलए आवेदन ,कया ह ै और जो मामला क(cid:4)+ सरकार के िवचारधीन ह,ै उसे ,कसी (cid:8)ािधकृत
(cid:13)ापारी के पास केवल एक अिनवासी सामा(य (NRO) खाता खोलन े क3 अनुमित ह,ै इस (cid:8)कार का खाता छह माह के
िलए खोला जाएगा और उसका नवीकरण छह-छह महीन के अंतराल पर ,कया जाएगा, बशतH ,क बशतH ,क उस (cid:13)ि-
के पास िविधमा(य वीज़ा हो और संबंिधत िवदेशी (नाग8रक) पंजीकरण काया(cid:22)लय (FRO) / िवदेशी (नाग8रक) JेKीय
पंजीकरण काया(cid:22)लय (FRRO) .ारा जारी िविधमा(य आवासीय अनुLापK (परिमट) हो। इस (cid:8)कार के खात े केवल
(cid:8)ािधकृत (cid:13)ापा8रय .ारा खोले जा सकत े ह।E ”
4444.... अअअअननननससुुससुु चचूूचचूू ीीीी 4444 मममम "" ""ससससशशंंशशंं ोोोोधधधधनननन::::
अनुसूची 4 म,(cid:4) पैरा 8 के 7थान पर िनNिलिखत को (cid:8)ित7थािपत ,कया जाएगा, अथा(cid:22)त:्
“िवशेष अिनवासी Qपया खाता (SNRR) का काय(cid:22)काल कांRैSट / प8रचालन क3 अविध / खाता धारक के कारोबार क3
अविध के समान होगा और ,कसी भी ि7थित म (cid:4) सात वष (cid:22) स े अिधक नहT होगा। इसके नवीकरण के िलए 8रज़व(cid:22) बEक का
अनुमोदन आवUयक होगा।
बशतH ,क य,द िवशेष अिनवासी Qपया खाता (SNRR) भारत के बाहर के िनवासी (cid:13)ि-य .ारा, समय-समय पर
यथासंशोिधत िवदेशी मु+ा (cid:8)बंध (भारत से बाहर के िनवासी ,कसी (cid:13)ि- .ारा (cid:8)ितभूित अंतरण अथवा िनग(cid:22)म)
िविनयमावली, 2017 के अनसु ार भारत म (cid:4) िनवेश करने के उVेUय से खोला गया ह,ै तो उस पर सात वष(cid:22) क3 अविध
संबंधी (cid:8)ितबंध लाग ू नहT होगा। ”
5555.... अअअअननननससुुससुु चचूूचचूू ीीीी 4444 मममम "" ""ससससशशंंशशंं ोोोोधधधधनननन ::::
िवदेशी मु(cid:10)ा (cid:12)बंध (जमा) िविनयमावली, 2016 (1 अ(cid:12)ैल 2016 क(cid:26) अिधसूचना सं. फेमा.5 (आर)/2016-आरबी) क(cid:26) मौजूदा
अनुसूची 5 के Fथान पर िन1िलिखत को (cid:12)ितFथािपत >कया जाएगा, अथा+त:्
अअअअननननससुुससुु चचूूचचूू ीीीी 5555
[[[[ककककृृृृपपपपययययाााा ििििववववििििननननययययमममम---- 5555((((5555)))) ददददेखेखेखेख]]""]]""
एएएए’’’’((((ोोोो खखखखाााातततताााा खखखखोोोोललललनननन ेे ेेककककेेेे ििििललललएएएए ििििननननययययमममम एएएएवववव ंं ंंशशशशतततत ))))::::
इस अनुसूची म 0 िविनHदI शतJ के अधीन रहत े &ए भारत म 0 >कसी (cid:12)ािधकृत Lापारी के पास एFMो एज0ट के Nप म 0 भारतीय
Oपये म 0 एFMो खाता संय!ु Nप से और अलग-अलग िन1िलिखत मामल" म0 खोला जा सकता ह।ै
1. >कसी अिनवासी कॉपSरेट (कंपनी) (cid:31)ारा खुल े (cid:12)Fताव / गैर-सूचीबUता / (cid:12)Fताव छोडने के ज)रए पूंजीगत िलखत" /
प)रवत+नीय नोट के अजन+ / अंतरण के िलए।
ए. एFMो खात े म0 अनुमत जमा िन1वत ह ,:
i. ब,Yकग चैनल के ज)रए िवदशे ी आवक िव(cid:12)ेषण।
ii. समय-समय पर यथासंशोिधत िवदेशी मु(cid:10)ा (cid:12)बंध (गारंटी) िविनयमावली, 2000 म 0 िविनHदI शतJ के अधीन
(cid:12)ािधकृत Lापारी ब,क (cid:31)ारा जारी क(cid:26) गई गारंटी के ज)रए।¹Hkkx IIµ[k.M 3(i)º Hkkjr dk jkti=k % vlk/kj.k 3
बी. एFMो खाते स े अनुमत नाम े (डेिबट) इस (cid:12)कार ह:,
i. भारतीय (cid:12)ितभूित और िविनमय बोड+ (SAST) िविनयमावली अथवा सेबी (cid:31)ारा जारी >कसी अ]य िविनयम के
अनुसार।
सी. इस (cid:12)योजन के िलए ओवरसीज़ अज+क (cid:31)ारा िनवासी अिधकार (cid:12)ा_ अिधदेशी (cid:31)ारा भारतीय (cid:12)ितभूित और िविनमय
बोड+ (SAST) िविनयमावली अथवा सेबी (cid:31)ारा जारी >कसी अ]य िविनयम के एFMो खात े का प)रचालन कर सकता
ह।ै
डी. उ‘लेखनुसार अपaे ा परू ी होते ही एFMो खाता बंद कर >दया जाएगा।
2. पूंजीगत िलखत" / प)रवत+नीय नोट" के अज+न / अंतरण के िलए िनवासी और अिनवासी अज+क (cid:31)ारा
ए. एFMो खात े म0 अनुमत जमा िन1वत ह ,:
i. ब,Yकग चैनल के ज)रए िवदेशी आवक िव(cid:12)ेषण;
ii. अिनवासी धारक से अंतरण के ज)रए पूंजीगत िलखत" / प)रवत+नीय नोट" के अज+न का (cid:12)Fताव करने वाले िनवासी
अज+क (cid:31)ारा ब,Yकग चैनल के ज)रए Oपये म 0 (cid:12)ा_ (cid:12)ितफल ।
iii. समय-समय पर यथासंशोिधत िवदेशी मु(cid:10)ा (cid:12)बंध (गारंटी) िविनयमावली, 2000 म 0 िविनHदI शतJ के अधीन
(cid:12)ािधकृत Lापारी ब,क (cid:31)ारा जारी क(cid:26) गई गारंटी के ज)रए।
बी. एFMो खात े से अनुमत नामे (डेिबट) इस (cid:12)कार ह:,
i. लाभाथc के ब,क खात े म 0 पजूं ीगत िलखत" / प)रवत+नीय नोट" के िनग+म / अंतरण के िलए (cid:12)ा_ (cid:12)ितफल रािश का
िव(cid:12)ेषण (भारत म 0 िनग+मकता+ अथवा भारत अथवा िवदेश म 0पूंजीगत िलखत" / प)रवत+नीय नोट" का अंतरणकता+);
ii. िजस (cid:12)योजन के िलए एFMो खाता खोला गया था ऐसे (cid:12)eयa िवदेशी िनवेश संबंधी लने दने के िवफल होने / सफल न
होने के मामल े म0 िनिधय" के (cid:12)ारिfभक िनवेशक क(cid:26) वापसी के िलए (cid:12)ित ।
सी. एFMो खाते के साथ रखी /संलg (cid:12)ितभूितय" को सेबी (cid:31)ारा (cid:12)ािधकृत िनaेपागार सहभागी के पास एFMो एज0ट के
Nप म 0 रख े गए डी मैट खाते स ेजुड़ सकती ह।,
डी. एFMो खाता िजस (cid:12)योजन के िलए खोला जाता ह ै उसक(cid:26) तारीख से अिधकतम 6 महीने क(cid:26) अविध तक प)रचालनीय
रहगे ा और उ‘लेखानुसार अपेaा पूरी होत े ही अथवा खाता खलु न े क(cid:26) तारीख स े 6 माह समा_ होन,े जो भी पहल े हो, को
बंद कर >दया जाएगा। य>द एFMो खाता 6 महीन े स े अिधक अविध के िलए खलु ा रखना आवhयक हो तो तeसंबंध म 0
)रज़व+ ब,क क(cid:26) िविशI अनुमित (cid:12)ा_ क(cid:26) जाए।
ई. उपय!ु+ परै ाiाफ डी. म0 उि‘लिखत >कसी बात के होते &ए भी, िनवासी खरीददार और अिनवासी िवMेता, अथवा
इसके िवपरीत, य>द खरीददार और िवMेता (cid:31)ारा इस पर सहमित होती ह,ै तो उनके बीच होने वाले पूंजीगत िलखत" के
अंतरण संबंधी मामले म,0 उनके अंतरण करार क(cid:26) तारीख से अठारह माह से अनिधक अविध हते ु एवं कुल (cid:12)ितफल रािश
के पkीस (cid:12)ितशत से अनिधक रािश तक के िलए एFMो एiीम0ट >कया जा सकता ह।ै
3. समय-समय पर यथाशांशोिधत िवदेशी मु(cid:10)ा (cid:12)बंध (भारत स े बाहर के िनवासी >कसी Lि! (cid:31)ारा (cid:12)ितभूित का अंतरण
अथवा िनग+म) िविनयमावली, 2017 और भारतीय (cid:12)ितभूित और िविनमय बोड+ (शेयर" का पया+_ मा6ा म 0 अज+न और
अिधiहण), 1997 [सेबी (SAST) िविनयमावली] अथवा सेबी (cid:31)ारा जारी >कसी अ]य िविनयम के उपबंध" के अतं ग+त
अज+न/अंतरण >कया जा सकेगा।
4. एFMो खाता mयाज रिहत खाता होगा ।
5. एFMो खाते म0 जमा शेष के बदले िनिध अथवा गरै -िनिध आधा)रत सुिवधाn क(cid:26) अनुमित नहo होगी।
6. )रज़व + ब,क (cid:31)ारा जारी केवायसी >दशािनदpश" के अनुपालन क(cid:26) अपेaा (cid:12)ािधकृत Lापारी (cid:31)ारा सुिनि=त क(cid:26) जाएगी।4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
7. एFMो खाते म 0 जमा शेष, य>द कोई हो, तeसमय लागू िविनमय दर पर (अथा+त,् पूंजीगत िलखत" अथवा प)रवतन+ ीय नोट"
का अज+न करने वाले भारत से बाहर के िनवासी Lि! (cid:31)ारा िविनमय दर जोिखम का वहन >कया जाएगा), उि‘लिखत अजन+
संबंधी सभी औपचा)रकताn के पूरी हो जाने के बाद (cid:12)eयावqतत >कया जा सकेगा।
8. य>द >कसी मामले म0 अजन+ / अतं रण फलीभूत न हो, तो (cid:12)ािधकृत Lापारी ऐसे िव(cid:12)ेषण" क(cid:26) सदाशयता के बारे म0 संतुI
होने पर ऐसे एFMो खात े म0 जमा पूरी रािश के (cid:12)eयावत+न / वापसी क(cid:26) अनुमित दे सकत े ह।,
9. (cid:12)eयa िवदेशी (FDI) िनवेश क(cid:26) )रपोsटग हते ु िनग+मकता + अथवा पूंजीगत िलखत" / प)रवत+नीय नोट" के अतं रंक के खाते म 0
िनिधय" के आन,े जैसा भी मामला हो, क(cid:26) तारीख िव(cid:12)ेषण हते ु संगत तारीख मानी जाएगी।
[फा. सं. 1/31/ 2015]
ई एम
आर.के. मूलचंदानी मुtय महा(cid:12)बंधक
,
(cid:1)(cid:1)(cid:1)(cid:1)टटटट(cid:3)(cid:3)(cid:3)(cid:3)पपपपणणणण :::: मूल िविनयमावली 01.04.2016 को भारत सरकार के सरकारी राजप6–असाधारण-भाग-II, खंड 3, उप-खंड (i)
म0. जी.एस.आर.सं. 389 (ई) के तहत (cid:12)कािशत क(cid:26) गयी थी।
RESERVE BANK OF INDIA
(Foreign Exchange Department)
(CENTRAL OFFICE)
NOTIFICATION
New Delhi, the 9th November, 2018
No. FEMA 5 (R)(1)/2018-RB
Foreign Exchange Management (Deposit) (Amendment) Regulations, 2018
G.S.R. 1093(E)—In exercise of the powers conferred by clause (f) of sub section (3) of Section 6 of the Foreign
Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the following amendments to the Foreign
Exchange Management (Deposit) Regulations, 2016, Notification No. FEMA 5(R)/2016-RB dated April 1, 2016,
namely:
1. Short Title and Commencement:
(i) These regulations may be called the Foreign Exchange Management (Deposit) (Amendment) Regulations, 2018.
(ii) These regulations shall come into force from the date of their publication in the Official Gazette.
2. Amendment to Regulation 7:
In Regulation 7, after the existing sub-regulation (4), the following shall be added, namely:
“5. An Authorized Dealer in India may allow a Foreign Portfolio Investor and a Foreign Venture Capital
Investor, both registered with the Securities and Exchange Board of India (SEBI) under the relevant SEBI
regulations to open and maintain a non-interest bearing foreign currency account for the purpose of making
investment in accordance with Foreign Exchange Management (Transfer or issue of security by a person
resident outside India) Regulations, 2017, as amended from time to time.
3. Amendment to Schedule 3:
In Schedule 3, in para 1, under the heading, ‘Notes’, after existing para ‘D’, the following shall be added, namely:
“E. A person being a citizen of, Bangladesh or Pakistan belonging to minority communities in those
countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians who is residing in India and has
been granted a Long Term Visa (LTV) by the Central Government is permitted to open with an authorized
dealer only one NRO Account. The said NRO account shall be converted to a resident account once the
person becomes a citizen of India within the meaning of the Citizenship Act, 1955. Such accounts can be
opened by Authorised Dealers only,
F. A person being a citizen of Bangladesh or Pakistan belonging to minority communities in those
countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians who is residing in India and has
applied for a Long Term Visa (LTV) which is under consideration of the Central Government is permitted¹Hkkx IIµ[k.M 3(i)º Hkkjr dk jkti=k % vlk/kj.k 5
to open with an authorised dealer only one NRO Account which will be opened for a period of six months
and may be renewed at six monthly intervals subject to the condition that the individual holds a valid visa
and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional
Registration Office (FRRO) concerned. Such accounts can be opened by Authorised Dealers only,”
4. Amendment to Schedule 4:
In Schedule 4, for the existing paragraph 8, the following shall be substituted, namely:
“The tenure of the SNRR account should be concurrent to the tenure of the contract/ period of operation/ the
business of the account holder and in no case should exceed seven years. Approval of the Reserve Bank shall be
obtained in cases requiring renewal :
Provided the restriction of seven years shall not be applicable to SNRR accounts opened by a person resident
outside India for the purpose of making investment in India in accordance with Foreign Exchange Management
(Transfer or issue of security by a person resident outside India) Regulations, 2017, as amended from time to
time.”
5. Amendment to Schedule 5:
In the Foreign Exchange Management (Deposit) Regulations, 2016 [Notification No.FEMA.5(R)/2016-RB dated April 1,
2016], for the existing Schedule 5, the following shall be substituted, namely:
Schedule 5
[See Regulation 5(5)]
Terms and conditions for opening of Escrow Account
An Escrow account in INR can be opened jointly and severally with an Authorised Dealer in India as an Escrow Agent in
the following cases subject to the terms and conditions specified in this schedule.
1. By non-resident corporates for acquisition/ transfer of capital instruments/convertible notes through open offers/
delisting/ exit offers.
a. Permitted Credits in the Escrow account are:
i. Foreign Inward remittance through banking channels
ii. by way of a guarantee issued by an authorised dealer bank subject to terms and conditions as
specified in the Foreign Exchange Management (Guarantee) Regulations 2000, as amended from time
to time.
b. Permitted debits in the Escrow account are:
i. As per SEBI (SAST) Regulations or any other regulations issued by the Security Exchange Board of
India (SEBI).
c. The resident mandatee empowered by the overseas acquirer for this purpose, may operate the Escrow account
in accordance with SEBI (SAST) Regulations or any other regulations issued by the SEBI.
d. The Escrow account shall be closed immediately after completing the requirements as outlined above.
2. By resident and non-resident acquirers for acquisition/ transfer of capital instruments/convertible notes
a. Permitted Credits in the Escrow account are:
i. Foreign Inward remittance through banking channels;
ii. Receipt of rupee consideration through banking channels by the resident acquirer of capital
instruments/convertible notes who proposes to acquire from non-resident holders by way of transfer.
iii. by way of a guarantee issued by an authorised dealer bank subject to terms and conditions as
specified in the Foreign Exchange Management (Guarantee) Regulations 2000, as amended from time
to time.
b. Permitted debits in the Escrow account are:
i. Remittance of consideration for issue/ transfer of capital instruments/convertible notes directly into
the bank account of the beneficiary (issuer in India or transferor of capital instruments/convertible
notes in India or abroad);6 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
ii. Remittance of consideration for refund to the initial remitter of funds in case of failure/ non-
materialisation of FDI transaction for which the Escrow account was opened.
c. The securities kept/ linked with the Escrow account may be linked with demat account maintained with SEBI
authorised Depositary Participants as Escrow agents.
d. The Escrow account shall remain operational for a maximum period of six months only and the account shall
be closed immediately after completing the requirements as outlined above or on completion of six months from
the date of opening of such account, whichever is earlier. In case the Escrow account is required to be
maintained beyond six months, specific permission from the Reserve Bank has to be sought.
e. Notwithstanding what has been stated in paragraph d. above, in case of transfer of capital instruments
between a resident buyer and a non-resident seller or vice-versa, if so agreed between the buyer and the seller,
an escrow arrangement may be made between the buyer and the seller for an amount not more than twenty five
per cent of the total consideration for a period not exceeding eighteen months from the date of the transfer
agreement.
3. Acquisition/ transfer shall be in accordance with the provisions of Foreign Exchange Management (Transfer or Issue
of Security by a person resident Outside India) Regulation 2017, as amended from time to time and Security Exchange
Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 [SEBI (SAST) Regulations] or other
relevant regulations issued by the SEBI.
4. The Escrow account shall be non-interest bearing.
5. No fund or non-fund based facilities would be permitted against the balances in the Escrow account.
6. Requirement of compliance with KYC guidelines issued by the Reserve Bank shall rest with the Authorised Dealer.
7. Balance in the Escrow account, if any, may be repatriated at the then prevailing exchange rate (i.e., the exchange rate
risk will be borne by the person resident outside India acquiring the capital instruments/convertible notes), after all the
formalities in respect of the said acquisition are completed.
8. In cases, where proposed acquisition/ transfer does not materialise, the authorised dealer may allow repatriation/
refund of the entire amount lying to the credit of the Escrow account on being satisfied with the bonafides of such
remittances.
9. For the purpose of FDI reporting, date of transfer of funds into the bank account of the issuer or transferor of capital
instruments/convertible notes, as the case may be, shall be the relevant date of remittance.
[F. No. 1/31/EM/2015]
R. K. MOOLCHANDANI, Chief General Manager
Note : The Principal Regulations were published in the Official Gazette of Government of India–Extraordinary–Part-II,
Section 3, Sub-Section (i) dated 01.04.2016-G.S.R.No. 389(E).
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.