RBI Update - Liberalisation of Foreign Portfolio Investment under Schedule III of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019

The Reserve Bank of India (RBI) has liberalised the foreign portfolio investment (FPI) framework under Schedule III of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, by permitting all individual persons resident outside India, and not just NRIs and OCIs, to invest in equity instruments of listed Indian companies through recognised stock exchanges, subject to enhanced investment limits. AD Category-I banks are now permitted to open repatriable INR accounts for such investors and shall report and monitor investments in the same manner as applicable to NRIs/OCIs. Any reclassification of such investments from FPI to FDI due to breach of prescribed limits or otherwise shall be carried out in accordance with the RBI’s existing framework. Banks are required to ensure compliance with FEMA provisions, SEBI regulations, and other applicable laws by implementing appropriate systems, procedures, and investor due diligence measures. The directions have come into effect immediately.