Schedule 05 [See Regulation 5(5)] - Purchase and sale of securities other than capital instruments by a person resident outside India - Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017

Schedule 5 [See Regulation 5(5)] Purchase and sale of securities other than capital instruments by a person resident outside India 1. Permission to persons resident outside India A. Permission to Foreign Portfolio Investors (FPIs) An FPI may purchase the following instruments on repatriation basis subject to the terms and conditions specified by the Securities and Exchange Board of India and the Reserve Bank: (a) dated Government securities/ treasury bills; (b) non-convertible debentures/ bonds issued by an Indian company; (c) commercial papers issued by an Indian company; (d) units of domestic mutual funds; (e) Security Receipts (SRs) issued by Asset Reconstruction Companies up to 100 percent of each tranche, subject to directions/ guidelines of the Reserve Bank; (f) Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued by banks in India to augment their capital (Tier I capital and Tier II capital as defined by Reserve Bank) provided that the investment by all eligible investors in Perpetual Debt instruments (Tier I) shall not exceed an aggregate ceiling of 49 percent of each issue and investment by a single FPI shall not exceed the limit of 10 percent of each issue; (g) non-convertible debentures/ bonds issued by Non-Banking Financial Companies categorized as Infrastructure Finance Companies (IFCs) by the Reserve Bank; Provided this will include such instruments issued on or after November 3, 2011 and held by deemed FPIs; (h) Rupee denominated bonds/ units issued by Infrastructure Debt Funds; Provided this will include such instruments issued on or after November 22, 2011 and held by deemed FPIs. (i) Credit enhanced bonds; (j) Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 9 of these Regulations; (k) Security receipts issued by securitization companies subject to conditions as specified by the Reserve Bank and/ or Securities and Exchange Board of India; (l) Securitised debt instruments, including (i) any certificate or instrument issued by a special purpose vehicle (SPV) set up for securitisation of asset/s with banks, Financial Institutions or NBFCs as originators; and/ or (ii) any certificate or instrument issued and listed in terms of the Securities and Exchange Board of India (Regulations on Public Offer and Listing of Securitised Debt Instruments), 2008. 1 [ (m) Municipal bonds. ] Provided that FPIs may offer such instruments as permitted by the Reserve Bank from time to time as collateral to the recognized Stock Exchanges in India for their transactions in exchange traded derivative contracts as specified in sub-Regulation 5 of Regulation 5. B. Permission to Non-resident Indians (NRIs) or Overseas Citizens of India (OCIs) Repatriation basis (1) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may, without limit, purchase the following instruments on repatriation basis, (a) Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds; (b) Bonds issued by a Public Sector Undertaking (PSU) in India; (c) Shares in Public Sector Enterprises being disinvested by the Central Government, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids; (d) Bonds/ units issued by Infrastructure Debt Funds; (e) Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 9 of these Regulations; (2) An NRI or an OCI may purchase on repatriation basis perpetual debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued by banks in India to augment their capital, as stipulated by Reserve Bank. The investments by all NRIs or OCIs in Perpetual Debt Instruments (Tier I) should not exceed an aggregate ceiling of 24 percent of each issue and investments by a single NRI or OCI should not exceed 5 percent of each issue. Investment by NRIs or OCIs in Debt Capital Instruments (Tier II) shall be accordance with the extant policy for investment by NRIs or OCIs in other debt instruments. (3) An NRI may subscribe to National Pension System governed and administered by Pension Fund Regulatory and Development Authority (PFRDA), provided such person is eligible to invest as per the provisions of the PFRDA Act. The annuity/ accumulated saving will be repatriable. Provided that NRI/ OCIs may offer such instruments as permitted by the Reserve Bank from time to time as collateral to the recognized Stock Exchanges in India for their transactions in exchange traded derivative contracts as specified in sub-Regulation 5 of Regulation 5. C. Permission to Non-resident Indians (NRIs) or Overseas Citizens of India (OCIs) Non-Repatriation basis (1) An NRI or an OCI may, without limit, purchase on non-repatriation basis, dated Government securities (other than bearer securities), treasury bills, units of domestic mutual funds, units of money Market Mutual Funds, or National Plan/ Savings Certificates. (2) An NRI or an OCI may, without limit, purchase on non-repatriation basis, listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 9 of these Regulations. (3) An NRI or an OCI may, without limit, on non-repatriation basis subscribe to the chit funds authorised by the Registrar of Chits or an officer authorised by the State Government in this behalf. D. Permission to Foreign Central Banks or a Multilateral Development Bank for purchase of Government Securities (1) A Foreign Central Bank may purchase and sell dated Government securities/ treasury bills in the secondary market subject to the conditions as may be stipulated by the Reserve Bank. (2) A Foreign Central Bank, may purchase and sell dated Government securities/ treasury bills subject to the conditions as may be stipulated by Reserve Bank. (3) A Multilateral Development Bank which is specifically permitted by Government of India to float rupee bonds in India may purchase Government dated securities. E. Permission to other non-resident investors for purchase of securities (1) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds which are registered with Securities and Exchange Board of India as eligible investors in Infrastructure Debt Funds may purchase on repatriation basis Rupee Denominated bonds/ units issued by Infrastructure Debt Funds. (2) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks registered with Securities and Exchange Board of India may purchase, on repatriation basis the following instruments and subject to such terms and conditions as may be specified by the Reserve Bank and the Securities and Exchange Board of India: (a) dated Government securities/ treasury bills; (b) commercial papers issued by an Indian company; (c) units of domestic mutual funds; (d) listed non-convertible debentures/ bonds issued by an Indian company; (e) listed and unlisted non-convertible debentures/ bonds issued by an Indian company in the infrastructure sector. The term Infrastructure Sector has the same meaning as given in the Harmonised Master List of Infrastructure sub-sectors approved by Government of India vide Notification F. No. 13/06/2009-INF dated March 27, 2012 as amended/ updated; (f) non-convertible debentures/bonds issued by Non-Banking Finance Companies categorized as Infrastructure Finance Companies (IFCs) by the Reserve Bank; (g) security Receipts (SRs) issued by Asset Reconstruction Companies up to 100 percent of each tranche, subject to directions/ guidelines of the Reserve Bank; (h) perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued by banks in India to augment their capital (Tier I capital and Tier II capital as defined by Reserve Bank) provided that the investment by all eligible investors in Perpetual Debt instruments (Tier I) shall not exceed an aggregate ceiling of 49 percent of each issue, and investment by a single long term investor shall not exceed the limit of 10 pe cent of each issue; (i) primary issues of non-convertible debentures/ bonds provided such non-convertible debentures/ bonds are committed to be listed within 15 days of such investment. In the event of the instruments not being listed within 15 days of issuance then the long term investor shall immediately dispose such instruments by way of sale to a third party or to the issuer and the terms of offer to the long term investors should contain a clause that the issuer of such instruments shall immediately redeem/ buyback those securities from the long term investors in such an eventuality; (j) credit enhanced bonds; (k) listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 9 of these Regulations; (l) security receipts (SRs) issued by securitization companies subject to conditions as specified by Reserve Bank and/ or Securities and Exchange Board of India 2. Mode of Payment (1) The amount of consideration for purchase of instruments by FPIs shall be paid out of inward remittance from abroad through banking channels or out of funds held in a foreign currency account and/ or Special Non-Resident Rupee (SNRR) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. The foreign currency account and SNRR account shall be used only and exclusively for transactions under this Schedule. (2) The amount of consideration for purchase of instruments by NRIs or OCIs on repatriation basis shall be paid out of inward remittances from abroad through banking channels or out of funds held in NRE/ FCNR(B) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. (3) The amount of consideration for (a) purchase of instruments by NRIs or OCIs on non-repatriation basis and (b) subscriptions to the National Pension System by NRIs shall be paid out of inward remittances from abroad through banking channels or out of funds held in NRE/ FCNR(B)/ NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. (4) The amount of consideration for purchase of Government dated securities by a Foreign Central Bank or a Multilateral Development Bank shall be paid out of inward remittances from abroad through banking channels or out of funds held in an account opened with the specific approval of the RBI. (5) The amount of consideration for purchase of instruments by other non-resident investors shall be paid out of inward remittances from abroad through banking channels. 3. Permission for Sale of instruments A person resident outside India who has purchased instruments in accordance with this Schedule may sell/ redeem the instruments subject to such terms and conditions as may be specified by the Reserve Bank and the Securities Exchange Board of India. 4. Remittance/ credit of sale/ maturity proceeds (1) The sale/ maturity proceeds (net of taxes) of instruments held by Foreign Portfolio Investors (FPIs) may be remitted outside India or may be credited to the foreign currency account or SNRR account of the FPI. (2) The net sale/ maturity proceeds (net of taxes) of instruments held by NRIs or OCIs, may be: (a) Credited to the NRO account person concerned where the instruments were held on non-repatriation basis (b) Credited to the NRO account person concerned where the payment for the purchase of the instruments sold was made out of funds held in NRO account, or (c) Remitted abroad or at the NRI/ OCI investor's option, credited to his NRE/ FCNR(B)/ NRO account, where the instruments were purchased on repatriation basis. (3) In all other cases, the sale/ maturity proceeds (net of taxes) may be remitted abroad or credited to an account opened with the prior permission of the Reserve Bank. ********* Notes 1. Inserted vide NOTIFICATION No. FEMA 20 (R) (4) /2019-RB dated 18-04-2019