SCHEDULE 1 - Purchase and sale of debt instruments by a person resident outside India - Foreign Exchange Management (Debt Instruments) Regulations, 2019

SCHEDULE 1 Purchase and sale of debt 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 debt 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 or Exchange-Traded Funds (ETFs) which invest less than or equal to 50 percent in equity; (e) Security Receipts (SRs) issued by Asset Reconstruction Companies; (f) debt instruments issued by banks, eligible for inclusion in regulatory capital; (g) Credit enhanced bonds; (h) Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 6 of these Regulations; (i) 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; (j) 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. (k) Municipal Bonds : 1 [ (l) debt securities issued by (i) InvITs and (ii) REITs. ] 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 2 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 or Exchange-Traded Funds (ETFs) which invest less than or equal to 50 percent in equity; b. Bonds issued by a Public Sector Undertaking (PSU) in India; c. Bonds issued by Infrastructure Debt Funds; d. Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 6 of these Regulations; (2) An NRI or an OCI may purchase on repatriation basis debt instruments issued by banks, eligible for inclusion in regulatory capital. (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 2 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 or Exchange-Traded Funds (ETFs) which invest less than or equal to 50 percent in equity, 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 6 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) Foreign Central Banks, Multilateral Development Banks or any other entity permitted by the Reserve Bank, may purchase or sell dated Government Securities/treasury bills, as per terms and conditions specified by the Reserve Bank. 2 [ 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. ] 5 [F. Permission to persons resident outside India for purchase of Sovereign Green Bonds in the International Financial Services Centre (IFSC) in India (1) Persons resident outside India that maintain a securities account with a depository in IFSC in India may purchase or sell Sovereign Green Bonds issued by the Government of India, as per terms and conditions specified by the Reserve Bank. ] 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. 3 [ (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. ] 6 [ (4B) The amount of consideration for purchase of Sovereign Green Bonds issued by the Government of India by persons resident outside India in terms of sub-paragraph (F) of paragraph 1 of this Schedule shall be paid out of inward remittance from abroad through banking channels or out of funds held in a foreign currency account maintained in accordance with the regulations issued by the Reserve Bank and/or the International Financial Services Centre Authority. ] (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. 4 [ (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. ] 7 [ (2B) The sale/ maturity proceeds (net of taxes, as applicable) of instruments held by persons resident outside India in terms of sub-paragraph (F) of paragraph 1 of this Schedule may be remitted outside India. ] (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.396(1)/2021-RB dated 13-10-2021 2. Inserted vide Notification No. FEMA.396(2)/2023-RB dated 16-10-2023 3. Inserted vide Notification No. FEMA.396(2)/2023-RB dated 16-10-2023 4. Inserted vide Notification No. FEMA.396(2)/2023-RB dated 16-10-2023 5. Inserted vide Notification No. FEMA.396(3)/2024-RB dated 02-08-2024 6. Inserted vide Notification No. FEMA.396(3)/2024-RB dated 02-08-2024 7. Inserted vide Notification No. FEMA.396(3)/2024-RB dated 02-08-2024