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TMI Blog‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debtX X X X Extracts X X X X X X X X Extracts X X X X ..... xchange Management (Borrowing and Lending) Regulations, 2018 notified vide Notification No. FEMA 3(R)/2018-RB dated December 17, 2018; c. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017 ; and d. Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 notified vide Notification No. FEMA 25/RB 2000 dated May 03, 2000 . 2. AD Category I banks may refer to A.P.(DIR Series) Circular No. 21 dated March 01, 2019 on Voluntary Retention Route (VRR) for Foreign Portfolio Investors (FPIs) investment in debt. Based on the feedback received the directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents through the Route will be free of the macro-prudential and other regulatory norms applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a period. Participation through this Route will be entirely voluntary. The features of the Route are explained below in detail. 2. Definitions Committed Portfolio Size (CPS), for an FPI, shall mean the amount allotted to that FPI. General Investment Limit , for any one of the three categories, viz., Central Government Securities, State Development Loans or Corporate Debt Instruments, shall mean FPI investment limits announced for these categories under the Medium Term Framework, in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Route. Participation through this Route shall be voluntary. 4. Eligible instruments Under VRR-Govt, FPIs will be eligible to invest in any Government Securities i.e., Central Government dated Securities (G-Secs), Treasury Bills (T-bills) as well as State Development Loans (SDLs). Under VRR-Corp, FPIs may invest in any instrument listed under Schedule 5 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017 , other than those specified at 1A(a) and 1A(d) of that Schedule. Repo transactions, and reverse repo transactions. 5. Features a. Investment through this Route shall be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount shall be adhered to on an end-of-day basis. For this purpose, investment shall include cash holdings in the Rupee accounts used for this Route. g. Amounts of investment shall be reckoned in terms of the face value of securities. 6. Management of portfolio Successful allottees shall invest at least 75% of their CPS within three months from the date of allotment. The retention period will commence from the date of allotment of limit. Prior to the end of the committed retention period, an FPI, if it so desires, may opt to continue investments under this Route for an additional identical retention period. In that case, it shall convey this decision to its custodian. In case an FPI decides not to continue under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in excess of the CPS. 8. Access to other facilities FPIs investing through the Route will be eligible to participate in repos for their cash management, provided that the amount borrowed or lent under repo shall not exceed 10% of their investment under VRR. FPIs investing under this route shall be eligible to use any currency or interest rate derivative instrument, OTC or exchange traded, to manage their interest rate risk or currency risk. 9. Other operational aspects Utilisation of limits and adherence to other requirements of this Route shall be the responsibility of both the FPI and its custodian. Custodians shall not permit any repatriation from the cash accounts of an FPI, if such transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the total acceptance amount matches the auction amount. In case there are more than one marginal bids, allocation shall be made to the bid with the largest amount, and then in descending order of amount bid until the acceptance amount matches the auction amount. In case the amount offered is the same for two or more marginal bids, the amount will be allocated equally. f. If an FPI has been allotted multiple bids in an auction, the CPS shall be reckoned for each bid separately. g. FPI which has got CPS allocated under an auction will be eligible to participate in subsequent auction as well. - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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