RBI issues framework for reclassification of FPI to FDI
Any FPI investing in breach of the prescribed limit has the option of divesting their holdings or reclassifying such holdings as FDI subject to the conditions specified by the RBI and Sebi within five trading days from the date of settlement of the trades causing the breach.
The Reserve Bank of India on Monday issued an operational framework for reclassification of investment made by a foreign portfolio investor to foreign direct investment (FDI) if the entity breaches the prescribed limit.
Currently, an investment made by foreign portfolio investor along with its investor group (FPI) should be less than 10 per cent of the total paid-up equity capital on a fully diluted basis.
Any FPI investing in breach of the prescribed limit has the option of divesting their holdings or reclassifying such holdings as FDI subject to the conditions specified by the RBI and Sebi within five trading days from the date of settlement of the trades causing the breach.
The RBI has issued an operational framework for reclassification of foreign portfolio investment by FPI to FDI.
As per the framework, the FPI concerned will have to take necessary approvals from the government and concurrence of the Indian investee company concerned.
However, the facility of reclassification shall not be permitted in any sector prohibited for FDI, the RBI said.
For reclassification, the entire investment held by such FPI should be reported within the timelines as specified under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019.
Post completion of reporting, the FPI should approach its Custodian with a request for transferring the equity instruments of the Indian company from its demat account maintained for holding foreign portfolio investments to its demat account maintained for holding FDI, the RBI said.
The directions have become operative with immediate effect, the central bank added.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Senior Citizen Latest FD Rates: Know what major banks like SBI, PNB, Canara Bank, HDFC Bank, ICICI Bank are providing on fixed deposits
Gratuity Calculator: Rs 38,000 as last-drawn basic salary, 5 years and 5 months of service; what will be gratuity amount?
Retirement Planning: In how many years your Rs 25K monthly SIP investment will grow to Rs 8.8 cr | See calculations
Top 5 Small Cap Mutual Funds with best SIP returns in 1 year: See how Rs 25,000 monthly investment has grown in each scheme
Top 7 SBI Mutual Funds With Best SIP Returns in 1 Year: Rs 25,000 monthly SIP investment in No.1 fund has jumped to Rs 3,58,404
Top 7 Mid Cap Mutual Funds With up to 41% SIP Returns in 5 Years: No 1 fund has converted Rs 15,000 monthly investment into Rs 23,84,990
SBI 5-Year FD vs MIS: Which can offer higher returns on a Rs 2,00,000 investment over 5 years? See calculations
07:52 PM IST