RBI introduces new system for monitoring foreign investment limits. Therefore, invites Authorised Dealer Category -1 (AD Category – 1) to Foreign Exchange Management (Transfer or Issue of Security by a person Resident outside India) Reg. 2017 wherein onus of compliance with sectoral/ statutory caps on foreign investment lies with the Indian investee company.
Further, RBI directs listed Indian companies to provide specified data/information on foreign investment to the depositories by May 15, 2018. The listed companies who do not provide the information will not be able receive foreign investment and violate the provision under FEMA.
RBI states that authorised dealer bank would be required to provide the details of investment made by their respective NRI clients to the depositories in the format as provided by the depositories/ SEBI further states that upon the implementation of the new monitoring system. In addition, the reporting to Reserve Bank in the existing system, viz., LEC (NRI) and LEC (FII), would continue.
RBI highlights that currently it receives data on investment made by Foreign Portfolio Investors (FPI) and Non-resident Indians (NRI) on stock exchanges from the custodian banks and Authorised Dealer Banks for their respective clients, based on which restrictions beyond a threshold limit is imposed on FPI/ NRI investment in listed Indian companies.