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partial application Money refund (FDI)

Alka (aaa) (29 Points)

18 May 2011

Dear Sir,

The client is Pvt ltd co.

- FDI is recieved in USD.

-shares of 10 lacs are allotted to the client,

-Rs.18000 is remaining amt with the company and is transferred to a local account in India. Do we have to refund the left application money to NRI account?

Please let me know the formalities to deal with this situation.

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2 Replies

Alka (aaa) (29 Points)
Replied 19 May 2011

Originally posted by : Alka
	Dear Sir, The client is Pvt ltd co. - FDI is recieved in USD. -shares of 10 lacs are allotted to the client, -Rs.18000 is remaining amt with the company and is transferred to a local account in India. Do we have to refund the left application money to NRI account? Please let me know the formalities to deal with this situation.

Dear Sir

I visited RBI website and found the following para on the aforesaid aspect. My client has a NRE account. Can anyone please clarify the situation.

https://www.rbi.org.in/scriptts/ECMUserParaDetail.aspx?Id=494&CatID=14

10C.18 Where NRIs/OCBs intend to subscribe to new issues of Indian companies, authorised dealers may allow payment of subscripttion (application money) from the applicants' NRE/FCNR accounts or NRO accounts, as the case may be. If the subscripttion or any portion thereof (inclusive of interest on delayed refunds of share application money) is to be refunded by the company, authorised dealers may recredit the amount to the same account of the applicant from which it was drawn earlier. In cases where subscripttion to new issues of shares/securities were made by remittance from abroad or by debit to the investor's NRE/FCNR account, he will have the option of having the excess subscripttion refunded to him either by remittance of the amount abroad or by credit to his NRE/FCNR account. Remittance of funds abroad or credit thereof to the applicant's NRE/FCNR account may be allowed only if the relative refund order is accompanied by a certificate from the collecting bankers or the investee company's bankers indicating that the original subscripttion was received by way of remittance from abroad or by debit to the applicants' NRE/FCNR account. Authorised dealers may also ensure that the payment of interest in respect of delayed refund of share subscripttion is in accordance with the provisions indicated in the prospectus of the company in its public issue as vetted by Securities and Exchange Board of India (SEBI).

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