Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023

Last updated: 25 October 2023

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The Reserve Bank of India has issued the Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023. These new regulations, effective from their publication date, permit individuals residing outside India who maintain a rupee account under specific conditions to buy and sell dated Government Securities and treasury bills. Funds for these purchases must come from their existing rupee accounts, and proceeds from sales or maturity will be credited back to the same accounts.

RESERVE BANK OF INDIA
(Financial Markets Regulation Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 16th October, 2023

Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023

No. FEMA.396(2)/2023-RB.—In exercise of the powers conferred by clause (a) of sub-section (2) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments to the Foreign Exchange Management (Debt Instruments) Regulations, 2019 (Notification No. FEMA.396/2019-RB dated October 17, 2019) (hereinafter referred to as 'the Principal Regulation'), namely:-

1. Short title and commencement

(i) These Regulations shall be called the Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023.

(ii) They shall come into force with effect from the date of their publication in the Official Gazette.

2. Amendment to Schedule 1 to the Principal Regulation

(i) In paragraph 1 of Schedule 1 to the Principal Regulation, after sub-paragraph D, the following new subparagraph shall be inserted:-

“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.”

(ii) In paragraph 2 of Schedule 1 to the Principal Regulation, after clause (4) the following new clause shall be inserted: -

“(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.”

(iii) In paragraph 4 of Schedule 1 to the Principal Regulation, after clause (2) the following new clause shall be inserted: -

“(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.”

DIMPLE BHANDIA, Chief General Manager
[ADVT.-III/4/Exty./501/2023-24]

FAQ :

These are amendments made by the Reserve Bank of India to the existing Foreign Exchange Management (Debt Instruments) Regulations, 2019, allowing for new provisions regarding debt instruments.

The regulations come into force from the date of their publication in the Official Gazette.

Persons resident outside India who maintain a rupee account in terms of regulation 7(1) of the Foreign Exchange Management (Deposit) Regulations, 2016, are permitted to do so.

The consideration amount for the purchase must be paid out of funds held in the rupee account maintained by the non-resident individual as per the specified regulation.

The sale or maturity proceeds, after deducting applicable taxes, will be credited to the same rupee account from which the purchase was made.