MANU/SFII/0001/2017

Ministry : Securities and Exchange Board of India

Department/Board : Investment Management Department

Circular No. : SEBI/HO/IMD/FPIC/CIR/P/2017/16

Date : 28.02.2017

Notification/ Circulars Referred : Notification No.FEMA.362/2016-RB dated February 15, 2016 MANU/RFEM/0007/2016

Citing Reference:
Notification No.FEMA.362/2016-RB dated February 15, 2016 MANU/RFEM/0007/2016  Referred

To

All Foreign Portfolio Investors
through their designated Custodians of Securities
The Depositories (NSDL and CDSL)

Sir / Madam,

Investments by FPIs in corporate debt securities

1. RBI on October 24, 2016, had amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Twelfth Amendment) Regulations, 2016 through a Gazette notification to permit FPIs to invest in unlisted corporate debt and securitised debt instruments. Thereafter, RBI vide circular RBI/2016-17/138 dated November 17, 2016 had enhanced the list of eligible instruments for investment by FPIs under the Corporate debt route along with certain terms and conditions.

2. Accordingly, the SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017 were notified on February 27, 2017. It has been decided to permit FPIs to invest in the following:

a. Unlisted corporate debt securities in the form of non-convertible debentures/bonds issued by public or private Indian companies subject to the guidelines issued by the Ministry of Corporate Affairs, Government of India from time to time and also subject to minimum residual maturity of three years and end use-restriction on investment in real estate business, capital market and purchase of land. The expression 'Real Estate Business' shall have the same meaning as assigned to it in Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 Notification No.FEMA.362/2016-RB dated February 15, 2016. The custodians of the FPIs shall put in place an appropriate mechanism to ensure compliance with these conditions as prescribed by RBI from time to time.