Foreign Trade Administration (Overseas Financial investment) Instructions, 2022 – Investments in Abroad Funds

Reserve Bank of India (RBI) issued A.P. (DIR Collection) Circular No. 09 on June 07, 2024, addressing Category-I Authorised Supplier Financial institutions relating to amendments to the Overseas Trade Management (Abroad Expense) Instructions, 2022. These amendments make clear that investments in models or any other devices issued by regulated abroad investment decision money are thought of Abroad Portfolio Investments (OPI). The modifications permit shown Indian organizations and resident men and women to invest in these types of resources, and in International Economic Providers Centres (IFSCs), unlisted Indian entities are also allowed to devote beneath specified limits. This update, reflecting the diverse regulatory frameworks of several jurisdictions, will be integrated into the existing pointers issued in August 2022. The round makes sure compliance under the International Exchange Administration Act, 1999, and financial institutions are instructed to inform their clientele appropriately.
Reserve Bank of India
RBI/2024-25/41A.P. (DIR Sequence) Round No. 09 Dated: June 07, 2024
ToAll Group-I Authorised Vendor Banking institutions
Madam/ Sir
Foreign Trade Management (Overseas Financial investment) Directions, 2022 – Investments in Overseas Money
Consideration of Class-I Authorised Seller Banks is invited to Paragraph 1(ix)(e) of Foreign Exchange Management (Overseas Financial investment) Directions, 2022, issued vide A.P. (DIR Series) Circular No.12 dated August 22, 2022, in phrases of which, expense (which includes sponsor contribution) in units of any investment fund abroad, duly regulated by the regulator for the economic sector in the host jurisdiction, shall be deemed as Abroad Portfolio Financial investment. More, as for every the provisions of Paragraph 1(ix)(e) and Paragraph 24(1) of FEM (OI) Directions, 2022, investments can be produced in “units” of investment funds.
2. In this regard, in view of the varied regulatory framework governing financial commitment cash across many jurisdictions and to offer clarity, the following amendments are carried out in the Foreign Trade Administration (Overseas Financial commitment) Directions, 2022:
(a) Existing Paragraph 1(ix)(e) of FEM (OI) Directions, 2022 is changed with the pursuing:
“The investment (together with sponsor contribution) in models or any other instrument (by regardless of what title identified as) issued by an financial commitment fund overseas, duly regulated by the regulator for the financial sector in the host jurisdiction, shall be taken care of as OPI. Appropriately, in jurisdictions other than IFSCs, mentioned Indian providers and resident individuals may possibly make these investment decision. While in IFSCs, an unlisted Indian entity also may well make this sort of OPI in models or any other instrument (by whichever title termed) issued by an expense fund or automobile, in conditions of agenda V of the OI Regulations topic to boundaries, as relevant.
Explanation: ‘investment fund abroad, duly regulated’ for the intent of this para shall also include things like money whose pursuits are controlled by fiscal sector regulator of host country or jurisdiction by means of a fund supervisor.”
(b) Existing Paragraph 24(1) of FEM (OI) Instructions, 2022 is replaced with the pursuing:
“A individual resident in India, becoming an Indian entity or a resident person, may possibly make expenditure (like sponsor contribution) in models or any other instrument (by whatsoever title named) issued by an investment fund or motor vehicle set up in an IFSC, as OPI. Accordingly, in addition to mentioned Indian providers and resident folks, unlisted Indian entities also may perhaps make these types of expenditure in IFSC.”
3. Overseas Exchange Administration (Overseas Investments) Instructions, 2022 issued vide A.P. (DIR Series) Round No.12 dated August 22, 2022, shall accordingly be current to mirror the higher than alterations. Advert Classification-I Banking institutions may possibly deliver the contents of this circular to the observe of their constituents.
4. The directions in this round have been issued less than Part 10(4) and 11(1) of the International Exchange Management Act, 1999 (42 of 1999) and are with no prejudice to permissions/approvals, if any, needed underneath any other regulation.
Yours faithfully,
(N Senthil Kumar)Standard Manager