Full Text
REGD. No. D. L.-33004/99
The Gazette of India
CG-MH-E-15012025-260259
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 41] NEW DELHI, WEDNESDAY, JANUARY 15, 2025/PAUSHA 25, 1946
RESERVE BANK OF INDIA
(Foreign Exchange Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 14th January, 2025
Foreign Exchange Management (Mode of Payment and Reporting of Non- Debt Instruments) (Third
Amendment) Regulations, 2025
Notification No. FEMA 395(3)/2025-RB.—In exercise of the powers conferred by 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 (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019
[Notification No. FEMA.395/2019-RB dated October 17, 2019] (hereinafter referred to as 'the Principal Regulations)
namely:-
1. Short Title & Commencement.-- (1) These Regulations may be called the Foreign Exchange Management
(Mode of Payment and Reporting of Non- Debt Instruments) (Third Amendment) Regulations, 2025.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the principal regulations, in regulation 3.1,for the existing provision at Sl. No. I, II, VI, VII, VIII and IX the
following shall be substituted, namely:
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| Schedule of the Rules | Instructions on Mode of payment and Remittance of sale proceeds |
+-----------------------+-------------------------------------------------------+----------------+
| II. Schedule II | A. Mode of payment | |
| (Investments by Foreign| (1) The amount of consideration shall be paid as inward remittance from abroad | |
| Portfolio Investors) | through banking channels or out of funds held in a foreign currency account and/ or a | |
| | Special Non-Resident Rupee (SNRR) account maintained in accordance with the | |
| | Foreign Exchange Management (Deposit) Regulations, 2016. | |
| | | |
| | (2) Unless otherwise specified in these regulations or the relevant Schedules, the | |
| | foreign currency account shall be used only and exclusively for transactions under | |
| | this Schedule. | |
| | | |
| | B. Remittance of sale proceeds | |
| | | |
| | The sale proceeds (net of taxes) of equity instruments and units of REITs, InViTs and | |
| | domestic mutual fund may be remitted outside India or credited to the foreign | |
| | currency account or a SNRR account of the FPI. | |
+-----------------------+-------------------------------------------------------+----------------+
| VI. Schedule VI | A. Mode of payment | |
| (Investment in a Limited| Payment by an investor towards capital contribution of an LLP shall be made by way | |
| Liability Partnership) | of an inward remittance through banking channels or out of funds held in any | |
| | repatriable foreign currency or Rupee account maintained in accordance with the | |
| | Foreign Exchange Management (Deposit) Regulations, 2016. | |
| | | |
| | B. Remittance of disinvestment proceeds | |
| | | |
| | The disinvestment proceeds may be remitted outside India or may be credited to any | |
| | repatriable foreign currency or Rupee account of the person concerned, maintained in | |
| | accordance with the Foreign Exchange Management (Deposit) Regulations, 2016 | |
+-----------------------+-------------------------------------------------------+----------------+
| VII. Schedule VII | A. Mode of payment | |
| (Investment by a Foreign| (1) The amount of consideration shall be paid as inward remittance from abroad | |
| Venture Capital Investor)| through banking channels or out of funds held in a foreign currency account and/ or | |
| | a Special Non-Resident Rupee (SNRR) account maintained in accordance with the | |
| | Foreign Exchange Management (Deposit) Regulations, 2016. | |
| | | |
| | (2) Unless otherwise specified in these regulations or the relevant Schedules, the | |
| | foreign currency account shall be used only and exclusively for transactions under | |
| | this Schedule. | |
| | | |
| | B. Remittance of sale/ maturity proceeds | |
| | | |
| | The sale/ maturity proceeds (net of taxes) of the securities may be remitted outside | |
| | India or may be credited to the foreign currency account or a Special Non-resident | |
| | Rupee Account of the FVCI. | |
+-----------------------+-------------------------------------------------------+----------------+
| VIII. Schedule VIII | A. Mode of payment: | |
| (Investment by a person| The amount of consideration shall be paid by the person concerned as inward | |
| resident outside India in| remittance from abroad through banking channels or by way of swap of shares of a | |
| an Investment Vehicle)| Special Purpose Vehicle or out of funds held in any repatriable foreign currency or | |
| | Rupee account maintained in accordance with the Foreign Exchange Management | |
| | (Deposit) Regulations, 2016. | |
| | | |
| | B. Remittance of sale/ maturity proceeds: | |
| | | |
| | The sale/ maturity proceeds (net of taxes) of the units may be remitted outside India | |
| | or may be credited to any repatriable foreign currency or Rupee account of the | |
| | person concerned, maintained in accordance with the Foreign Exchange Management | |
| | (Deposit) Regulations, 2016. | |
+-----------------------+-------------------------------------------------------+----------------+
| IX. Schedule X | A. Mode of Payment | |
| (Issue of Indian | | |
| Depository Receipts) | NRIs or OCIs may invest in the IDRs out of funds held in their NRE/ FCNR(B) | |
| | account, maintained in accordance with the Foreign Exchange Management (Deposit) | |
| | Regulations, 2016. | |
| | An FPI may invest in the IDRs out of funds held in a foreign currency account and/or | |
| | an SNRR account, maintained in accordance with the Foreign ExchangeManagement | |
| | (Deposit) Regulations, 2016, as amended from time to time. | |
| | | |
| | B. Remittance of sale/ maturity proceeds | |
| | | |
| | Redemption/conversion of IDRs into underlying equity shares of the issuing | |
| | company shall be in compliance with the Foreign Exchange Management (Overseas | |
| | Investment) Rules, 2022. | |
+-----------------------+-------------------------------------------------------+----------------+
3. In the principal regulations, in regulation 3, for the existing sub-regulation 3.2 the following shall be substituted,
namely;
"Issue of Convertible Notes by an Indian start-up company:
A start-up company issuing convertible notes to a person resident outside India shall receive the amount of
consideration by inward remittance through banking channels or by debit to any repatriable foreign currency or Rupee
account of the person concerned, maintained in accordance with the Foreign Exchange Management (Deposit)
Regulations, 2016. Repayment or sale proceeds may be remitted outside India or credited to any repatriable foreign
currency or Rupee account of the person concerned, maintained in accordance with the Foreign Exchange
Management (Deposit) Regulations, 2016.
4. In the principal regulations, in regulation 3, after sub-regulation 3.2, the following paragraph may be inserted,
namely;
"Explanation: For the purpose of these regulations, “banking channels" shall include any rupee vostro accounts,
including Special Rupee Vostro Accounts, permitted to be held by a person resident outside India, in terms of
Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016."
Dr. ADITYA GAIHA, Chief General Manager-in-Charge
[ADVT.-III/4/Exty./897/2024-25]
The principal regulations were published in the Official Gazette of Government of India - Extraordinary – Part-II,
Section 3, Sub-Section (i) vide number G.S.R. 795 (E) dated 17th October, 2019. and subsequently amended vide the
following, namely;
Notification No. FEMA. 395(1)/2020-RB dated June 15, 2020
Notification No. FEMA. 395(2)/2020-RB dated April 23, 2024