Disclosing FII, NRI investments is must, says RBI

Fixes lower cut-off point than actual ceilings

The Reserve Bank of India has said that companies will have to mandatorily informed the central bank when FII/NRI/PIO investments in them reach sectoral cap or statutory limit.

RBI in a circular also said “for the effective monitoring of foreign investment ceiling limits, the Reserve Bank has fixed cut-off points that are two percentage points lower than the actual ceilings.

“Once the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reaches the cut-off point of 2 per cent below the overall limit, the Reserve Bank cautions all the designated bank branches not to purchase any more equity shares of the respective company on behalf of any FIIs/ NRIs/ PIOs without prior approval of the Reserve Bank.”

“Domestic company raising the aggregate FII investment limit of 24 per cent to the sectoral cap/statutory limit as applicable, or raising the aggregate NRI investment limit of 10 per cent to 24 per cent, should necessarily intimate the same to the Reserve Bank of India immediately,” an RBI circular said today.

Fema certificate

In addition, the circular also asked companies to present a certificate from company secretary ensuring that the relevant provisions of the Foreign Exchange Management Act of 1999 and the FDI policy have been complied with.

Sebi-registered FIIs/NRIs/PIOs are allowed to purchase or sell shares and convertible debentures of a domestic company in the market to the permissible limits of 24 percent and 10 percent respectively, in accordance with paid-up equity capital or value of each series of convertible debentures. RBI monitors the ceilings on FII/NRI/PIO investments in domestic companies on a daily basis.