New System For Monitoring Of Foreign Investment Limits In Listed Companies

In order to enable listed Indian companies to ensure compliance with the various foreign investment limits, Reserve Bank Of India (RBI) in consultation with Securities and Exchange Board of India (Sebi), has decided to put in place a new system for monitoring foreign investment limits, for which the necessary infrastructure and systems for operationalising the monitoring mechanism, shall be made available by the depositories -- Central Depository Services and National Securities Depository Limited. All listed Indian companies are required to provide the specified data on foreign investment to the depositories. The requisite information may be provided before May 15, 2018. 

The listed Indian companies, in non-compliance with the above instructions will not be able to receive foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations made thereunder, said RBI.

Currently, Reserve Bank of India receives data on investment made by Foreign Portfolio Investors (FPI) and Non-resident Indians (NRI) on stock exchanges from the custodian banks and authorised dealer banks for their respective clients, based on which restrictions beyond a threshold limit is imposed on FPI/ NRI investment in listed Indian companies.

Upon implementation of the new monitoring system, all authorised dealer banks would be required to provide the details of investment made by their respective NRI clients to the depositories in the format as provided by the depositories/ SEBI. In addition, the reporting to Reserve Bank in the existing system, viz, LEC (NRI) and LEC (FII), would continue.