RBI Eases Investment Rules for NRIs and OCIs: Designated Repatriable Rupee Accounts Allowed

The Reserve Bank of India (RBI) has introduced the significant changes to the foreign investment regulations and makes it easier for the Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other overseas investors to invest in the Indian financial markets. The latest amendments permit the use of the designated repatriable rupee accounts and it will simplify the payment and reporting procedures under the FEMA regulations.

What Has RBI Changed?

The RBI has amended the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations of the year 2019.

The key feature of the amendment is the introduction of the designated repatriable rupee accounts for eligible overseas investors.

These accounts will facilitate the smoother investment transactions and the easier repatriation of sale proceeds from investments made in India.

This revised rules also streamline the manner in which investments are to be made, proceeds are received and transactions are reported to the RBI.

What Are Designated Repatriable Rupee Accounts?

A designated repatriable rupee account is the special rupee-denominated account which allows the eligible overseas investors to,

Invest in the Indian financial instruments.
Receive the dividends, interest, and sale proceeds.
Repatriate funds outside India in accordance with FEMA regulations.
Conduct investment-related transactions through a simplified banking channel.

This new framework is expected to reduce the procedural hurdles and improve operational efficiency for NRIs, OCIs and other foreign investors.

Expansion of Investment Access

Earlier, there are several investment routes were primarily available to the NRIs and OCIs.

The RBI has now extended the certain equity investment facilities to all individual Persons Resident Outside India (PROIs) and placing them on par with the NRIs and OCIs for eligible investments.

Additionally, the RBI recently increased the investment limits for NRIs and OCIs in listed equity instruments and it expanded the direct equity market access for overseas investors.