(i) By its Notification No. FERA.114/92-RB dated 27th April 1992 amended upto 24th February 1997 Reserve Bank has granted general permission to NRIs/OCBs to subscribe to the shares/convertible debentures of an Indian company on non-repatriation basis, and to an Indian company to issue shares or convertible debentures by way of new/rights/bonus issue to NRIs/OCBs on non-repatriation basis provided that the investee company is not engaged in agricultural/plantation activities or real estate business (excluding real estate development i.e. development of property or construction of houses) or chit fund or is not a Nidhi company. The payment for these shares should, however, be received from the NRIs/OCBs by inward remittance or by debit to their NRE/FCNR/NRO accounts maintained with an authorised dealer or an authorised bank in India. Consequently, it will be in order for companies in India to issue shares/convertible debentures to NRIs/OCBs on non-repatriation basis by way of new, rights or bonus issues without the prior approval of Reserve Bank provided the conditions mentioned in the Notification are satisfied. The company should, however, file a declaration in form DIN within 90 days from the date of receipt of the investment to the concerned Regional Office of the Reserve Bank in whose jurisdiction its registered office is situated. The company may also credit the dividend/interest in respect of the shares/convertible debentures to the investors NRO account with a bank in India.

(ii) Reserve Bank of India vide its Notification No.F.E.R.A.213/99-RB dated 1st November 1999, has granted general permission to Indian companies to issue, by way of public issue, non-convertible debentures (NCDs) to NRIs/PIOs/OCBs on non-repatriation basis subject to the following conditions:

i) The amount of subscription should be received by inward remittance from abroad through normal banking channels or by debit to the non-residents NRE/FCNR/NRO/NRSR account, as the case may be, with an authorised dealer in India. The principal amount representing the investment is not repatriable. If the investment is made out of funds held in NRSR account, the principal as well as interest earned are not repatriable.

ii) The rate of interest on such NCDs shall not exceed prime lending rate of State Bank of India, plus 300 basis points.

iii) The minimum period for redemption of such NCDs should be three years.

iv) The company raising funds through NCDs should not be engaged in agricultural/plantation activity, real estate business, trading in transferable development rights (TDRs) or act as Nidhi/Chit Fund company.

v) The issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of receipt of remittance, a report containing the following:-
(a) A list containing names of NRIs/OCBs.
(b) Country of residence or incorporation of the non-resident investor;
(c) Amount and date of receipt of remittance and its rupee equivalent;
(d) Name and address of the authorised dealer in India through whom the remittance is received.

vi) The issuer company files with Regional Office of Reserve Bank, not later than thirty days from the date of issue of NCDs, the following:-
(a) A list containing names of NRIs/OCBs and the number and face value of NCDs issued to each of them on non-repatriation basis.
(b) Certified true copy of resolution passed in the meeting of the Board of Directors of the company, indicating the quantum and value of NCDs issued to NRIs/OCBs and residents and other details of the issue such as coupon rate, date of redemption, etc.
(c) Original Foreign Inward Remittance Certificate (FIRC)/Bank Certificate evidencing receipt of funds, from abroad or from the NRE/FCNR/NRO/NRSR accounts as the case may be, of the NRI/PIO/OCB.
(d) Memorandum and Articles of Association of the issuer company.
(e) Certificate in Form OAC/OAC1 indicating the NRI shareholding to the extent of atleast 60% either directly or indirectly in case of investment by OCB.
(f) Any information sought by the Reserve Bank with reference to the issue of NCDs within such time as may be stipulated.
(g) An undertaking that the issuer company is not and shall not be engaged in agricultural/plantation activity, real estate business, trading in TDRs or act as Nidhi/Chit Fund company.