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July 24, 1998

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RBI modifies investment ceiling for NRIs, PIOs and OCBs

The Reserve Bank of India has modified the investment ceiling of non-resident Indians, overseas corporate bodies and person of Indian origin for purchase of shares in a company through stock exchanges under the portfolio investment scheme.

According to the modified norms, the investment limit by a single non-resident Indian, person of Indian origin, overseas corporate body owned by such persons to the extent of at least 60 per cent in a company has been enhanced from the existing level of one per cent to five per cent of the paid-up equity capital of the company.

Similarly, the aggregate limit for all NRIs/PIOs/OCBs investment through the secondary market in a company has been raised from the existing level of five per cent to ten per cent of the paid-up equity capital. The individual and aggregate ceiling limits for portfolio investments by NRIs/OCBs/PIOs would be exclusive of the aggregate portfolio investment ceiling for foreign institutional investors.

To facilitate speedy approval, the RBI has also delegated to the designated banks, powers for renewal of general permission already granted by the Reserve Bank of India to individual NRIs for purchase of shares through stock exchanges.

Such RBI permissions granted through designated banks to NRIs/PIOs/OCBs for secondary market transactions is valid for five years.

The RBI has stated that the earlier facility of aggregate investment by all NRIs/PIOs/OCBs through stock exchanges upto the enhanced limit of 24 per cent subject to the general body resolution of a company would continue to be operative.

FII investments would also continue to be subject to a separate aggregate ceiling of 24 per cent/30 per cent of the paid-up equity capital of a company.

UNI

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