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Corporate Laws Central Ministry of Finance Foreign Exchange Management Act, 1999

Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023

16-Oct-2023 | No. FEMA.396(2)/2023-RB

The Reserve Bank of India has issued Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023 effective from 16th October, 2023.

By virtue of this notification Foreign Exchange Management (Debt Instruments) Regulations, 2019 are being amended by Foreign Exchange Management (Debt Instruments) (Second Amendment) Regulations, 2023.

Key highlights of the amendment:-

1. A new sub-paragraph, labeled ?E,? is introduced after sub-paragraph D in paragraph 1 (Permission to persons resident outside India) of Schedule 1 (Purchase and sale of debt instruments by a person resident outside India) . This sub-paragraph grants permission to persons resident outside India who maintain a rupee account, as per regulation 7(1) of the Foreign Exchange Management (Deposit) Regulations, 2016. It allows them to purchase or sell dated Government Securities and treasury bills, subject to terms and conditions specified by the Reserve Bank.

2. In paragraph 2 (Mode of Payment) of Schedule 1, a new clause ?4A? is added. This clause clarifies that the consideration for the purchase of dated Government Securities/treasury bills under sub-paragraph (E) of paragraph 1 should be paid out of funds held in the rupee account maintained under regulation 7(1) of the Foreign Exchange Management (Deposit) Regulations, 2016.

3. Another significant addition was made to paragraph 4 (Remittance/ credit of sale/ maturity proceeds) of Schedule 1. A new clause ?2A? was introduced, stipulating that the sale or maturity proceeds (net of applicable taxes) of instruments held by persons resident outside India with a rupee account under regulation 7(1) of the Foreign Exchange Management (Deposit) Regulations, 2016, shall be credited to the same rupee account.

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