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Prior intimation to RBI for raising FII/NRI limits for investments

23rd March, 2012

Indian company raising the aggregate FII investment limit to the sectoral cap/ statutory limit or raising the aggregate NRI investment limit, should intimate the same to the Reserve Bank of India, immediately. This intimation should be given along with a certificate from the Company Secretary stating that all the relevant provisions of the Foreign Exchange Management Act, 1999 and the FDI policy have been complied with.

Reserve Bank of India (A.P. DIR Series) Circular No. 94, dated 19-3-2012 issued in this regard also observes that it is monitoring, on daily basis, the ceilings on FII/ NRI/ PIO investments in Indian companies. To improve such monitoring, RBI notes that it has fixed cut-off points that are two percentage points lower than the actual ceilings and once the aggregate net purchases of equity shares of the company by FIIs/NRIs reaches such cut-off point, it cautions all the designated bank branches not to purchase any more equity shares of the respective company on behalf of any FIIs without prior approval of the Reserve Bank. Thereafter, RBI gives clearances on first-come-first-served basis till investment reaches the limit when the banks are advised to stop such purchases.
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