New system for monitoring foreign investment limits in listed firms

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RBI to disallow investment if there is non-compliance.

The Reserve Bank, in consultation with Securities and Exchange Board of India (SEBI), has decided to put in place a new system for monitoring foreign investment limits.

Necessary infrastructure and systems to kick-start the monitoring mechanism, according to RBI, will be made available by the depositories.

All listed Indian companies are required to provide the specified data/information on foreign investment to the depositories. The requisite information should be furnished on or before May 15, the RBI said.

The listed Indian companies in non-compliance with the above instructions will not be able to receive foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations made thereunder, the RBI said.

The objective is to enable listed Indian companies to ensure compliance with the various foreign investment limits.

Upon implementation of the new monitoring system, all authorised dealer banks would be required to provide the details of investment made by their respective NRI clients to the depositories in the format as provided by the depositories/ SEBI. In addition, the reporting to Reserve Bank in the existing system would continue, the RBI said.


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