The Reserve Bank has issued a notification on February 10, 1998 operationalising the procedure for granting general permission to Indian companies to issue equity shares/securities to foreign investors in accordance with the approval for foreign direct investments (FDIs) granted by the Secretariat for Industrial Assistance (SIA) (Government of India, Ministry of Industry, Department of Industrial Policy & Promotion) or by the Foreign Investment Promotion Board (FIPB).

The notification (No.FERA 182/98 RB dated February 10, 1998) has been issued under Sections 19(1) and 29(1) of the Foreign Exchange Regulation Act (FERA), 1973. The general permission for issue of equity shares/securities to foreign investors is granted subject to observance of certain terms and conditions.

It may be recalled that the Reserve Bank of India had, on February 4, announced that in order to simplify the procedures for foreign direct investments in India already approved by the Government of India, it has granted general permission under FERA to all such proposals. With the issuance of the notification, it is now no longer necessary for the Indian companies to approach the regional offices of the Reserve Bank for "in-principle" permission before receiving inward remittance or at the last stage for issuing shares to the foreign investors. The companies are, however, required to file the required documents with the concerned regional offices of the Reserve Bank within 30 days after issue of shares.

The RBI notification dated February 10, 1998 is available on the RBI website on the Internet also (http://www.rbi.org.in).

(Alpana Killawala)
General Manager

Press Release : 1997-98/728