Mumbai

TheReserve Bank of India (RBI) has allowed authorised dealer (AD) banks to open repatriable rupee accounts for overseas individuals investing in listed Indian companies, paving the way for broader foreign participation in the country’s equity markets beyond Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs).

The new framework came into effect immediately, according to a notification issued by the central bank on June 13 and uploaded to its website on Monday. The move follows amendments to foreign exchange regulations after the government revised the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.

Under the updated rules, all individuals residing outside India are now permitted to invest in equity instruments of listed Indian companies under Schedule III of the regulations. As part of the revised framework, overseas individual investors will be allowed to invest through inward remittances or funds maintained in repatriable deposit accounts.

Investors will also be required to designate a repatriable rupee account that will be used exclusively for transactions undertaken under this investment route. The RBI clarified that proceeds from the sale of equity investments may either be repatriated overseas or credited to the designated rupee account after the payment of applicable taxes.

Market participants said the move is expected to simplify the investment process for foreign individuals by providing a dedicated banking channel for equity investments and related transactions. In a related development, the central bank has introduced a new reporting category called Individual Foreign Investor (IFI).

Under this classification, authorised dealer banks will report purchases and transfers of equity instruments made by overseas individuals, including NRIs and OCIs.

Earlier this month, RBI Governor Sanjay Malhotra announced that the limits for investment by NRIs and OCIs in equity instruments traded on the stock market without SEBI registration are being increased.