RBI makes changes in framework for reclassification of FPI to FDI | Check new norms

The Reserve Bank of India on Monday announced an operational framework for reclassification of investment made by a foreign portfolio investor to foreign direct investment if the entity breaches the prescribed limit. According to the RBI's current norm, an investment made by foreign portfolio investor along with its investor group should be less than 10 per cent of the total paid-up equity capital on a fully diluted basis. FPI concerned will have to take necessary approvals: RBI According to the latest framework, the FPI concerned will have to take necessary approvals from the government and the concurrence of the Indian investee company concerned. FPI should approach its Custodian: RBI Post completion of reporting, the FPI should approach its Custodian with a request for transferring the equity instruments of the Indian company from its demat account maintained for holding foreign portfolio investments to its demat account maintained for holding FDI, the RBI said.