What changed
Previously, share transfers from resident to non-resident requiring FIPB approval, attracting SEBI SAST, or involving financial sector companies needed RBI prior approval. Now, such transfers can be done without RBI approval if specific conditions (e.g., FIPB approval obtained, pricing guidelines met, NOCs from financial regulators) are satisfied. Similarly, transfers from non-resident to resident not meeting FEMA pricing guidelines are now allowed without RBI approval if SEBI pricing norms are met and a CA certificate is provided.
What it means for you
Banks can process a wider range of FDI share transfers without seeking RBI's prior nod, reducing processing times and compliance burden. However, they must verify that all conditions—such as sectoral caps, pricing compliance, and necessary approvals or NOCs—are met before filing FC-TRS. This liberalization streamlines FDI flows but places greater onus on AD banks to ensure end-to-end regulatory compliance.
What you must do
- Update internal checklists to include new conditions for exempted transfers (e.g., FIPB approval, SEBI pricing compliance, NOCs from financial regulators).
- Ensure CA certificates are obtained and attached to FC-TRS for transfers relying on SEBI pricing guidelines.
- Verify that resultant FDI adheres to sectoral caps, minimum capitalization, and reporting requirements before processing.
- Train staff on the revised categories of transfers that no longer require RBI prior approval.
Who it affects
AD Category-I banks, Companies involved in FDI share transfers, Non-resident investors and residents transferring shares
What transfers from resident to non-resident now do not need RBI prior approval?
Transfers requiring FIPB approval (provided FIPB approval is obtained and pricing guidelines met), those attracting SEBI SAST (if pricing and documentation norms are followed), transfers not meeting FEMA pricing guidelines (if SEBI pricing norms are met and CA certificate attached), and transfers involving financial sector companies (if NOCs from relevant regulators are obtained and FDI policy complied with).
What conditions must be met for a non-resident to resident transfer that does not meet FEMA pricing guidelines?
The original and resultant investment must comply with FDI policy and FEMA regulations (sectoral caps, conditionalities, reporting). The pricing must comply with relevant SEBI regulations (e.g., IPO, block deals, open offer). A Chartered Accountant certificate confirming SEBI compliance must be attached to FC-TRS.
Do these changes apply to all financial sector companies?
Yes, for transfers involving an investee company in the financial sector, RBI prior approval is no longer needed if NOCs from the respective financial sector regulators (for the investee, transferor, and transferee) are obtained and filed with FC-TRS, and all FDI policy and FEMA conditions are met.