What changed
Regulation 3.1, Sl. No. III (Schedule III) and X (Schedule XI) were substituted. For Schedule III, NRIs/OCIs must now designate one repatriable rupee account exclusively for investments, and NPS subscriptions can be paid from NRO accounts. For Schedule XI, payment modes for equity shares on International Exchanges were clarified, allowing use of the Indian company's foreign currency account or repatriable accounts.
What it means for you
Banks must ensure NRIs/OCIs designate a single repatriable rupee account for Schedule III investments, preventing commingling. NPS subscriptions now have broader funding sources, including NRO accounts. For International Exchange Scheme transactions, banks need to verify payment flows align with the specified accounts, reducing ambiguity in cross-border equity investments.
What you must do
- Update KYC and account opening procedures to require NRIs/OCIs to designate a single repatriable rupee account for Schedule III investments.
- Train staff on accepting NRO account funds for NPS subscriptions by NRIs/OCIs.
- Review payment processing for International Exchange Scheme equity to ensure funds flow through the Indian company's foreign currency account or repatriable accounts.
- Update internal reporting systems to capture the new designated account details for regulatory compliance.
Who it affects
Banks handling NRI/OCI investment accounts, Authorized dealers processing cross-border equity transactions, NPS intermediaries dealing with NRI/OCI subscriptions, Indian companies listed on International Exchanges
Can an NRI use multiple repatriable rupee accounts for Schedule III investments?
No. The amendment requires a single repatriable rupee account to be designated exclusively for investments under Schedule III.
Are NRO accounts now allowed for NPS subscriptions by NRIs/OCIs?
Yes. The amendment explicitly permits NPS subscriptions to be paid from NRO accounts, in addition to inward remittances or repatriable accounts.
What payment modes are accepted for equity shares under the International Exchange Scheme?
Payment can be made through banking channels to the Indian company's foreign currency account (under FEMA 2015 regulations) or as inward remittance from abroad via repatriable foreign currency/rupee accounts.