RBI Updates Mode of Payment for Equity Deals by PROIs, Allowing Inward Remittance via Repatriable Currency/Rupee Account

Notification No. FEMA 395(3)/2025-RB; Dated: 14.01.2025

The RBI has notified the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Third Amendment) Regulations, 2025. Regulation 3 deals with the mode of Payment and Remittance of sale proceeds.

Under the extant norms, the consideration for the following must be paid by a Non Resident (External) Account (NRE), Foreign Currency Non-Resident (Banks) account (FCNR(B)), or Escrow accounts or Special Non-Resident Rupees (SNRR) account in certain cases.

(a) Purchase or sale of equity instruments of an Indian company by a Person Resident Outside India

(b) Investments by Foreign Portfolio Investors

(c) Investment in a Limited Liability Partnership

(d) Investment by a Foreign Venture Capital Investor

(e) Investment by a person resident outside India in an Investment Vehicle

(f) Investment by Non-Resident Indians/Overseas Citizens of India in the Indian Depository Receipts.

The amended norms, specify that now the consideration must be paid as an inward remittance through banking channels or from funds held in repatriable foreign currency or Rupee accounts.

Further, a start-up company issuing convertible notes to a person resident outside India must receive the amount of consideration by inward remittance through banking channels or by debit to any repatriable foreign currency or Rupee account of the person concerned.

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