By its Notification No.F.E.R.A.196/99-RB dated 30th March 1999 Reserve Bank has granted general permission to a proprietorship concern or a firm in India to accept deposits from NRIs/PIOs on non-repatriation basis and to Indian companies (including non-banking finance companies registered with Reserve Bank) to accept deposits from NRIs/PIOs/OCBs on non-repatriation basis subject to the following conditions:-

a) The period of deposits should not exceed three years.

b) The rate of interest on such deposits should not exceed the ceiling rate prescribed form time to time under the companies (Acceptance of Deposit) Rules, 1975.

c) The amount representing the deposit should be received through normal banking channels or by debit to depositors NRE/FCNR/NRO/NRSR account maintained with an authorised dealer in India.

d) In case the deposit is placed out of inward remittance or out of funds held in investors NRE/FCNR/NRO accounts maintained with an authorised dealer in India, the maturity proceeds/interest may be credited to NRO/NRSR account of the non-resident depositor, as desired by him. If, however, the deposit is placed out of funds held in NRSR account of the depositor, interest as well as maturity proceeds should be credited to NRSR account only.

e) The amount of deposit on maturity will not be allowed to be remitted abroad.

f) The acceptance of deposit should be in compliance with the other applicable laws, rules and regulations issued by Government of India or the Reserve Bank or the SEBI or any other competent authority as applicable.

g) The concern or the firm or the company accepting the deposit should not utilise the funds representing the deposits in agricultural/plantation activities and real estate business or for relending or should not invest such funds in any other concern/firm/company engaged in or proposing to engage in agricultural/plantation activities or real estate business.

(ii) Indian companies wishing to raise deposits by issue of Commercial Paper (CP) have to comply with the Non-Banking Companies (Acceptance of Deposits through Commercial Paper) Directions, 1989 issued by Reserve Bank (IECD). Reserve Bank (ECD) has granted general permission to Indian companies for issue of CP to NRIs/OCBs vide Notification No.F.E.R.A. 85/89-RB dated 9th October 1989 as amended by Notification No.F.E.R.A. 205/99-RB dated 3rd July 1999 subject to the company complying with the conditions stipulated by Reserve Bank (IECD) and (ECD). Indian companies may accordingly raise deposits from NRIs/OCBs through issue of CP without obtaining specific permission of Reserve Bank (ECD) provided the amount invested will not be allowed to be repatriated outside India and the CP will not be transferable. Payment for investment in CP should be received by remittance from abroad through normal banking channel or by debit to investors NRE/FCNR/NRO/NRSR account and maturity proceeds should be paid by credit to NRO/NRSR account of the non-resident investor with a bank in India.

NOTE : OCBs are not permitted to invest in CPs.

II. Investment with Repatriation Benefits

NRIs/OCBs are also permitted to make investments in Indian firms/companies with repatriation benefits i.e. capital invested and dividend/income earned thereon are allowed to be repatriated outside India, under various schemes as explained in paragraphs 10C 11 to 10C 18.0