RBI drafts future-ready foreign investment rules

Mumbai: The Reserve Bank on Tuesday proposed simplified and future-ready rules related to foreign investments, including those pertaining to overseas listing of Indian companies.

The planned revisions in Foreign Exchange Management (Non-Debt Instruments) Rules follow Finance Minister Nirmala Sitharaman’s announcement in the Union Budget 2026-27 to carry out a comprehensive review of the rules.

Foreign investment into India is presently governed by the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (‘NDI Rules’). Pursuant to the announcement, the Centre constituted a committee to undertake a comprehensive review of the extant regulatory framework. Based on the recommendations of the Committee, and in consultation with the central government and other stakeholders, the Reserve Bank of India (RBI) said it has prepared a draft of the rationalised rules. One of the salient features of the proposed draft rules is a simplified and principle-based framework, the RBI said. It aims to rationalisation of provisions, harmonisation of definitions and a simplified regulatory architecture to enhance clarity and reduce regulatory complexity.

Alignment with the FDI policy, enhanced ease of doing business, and a future-ready regulatory framework are other key features, the central bank said while inviting comments on the draft by August 31. On issue and listing on an international stock exchange, the draft said a public company may issue its equity or offer equity of existing shareholders on a foreign stock exchange, subject to certain conditions.

One of the conditions is that the equity should be denominated in INR in the books of the company and held in dematerialised form. “If such company is listed on a recognised stock exchange in India, then issue or offer of equity shall additionally be in compliance with the applicable SEBI regulations and such equity shall rank pari passu with equity listed on a recognised stock exchange in India,” it said. In case, the company is not listed on a recognised stock exchange in India, then issue or offer of equity should be in compliance with the conditions or requirements prescribed by the Ministry of Corporate Affairs.