On August 13, The Reserve Bank of India (RBI) has introduced provisions for ‘Sovereign Green Bonds’ providing that a person resident outside India who maintains a securities account with a depository in IFSC in India would be able to purchase or sell Sovereign Green Bonds issued by the Government of India.
The RBI has notified the Foreign Exchange Management (Debt Instruments) (Third Amendment) Regulations, 2024 on August, 2 for the purpose to amend the Foreign Exchange Management (Debt Instruments) Regulations, 2019.
The amended regulations came into force on August, 7
The amended regulations has inserted a new sub-paragraph to paragraph 1 of Schedule 1 to the Principal Regulation which provides for the ‘Permission to persons resident outside India for purchase of Sovereign Green Bonds in the International Financial Services Centre in India’.
The regulation has further added new clause (4B) to paragraph 2 of Schedule 1 to the Principal Regulation to amend the provisions for mode of payment which states that the amount of consideration for the purchase of Sovereign Green Bonds by persons resident outside India will be paid out of inward remittance from abroad through banking channels or out of funds held in a foreign currency account maintained as per regulations issued by RBI and/or the International Financial Services Centre Authority.
Lastly, A new clause (2B) has been added to paragraph 4 of Schedule 1 to the Principal Regulation which states that the sale/maturity proceeds of instruments held by the persons resident outside India as per sub-para (F) of paragraph 1 of this Schedule may be remitted outside India.
