RBI issues draft for future-ready rules related to foreign investments

The Reserve Bank of India (RBI) has recently released draft rules proposing a simplified and future-ready regulatory framework for foreign investments, including provisions related to the overseas listing of Indian companies, as part of a broader review aimed at improving ease of doing business.According to agency reports, the proposed rules have been prepared following the recommendations of a committee constituted by the Centre to comprehensively review the existing regulatory framework governing foreign investments. The draft has also been formulated in consultation with the central government and other stakeholders.
The RBI said the proposed framework seeks to simplify regulations through a principle-based approach, rationalise existing provisions, harmonise definitions and create a clearer regulatory architecture. It also aims to align the rules with India's Foreign Direct Investment (FDI) policy while making the framework more adaptable to future business needs.The central bank has invited public comments on the draft until August 31, after which the rules will be finalised following wider consultations.One of the key proposals relates to the issue and listing of equity shares on international stock exchanges. Under the draft, a public company may issue fresh equity or allow existing shareholders to offer equity on a foreign stock exchange, subject to specified conditions.
The RBI said such equity must be denominated in Indian rupees in the company's books and held in dematerialised form. If the company is already listed on a recognised Indian stock exchange, the overseas issue must also comply with applicable Securities and Exchange Board of India (SEBI) regulations, and the shares must rank pari passu with those listed domestically.For public companies not listed on Indian stock exchanges, overseas equity issues must comply with conditions prescribed by the Ministry of Corporate Affairs. In the case of an initial overseas listing by an unlisted public company, the issue or transfer price of equity would be determined through a book-building process permitted by the concerned international stock exchange.
The draft also proposes that a person resident outside India or a foreign-controlled entity may make foreign investments on either a repatriation or non-repatriation basis through subscription to an issue, purchase of securities or gifts between natural persons.Additionally, the RBI has proposed allowing Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to subscribe to the National Pension System (NPS), governed by the Pension Fund Regulatory and Development Authority (PFRDA), provided they are eligible under the relevant provisions of the PFRDA Act. The accumulated savings and annuity under the scheme would be repatriable.According to media reports, the proposed changes to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, follow Union Finance Minister Nirmala Sitharaman's announcement in the Union Budget 2026–27 to undertake a comprehensive review of the existing foreign investment regulations. The revised rules are expected to streamline the regulatory framework and provide greater clarity for investors while supporting India's investment climate.