Schedule XI Under FEMA 395(4)/2026-RB: The International Exchanges Listing Route, Mode of Payment, and Sale Proceeds

✍️ RebaseNest Team · Last updated 21 Jun 2026

·12 min read
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Assuming you are an NRI or OCI who has read the RBI's June notification on Mode of Payment, seen the headline that it eased something for NRIs and OCIs, and noticed in the small print that the notification rewrites two schedules, not one. Schedule III is the familiar NRI/OCI repatriable equity, mutual funds and NPS basket. Schedule XI is the one almost nobody writes about: the Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme. It is its own animal, with its own definitions, its own Permissible Holder concept, and its own routing of money in and money out. This is what the substituted Schedule XI actually says, what it does not say, and where it sits in the larger stack.

1. Where Schedule XI lives in the FEMA stack

The Mode of Payment and Reporting of Non-Debt Instruments Regulations, 2019 were notified as FEMA. 395/2019-RB on 17 October 2019, published in the Official Gazette vide G.S.R. No. 795(E) dated 17.10.2019. They are operational rules made under the Foreign Exchange Management Act, 1999. They sit one layer below the Non-Debt Instruments Rules, 2019 (notified by the Ministry of Finance, Department of Economic Affairs), which themselves sit under the Act.

The principal regulations have a schedule for each investment route. Schedule III is the route used by individual NRIs and OCIs on a repatriation basis. Schedule XI is the route used by Permissible Holders subscribing to or purchasing equity shares of an Indian company listed on a recognised International Exchange. They are not the same population, the same instruments, or the same plumbing.

FEMA 395(4)/2026-RB substitutes both schedules in one shot. The substitution is what gives the schedule its current operative wording.

2. What Schedule XI actually says after the substitution

The substituted Schedule XI has two operative parts. Part A is mode of payment. Part B is remittance of sale proceeds. The structure and key clauses below are paraphrased from the notification text for legibility; the operative wording is in the notification itself, which AD-bank compliance teams work off directly.

Mode of payment, Part A:

The amount of consideration for purchase or subscription of equity shares of
an Indian company listed on an International Exchange shall be paid:

  (i)   through banking channels to a foreign currency account of the Indian
        company held in accordance with the Foreign Exchange Management
        (Foreign currency accounts by a person resident in India)
        Regulations, 2015; OR

  (ii)  as inward remittance from abroad through banking channels OR out of
        funds held in any repatriable foreign currency or rupee account
        maintained in accordance with the Foreign Exchange Management
        (Deposit) Regulations, 2016.

Explanation to Part A: the proceeds of purchase or subscription shall either be remitted to a bank account in India OR deposited in a foreign currency account of the Indian company held in accordance with the FCY Account Regulations, 2015.

Remittance of sale proceeds, Part B:

The sale proceeds (net of taxes) of the equity shares may be remitted outside
India OR credited to the bank account of the Permissible Holder maintained
in accordance with the Foreign Exchange Management (Deposit) Regulations,
2016.

Two things are worth noticing. First, the Schedule XI plumbing routes money through the Indian company's own foreign currency account (the FCY-PRI route) or through inward remittance or repatriable foreign-currency or rupee account funds on the inflow side. Second, Part B references a bank account of the Permissible Holder maintained in accordance with the Deposit Regulations, 2016 on the outflow side. The two parts use different account formulations: Part A(ii) specifies repatriable foreign currency or rupee accounts, while Part B references the broader bank-account language under the Deposit Regulations, 2016. The deposit-regulations framework is the operative reference for sale-proceeds crediting at the Schedule XI level.

3. Who is a Permissible Holder

The Permissible Holder concept is the gating definition for Schedule XI. The operative definition sits in Schedule XI, paragraph 2 of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, as inserted by the Direct Listing Scheme notification of 24 January 2024 issued by the Department of Economic Affairs. The high-level shape of the definition, paraphrased:

A Permissible Holder means a holder of equity shares listed on an
International Exchange, including its beneficial owner. Explanation 1 to
the paragraph states that a Permissible Holder is not a person resident
in India. A separate proviso applies a land-border carve-out: the holder
or its beneficial owner is not a person resident in a country that shares
a land border with India, except with prior Government approval.

The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 are the company-side eligibility framework. They sit on the issuer-eligibility and compliance side and do not themselves define Permissible Holder. The official Frequently Asked Questions issued by the Central Government on the Direct Listing Scheme on 24 January 2024 are the authoritative reading aid on both pieces.

In practice the Permissible Holder definition catches NRIs and OCIs (subject to the land-border carve-out), foreign portfolio investors, and other persons resident outside India who satisfy the scheme's eligibility tests. Residence outside India is the test, not location in any specific IFSC. The exact eligibility of any specific applicant is a question for the AD bank and counsel running the listing, not for a blog post.

The piece of this that NRIs and OCIs often miss: being eligible to invest under Schedule III as a person resident outside India does not, on its own, make you a Permissible Holder under Schedule XI. The two routes are parallel, not interchangeable. A subscription to an Indian-incorporated company's shares listed on India INX is a Schedule XI transaction. A subscription to shares of the same company listed on NSE Mumbai through the PIS route is a Schedule III transaction. The schedule that applies follows the listing venue, not the issuer.

4. Which International Exchanges are recognised

The scheme is operated through International Exchanges located in IFSCs in India. The two operational exchanges in GIFT City IFSC as of writing:

India INX     India International Exchange (IFSC) Limited
NSE IX        NSE IFSC Limited (also branded NSE International Exchange)

Both are regulated by the International Financial Services Centres Authority (IFSCA), the unified regulator for financial services in IFSCs, set up under the IFSCA Act, 2019. IFSCA's current listing framework is the International Financial Services Centres Authority (Listing) Regulations, 2024, which replaced the earlier IFSCA (Issuance and Listing of Securities) Regulations, 2021. The 2024 regulations are the current listing-side framework. The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 sit on the company-law side under the Ministry of Corporate Affairs.

For practical purposes today, recognised International Exchange under Schedule XI means an IFSC exchange. The notification does not add or remove exchanges. If at a later date the Direct Listing scheme framework is extended to non-IFSC permissible jurisdictions, the recognised list under Schedule XI would update through a separate notification.

5. The FCY account of the Indian company

The Schedule XI mode of payment language references a foreign currency account of the Indian company held under the FCY-PRI Regulations, 2015 (Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015). This is the issuer company's own account, not a Permissible Holder's account. The plumbing assumed by the schedule is:

Permissible Holder pays consideration
        |
        v
Indian company's FCY account (held in India under FCY-PRI 2015)
        |
   (issuer uses funds per scheme rules)
        OR
        |
        v
Indian banking channels (inward remittance OR repatriable account funds)
        |
   (issuer or registrar applies the consideration)

For a Permissible Holder choosing the FCY-issuer route, the consideration leaves the holder's bank in their jurisdiction and lands in the Indian company's FCY-PRI account. For a Permissible Holder choosing the inward-remittance route, the consideration moves through their repatriable foreign-currency or rupee account or arrives as fresh remittance from abroad. The schedule expresses both options in the substituted text; the AD bank's compliance team works off that exact wording for transaction-level routing.

6. Sale proceeds: where the money can go

Part B of the substituted Schedule XI is a two-option remittance clause. Net of taxes, the sale proceeds may either be remitted outside India or credited to a bank account of the Permissible Holder maintained under the FEMA Deposit Regulations, 2016. For an NRI or OCI Permissible Holder, the deposit-regulations bank account is most often an NRE rupee account, but the regulation does not name the account type at the Schedule XI level. The reference is to the deposit-regulations framework as a whole.

The net of taxes phrasing is doing real work. Taxes referred to are Indian taxes on the gain, computed under the relevant chapter of the Income-tax Act, 1961 read with any applicable DTAA. The Schedule XI language is silent on the rate, the holding period, and the regime, because those are not FEMA questions. They are tax questions. Section 47(viiab) of the Income-tax Act, 1961 contains a narrow not-regarded-as-transfer rule for specified capital assets transferred by a non-resident on a recognised stock exchange located in an IFSC, where the consideration is paid or payable in foreign currency. The exact applicability to any specific Schedule XI transaction depends on the instrument, the notified-asset status, and the specific CBDT notification in force at the time, and is a cross-border CA question.

7. What did not change

This is the same closing point as the broader Mode of Payment rewrite, applied to Schedule XI specifically.

The notification does not:

- create the Direct Listing scheme (the scheme framework is older)
- add or remove eligible International Exchanges (still IFSC exchanges)
- change Permissible Holder eligibility (NDI Rules + Companies Rules govern)
- change Indian-issuer eligibility (Companies Rules + IFSCA Regs govern)
- change the tax treatment of capital gains on these shares
- change SEBI's role on Indian-side listing parallel routes

What it does is harmonise the Schedule XI payment and remittance wording with the deposit-regulations and FCY-PRI frameworks, in line with the Schedule III rewrite. The operational effect for a Permissible Holder is the substituted Schedule XI text is now what the AD bank's compliance team works off.

8. How an NRI investor should read this

The practical position for an NRI or OCI today follows the venue of the listing and the place of incorporation of the issuer, not the investor's identity. Investments in listed Indian equities through a domestic Indian Portfolio Investment Scheme account fall under Schedule III of the principal regulations. Purchases of equity shares of an Indian-incorporated company that has directly listed on India INX or NSE IX in GIFT IFSC fall under Schedule XI, with mode of payment governed by the substituted text set out earlier. Purchases of shares of a foreign-incorporated company listed abroad fall under neither schedule and instead engage the Overseas Investment framework: the OI Rules, 2022, OI Regulations, 2022 and OI Directions, 2022.

The same NRI buying Reliance on NSE Mumbai is on the Schedule III route. The same NRI buying a hypothetical Indian-incorporated tech company directly listed on India INX is on the Schedule XI route. The same NRI buying Microsoft on Nasdaq is on the OI regime. These are three different sets of operational rules, three different AD-bank workflows, and three different tax conversations.

9. What to watch next

The Schedule XI route has been slow to be used in practice. The substituted text in FEMA 395(4)/2026-RB is plumbing that anticipates issuance activity, not a sign of fresh listings. Three artefacts worth watching over the next quarter, in priority order, while noting that the current legal position is already set by the notification text and does not depend on any of them landing:

1. A future RBI A.P. (DIR Series) circular could add bank-level operating
   guidance on the substituted Schedule XI; none is cited in the
   notification and none is necessary to establish current law.
2. Any further amendment to the Companies (Listing of Equity Shares in
   Permissible Jurisdictions) Rules, 2024 expanding eligible issuers.
3. Any IFSCA framework update on the Listing Regulations, 2024
   affecting direct-listed equity shares of Indian companies.

Until those land, the Schedule XI mechanics are what the substituted text says. The route is open, the plumbing is updated, and the next concrete signal will be a new direct listing on India INX or NSE IX of an Indian-incorporated company under the scheme.

A note on what this is. This article is one returnee's working notes, not personalised advice. Numbers age. Rules change. The only person who can sign off on your specific case is a qualified cross-border chartered accountant looking at your full facts. Use this as a checklist of questions to take to that conversation, not as the answer.

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