Schedule 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Schedule 1 is the heart of the Debt Instruments Regulations. Its paragraph 1 lists who may buy which debt instruments. Paragraph 2 says how they pay, paragraph 3 permits sale, and paragraph 4 says where the sale or maturity proceeds go. This article takes the parts for foreign portfolio investors (FPIs), foreign central banks and multilateral development banks, holders of a rupee account under regulation 7(1) of the Deposit Regulations, 2016, and buyers of Sovereign Green Bonds in an IFSC.
This is Schedule 1 of the Foreign Exchange Management (Debt Instruments) Regulations, 2019 (Notification No. FEMA 396/2019-RB, October 17, 2019), as per the text on the Reserve Bank's site, amended up to October 01, 2025. An FPI may purchase the listed instruments on repatriation basis, on the terms of the Securities and Exchange Board of India and the Reserve Bank. An FPI pays from inward remittance or from a foreign currency or SNRR account used only and exclusively for the Schedule. Sale or maturity proceeds go abroad or to the FPI's foreign currency or SNRR account.
Authority
The preamble cites "clause (a) of sub-section (2) of section 6 and section 47 of the Foreign Exchange Management Act, 1999". See the Act articles on section 6 and sections 47 and 48. The general bars in regulations 3 and 4 are explained in the previous article. For advice on an FPI or foreign central bank investment, see our FEMA advisory service.
Paragraph 1A: what an FPI may purchase
Paragraph 1A allows an FPI to purchase the following debt instruments on repatriation basis, "subject to the terms and conditions specified by the Securities and Exchange Board of India and the Reserve Bank":
- dated Government securities and treasury bills;
- non-convertible debentures and bonds, and commercial papers, issued by an Indian company;
- units of domestic mutual funds or Exchange-Traded Funds that invest less than or equal to 50 percent in equity;
- Security Receipts issued by Asset Reconstruction Companies;
- debt instruments issued by banks, eligible for inclusion in regulatory capital;
- credit enhanced bonds;
- listed non-convertible or redeemable preference shares or debentures issued in terms of regulation 6 (the bonus debt on mergers);
- securitised debt instruments, including certificates issued by a special purpose vehicle set up for securitisation with banks, financial institutions or NBFCs as originators;
- rupee denominated bonds or units issued by Infrastructure Debt Funds (including such instruments issued on or after November 22, 2011 and held by deemed FPIs);
- municipal bonds; and
- debt securities issued by InvITs and REITs (inserted with effect from October 21, 2021 by Notification No. FEMA.396(1)/2021-RB).
A proviso lets FPIs offer such instruments, as the Reserve Bank permits from time to time, as collateral to the recognised stock exchanges for their transactions in exchange traded derivative contracts under regulation 5(2).
Paragraphs 1D, 1E and 1F: other permitted investors
| Paragraph | Who | What and on what terms |
|---|---|---|
| 1D | Foreign Central Banks, Multilateral Development Banks or any other entity the Reserve Bank permits | May purchase or sell dated Government Securities and treasury bills, as per terms and conditions specified by the Reserve Bank |
| 1E | Persons resident outside India maintaining a rupee account under regulation 7(1) of the Deposit Regulations, 2016 | May purchase or sell dated Government Securities and treasury bills, and non-convertible debentures, bonds and commercial papers issued by an Indian company, as per terms specified by the Reserve Bank; inserted from October 21, 2023 and amended from October 01, 2025 |
| 1F | Persons resident outside India maintaining a securities account with a depository in an IFSC in India | May purchase or sell Sovereign Green Bonds issued by the Government of India, as per terms specified by the Reserve Bank; inserted from August 10, 2024 |
The footnotes name the amending notifications: No. FEMA.396(2)/2023-RB dated October 16, 2023 and No. FEMA.396(4)/2025-RB dated September 29, 2025 for paragraph 1E, and No. FEMA.396(3)/2024-RB dated August 02, 2024 for paragraph 1F.
Paragraph 2: mode of payment
| Sub-paragraph | Investor | Payment |
|---|---|---|
| 2(1) | FPIs | Out of inward remittance from abroad through banking channels, or out of funds held in a foreign currency account and/or Special Non-Resident Rupee (SNRR) account under the Deposit Regulations, 2016; the foreign currency account and SNRR account shall be used only and exclusively for transactions under the Schedule |
| 2(4) | Foreign Central Bank or Multilateral Development Bank buying Government dated securities | Inward remittance through banking channels, or funds in an account opened with the specific approval of the Reserve Bank |
| 2(4A) | Rupee account holders under paragraph 1E | Out of funds held in their rupee account under regulation 7(1) of the Deposit Regulations, 2016 |
| 2(4B) | Buyers of Sovereign Green Bonds under paragraph 1F | Inward remittance through banking channels, or funds in a foreign currency account kept under the Reserve Bank's and/or the International Financial Services Centre Authority's regulations |
| 2(5) | Other non-resident investors | Inward remittances from abroad through banking channels |
Paragraph 3 and paragraph 4: sale and proceeds
Paragraph 3 says a person resident outside India who has purchased instruments in accordance with the Schedule may sell or redeem them, on terms the Reserve Bank and SEBI specify. Paragraph 4 then covers proceeds:
- 4(1): the sale or maturity proceeds (net of taxes) of instruments held by FPIs may be remitted outside India or credited to the foreign currency account or SNRR account of the FPI;
- 4(2A): proceeds for rupee account holders under 1E shall be credited to the rupee account (inserted from October 21, 2023);
- 4(2B): proceeds for Sovereign Green Bond holders under 1F may be remitted outside India (inserted from August 10, 2024); and
- 4(3): in all other cases, proceeds may be remitted abroad or credited to an account opened with the prior permission of the Reserve Bank.
Example
Asterion Global Fund, an invented FPI, buys Government dated securities and listed corporate bonds. It pays from its SNRR account, which it uses only for Schedule 1 transactions, as paragraph 2(1) requires. On maturity of a bond, the net proceeds can be remitted outside India or credited to its SNRR account under paragraph 4(1). If the same fund also holds Sovereign Green Bonds in an IFSC securities account, it falls under paragraph 1F and the proceeds under 4(2B) may be remitted abroad. A foreign central bank buying Government dated securities falls under paragraph 1D, and its payment under 2(4) must come from inward remittance or an account the Reserve Bank has specifically approved.
The Reserve Bank's Master Direction of 2025 on non-resident investment in debt instruments is taken up in a separate article on that Master Direction. NRI and OCI investors are covered in the next article. Our guide on FPI investment gives context. The FPI registration itself is under the SEBI regulations, which this article does not explain.
Amendments and circulars after October 01, 2025 should be checked.
Need help with FPI and debt investment?
Schedule 1 gives the permission, but the terms are set by the Reserve Bank and SEBI outside the Regulations. Our FEMA advisory team can map which paragraph applies and what accounts are needed.
Key takeaways
- An FPI may purchase the instruments in paragraph 1A on repatriation basis, subject to SEBI and Reserve Bank terms.
- Foreign central banks, rupee account holders and IFSC securities account holders have their own paragraphs (1D, 1E, 1F).
- FPIs pay from inward remittance or a foreign currency or SNRR account used only and exclusively for the Schedule.
- Proceeds for FPIs go abroad or to the foreign currency or SNRR account.
- Paragraphs 1E and 1F were inserted in 2023 and 2024 respectively; paragraph 1E was amended from October 01, 2025.
Read next
- NRI and OCI investment in bonds and government securities: Schedule 1
- Regulations 1 to 7 of the Debt Instruments Regulations
- SEBI FPI Regulations: foreign portfolio investors
- FPI registration process and SEBI categories
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.