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.
Paragraphs 1B and 1C of Schedule 1 give Non-resident Indians (NRIs) and Overseas Citizens of India (OCIs) two routes into Indian debt: on a repatriation basis, where net sale proceeds may be taken abroad, and on a non-repatriation basis, where they stay in India. Paragraphs 2 and 4 say how the money comes in and where it goes out.
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 NRI or OCI may, without limit, purchase listed instruments on repatriation basis (paragraph 1B) and on non-repatriation basis (paragraph 1C). Repatriation-basis purchases are paid from inward remittance or NRE or FCNR(B) funds, and non-repatriation purchases from NRE, FCNR(B) or NRO funds. Non-repatriation proceeds are credited to the NRO account.
Authority
The Regulations rest on "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. Under regulation 2, an NRI is an individual resident outside India who is a citizen of India, and an OCI is an individual resident outside India registered as an Overseas Citizen of India Cardholder under section 7(A) of the Citizenship Act, 1955. The income-tax side of NRI investing is a separate subject; see our NRI tax filing service and income-tax guides.
Paragraph 1B: repatriation basis
Under paragraph 1B(1), an NRI or OCI may, without limit, purchase on repatriation basis:
- Government dated securities (other than bearer securities), treasury bills, or units of domestic mutual funds or Exchange-Traded Funds that invest less than or equal to 50 percent in equity;
- bonds issued by a Public Sector Undertaking in India;
- bonds issued by Infrastructure Debt Funds; and
- listed non-convertible or redeemable preference shares or debentures issued in terms of regulation 6 (bonus debt on mergers).
Paragraph 1B(2) lets an NRI or OCI purchase, on repatriation basis, debt instruments issued by banks that are eligible for inclusion in regulatory capital. Paragraph 1B(3) lets an NRI subscribe to the National Pension System governed and administered by the Pension Fund Regulatory and Development Authority, provided the person is eligible under the PFRDA Act; the annuity or accumulated saving "will be repatriable". A proviso allows NRIs and OCIs to offer such instruments as the Reserve Bank permits from time to time as collateral to the recognised stock exchanges for exchange traded derivative contracts under regulation 5(2).
Paragraph 1C: non-repatriation basis
| Sub-paragraph | What an NRI or OCI may do, without limit, on non-repatriation basis |
|---|---|
| 1C(1) | Purchase dated Government securities (other than bearer securities), treasury bills, units of domestic mutual funds or Exchange-Traded Funds that invest less than or equal to 50 percent in equity, or National Plan or Savings Certificates |
| 1C(2) | Purchase listed non-convertible or redeemable preference shares or debentures issued in terms of regulation 6 |
| 1C(3) | Subscribe to chit funds authorised by the Registrar of Chits or an officer authorised by the State Government |
Paragraph 2: how they pay
- 2(2), repatriation basis: out of inward remittances from abroad through banking channels, or out of funds in an NRE or FCNR(B) account kept under the Deposit Regulations, 2016.
- 2(3), non-repatriation basis and NPS: for purchases by NRIs or OCIs on non-repatriation basis, and for National Pension System subscriptions by NRIs, out of inward remittances from abroad through banking channels, or out of funds in an NRE, FCNR(B) or NRO account.
Paragraph 4(2): where proceeds go
Paragraph 4(2) says the net sale or maturity proceeds (net of taxes) of instruments held by NRIs or OCIs may be:
- credited to the NRO account of the person concerned, where the instruments were held on non-repatriation basis;
- credited to the NRO account of the person concerned, where the payment for the purchase of the instruments sold was made out of funds held in the NRO account; or
- remitted abroad or, at the NRI or OCI investor's option, credited to his or her NRE, FCNR(B) or NRO account, where the instruments were purchased on repatriation basis.
Paragraph 3 adds that a person resident outside India who purchased instruments in accordance with the Schedule may sell or redeem them, on terms the Reserve Bank and the Securities and Exchange Board of India specify.
A line to read carefully
Paragraph 4(2) turns on how the instrument was bought and which account paid for it. A purchase on repatriation basis can be remitted abroad; one on non-repatriation basis goes to the NRO account; and where payment for the purchase came from the NRO account, the proceeds again go to the NRO account. The Regulations do not say a repatriation-basis purchase can be paid from an NRO account: paragraph 2(2) lists only inward remittance and NRE or FCNR(B) funds for that basis.
Example
Sunil Bhardwaj, an invented NRI, buys dated Government securities on repatriation basis by paying from his NRE account (paragraph 1B(1), paragraph 2(2)). When the securities mature, the net proceeds can be remitted abroad, or credited at his option to his NRE, FCNR(B) or NRO account (paragraph 4(2)). His cousin, an OCI, buys treasury bills on non-repatriation basis out of his NRO account (paragraphs 1C(1) and 2(3)). On sale, the net proceeds are credited to his NRO account, since the instruments were held on non-repatriation basis. If an NRI wants to subscribe to the National Pension System, paragraph 1B(3) makes the annuity or accumulated saving repatriable, and paragraph 2(3) allows payment from NRE, FCNR(B) or NRO funds.
The NRE, NRO and FCNR accounts themselves are in the Deposit Regulations, 2016 and the Deposits and Accounts Master Direction; see our articles on NRE and FCNR(B) accounts and the NRO account. For what NRIs may buy more broadly, see our guide on NRI investment in India. The foreign portfolio investor paragraphs are in the previous article.
Amendments and circulars after October 01, 2025 should be checked.
Need help with NRI investments?
Choosing between repatriation and non-repatriation basis fixes where the money can go later. Our NRI tax filing team looks at the account route and the tax filing together.
Key takeaways
- NRIs and OCIs may, without limit, buy the paragraph 1B instruments on repatriation basis and the paragraph 1C instruments on non-repatriation basis.
- Paragraph 1B(3) allows NRIs to subscribe to the National Pension System; the annuity or saving is repatriable.
- Repatriation-basis purchases are paid from inward remittance or NRE or FCNR(B) funds; non-repatriation purchases also from NRO funds.
- Non-repatriation and NRO-funded proceeds go to the NRO account.
- Repatriation-basis proceeds can be remitted abroad or credited to NRE, FCNR(B) or NRO at the investor's option.
Read next
- FPIs and other foreign investors in debt: Schedule 1
- Regulations 1 to 7 of the Debt Instruments Regulations
- NRI accounts: NRE, NRO and FCNR
- How to determine NRI residential status
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.