Prior approval of RBI is not mandatory for transfer of Capital instruments from resident to non-residents by way of sale. Comment.

The statement, 'prior approval of RBI is not mandatory for transfer of capital instruments from resident to non-residents by way of sale' is incorrect in certain circumstances. Prior approval of RBI is required for Transfer of capital instruments from resident to non-residents by way of sale where: Transfer is at a price which falls outside the pricing guidelines specified by the Reserve Bank from time to time. Transfer of capital instruments by the non-resident acquirer involving deferment of payment of the amount of consideration. Further, in case approval is granted for a transaction, the same should be reported in Form FC-TRS to an AD Category-I bank for necessary due diligence, within 60 days from the date of receipt of the full and final amount of consideration.