# Schedule I – Permissible Capital Account Transactions for Persons Resident in India

## Source

Issued under the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, framed under Section 6(2) of FEMA.

## The 11 Permissible Classes (Schedule I)

#	Transaction
(a)	Investment by a person resident in India in foreign securities
(b)	Foreign currency loans raised in India and abroad by a person resident in India
(c)	Transfer of immovable property outside India by a person resident in India
(d)	Guarantees issued by a person resident in India in favour of a person resident outside India
(e)	Export, import and holding of currency/currency notes
(f)	Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India
(g)	Maintenance of foreign currency accounts in India and outside India by a person resident in India
(h)	Taking out of insurance policy by a person resident in India from an insurance company outside India
(i)	Loans and overdrafts by a person resident in India to a person resident outside India
(j)	Remittance outside India of capital assets of a person resident in India
(k)	Undertake derivative contracts

## How to Read Schedule I

These transactions are permissible — but each is subject to the limit, terms and conditions specified in the specific regulation governing that transaction.
A transaction listed here is permitted; transactions not listed require specific prior approval of RBI/Central Government.

## Memory Aid – "What can a Resident do?"

INVEST · BORROW · LEND · TRANSFER · MAINTAIN · GUARANTEE · INSURE · DERIVE

Invest abroad (a)
Borrow abroad (b, f)
Lend abroad (i)
Transfer immovable property abroad (c)
Maintain foreign accounts (g) and currency (e)
Guarantee for non-residents (d)
Insure from foreign insurers (h)
Derivatives (k)
Remit capital assets (j)

## Important Caveat – Section 6(2) Proviso

Even for these permitted transactions, no restriction can be imposed on drawal of foreign exchange for:

amortisation of loans, OR
depreciation of direct investments in ordinary course of business.

Worked example

### Example 1

Example 1: Mr. A, resident in India, wishes to take a foreign currency loan of USD 2 million from a US bank for business expansion. Is this permitted?

Answer: This falls under Schedule I item (b) — Foreign currency loans raised in India and abroad by a person resident in India — and item (f) — Loans/overdrafts from a person resident outside India. It is a permissible capital account transaction, subject to limits/conditions of the specific ECB (External Commercial Borrowings) regulations.

### Example 2

Example 2: A resident HUF wants to invest in shares of a listed US company. Is this permitted under Schedule I?

Answer: Yes, this is covered under Schedule I item (a) — Investment by a person resident in India in foreign securities. However, note that LRS is not available to HUFs, so the route and conditions under the relevant Overseas Investment regulations must be followed.

### Example 3

Example 3: Mr. B, resident in India, wishes to give a corporate guarantee to a foreign supplier on behalf of his subsidiary in Singapore. Is this permitted?

Answer: Yes — Schedule I item (d) — Guarantees issued by a person resident in India in favour of a person resident outside India. Subject to the specific regulations on guarantees.

⚠️ Common exam mistakes

Treating Schedule I as an exhaustive 'free-to-do' list — every item is still subject to limits, terms, and conditions of the relevant regulation.
Confusing Schedule I (residents) with Schedule II (non-residents) — keep the lists separate.
Missing that both 'investment' (item a) and 'derivatives' (item k) are separately listed — derivatives are a distinct permissible class.
Forgetting that insurance from a foreign insurer (item h) is itself a capital account transaction, not merely a current account expense.
Assuming a transaction not appearing in Schedule I is automatically prohibited — it actually requires specific prior approval, not blanket prohibition.

Bare-Act text Schedule I to FEM (Permissible Capital Account Transactions) Regulations, 2000 · Foreign Exchange Management Act, 1999 / FEM (PCAT) Regulations, 2000 · click to expand

SCHEDULE I — Classes of capital account transactions of persons resident in India: (a) Investment by a person resident in India in foreign securities; (b) Foreign currency loans raised in India and abroad by a person resident in India; (c) Transfer of immovable property outside India by a person resident in India; (d) Guarantees issued by a person resident in India in favour of a person resident outside India; (e) Export, import and holding of currency/currency notes; (f) Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India; (g) Maintenance of foreign currency accounts in India and outside India by a person resident in India; (h) Taking out of insurance policy by a person resident in India from an insurance company outside India; (i) Loans and overdrafts by a person resident in India to a person resident outside India; (j) Remittance outside India of capital assets of a person resident in India; (k) Undertake derivative contracts.

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Permissible Capital Account Transactions – Schedule I (Residents)

Worked example

⚠️ Common exam mistakes