# Prohibited CAT for PRI — Restrictions with North Korea

## The Rule

A Person Resident in India (PRI) shall NOT undertake any Capital Account Transaction with a citizen of North Korea (DPRK) unless approved by the Central Government (CG).

## Key Points

This is a complete prohibition for ordinary cases.
The transaction becomes permissible only with prior approval of the Central Government.
It is a sanctions-driven restriction reflecting India's compliance with international obligations.

## Where it sits in the framework

```

CAT for PRI

-------------------------------------------------

| |

Schedule II Prohibited CAT for PRI

(permissible list) (e.g., dealings with DPRK citizen

without CG approval)

```

## Practical Significance

Even if a transaction would otherwise be permitted under Schedule II (for PRI), if the counter-party is a citizen of North Korea, the transaction stands prohibited without specific CG approval.

Worked example

### Example 1

Example 1: Mr. A, a resident Indian, wishes to acquire equity shares in a company in Pyongyang owned by a North Korean citizen. → Prohibited unless prior approval of the Central Government is obtained.

### Example 2

Example 2: Mr. B, a PRI, wishes to lend money (capital nature) to his friend who is a citizen of North Korea. → Prohibited without CG approval, irrespective of the friend's current country of residence.

⚠️ Common exam mistakes

Assuming RBI approval is sufficient — it is the Central Government (not RBI) whose approval is required for transactions with DPRK citizens.
Thinking the prohibition applies only to residents of North Korea — it applies to citizens of North Korea wherever residing.
Forgetting that this prohibition overrides Schedule II permissibility.

Bare-Act text Regulation 4 read with Schedule II · FEM (Permissible Capital Account Transactions) Regulations, 2000 · click to expand

A person resident in India shall not undertake any capital account transaction with a person who is a citizen of the Democratic People's Republic of Korea (DPRK) unless specifically approved by the Central Government.

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Prohibited CAT for PRI - Transactions with Citizens of North Korea / DPRK

Worked example

⚠️ Common exam mistakes