RBI eases overseas investment norms

Highlights

Relaxing the recent curbs on the outward investments, Reserve Bank on Wednesday said that a company will...

Relaxing the recent curbs on the outward investments, Reserve Bank on Wednesday said that a company will be allowed to invest up to 400 per cent of its net worth provided it has raised the funds through external commercial borrowings (ECBs).

RBI also clarified that the curbs on capital outflows imposed on August 14 will not apply with retrospective effect.
“It has been decided further to retain the limit of 400 per cent of the net worth of the Indian party for the financial commitments funded by way of eligible ECB raised by the Indian party as per the extant ECB guidelines issued by the RBI from time to time,” said the central bank in clarifications on its last month’s Overseas Direct Investment (ODI) guidelines.
Clarifications on outbound investments come on a day when RBI Governor D. Subbarao demits office after completing five years in office. Last month, RBI had reduced the overseas direct investment limit to 100 per cent of a company’s net worth from 400 per cent for all companies.
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