RBI Issues Clarifications Regarding Applicability of Revised Guidelines in Respect of ODI to Facilitate Outward Investment Requirements of the Indian Companies
Reserve Bank of India (RBI) has issued certain clarifications vide AP (DIR Series) Circular No. 30 dated September 04, 2013 with respect to the applicability of the revised guidelines in respect of Overseas Direct Investment (ODI) notified vide A.P. (DIR Series) Circular No.23 dated August 14, 2013 to facilitate genuine outward investment requirements of the Indian companies. Salient features of the same are indicated below:
(i) It is clarified that all the financial commitments made on or before August 14, 2013, in compliance with the earlier limit of 400% of the networth of the Indian Party under the automatic route will continue to be allowed. In other words, such investments shall not be subject to any unwinding or approval from the Reserve Bank.
(ii) Attention of Authorised Dealer Category - I (AD Category - I) banks is also invited to the provisions under Regulation 6 of the Notification ibid, in terms of which the limit of financial commitments for an Indian Party (presently 100% of its net worth) shall not apply to the financial commitments funded out of EEFC account of the Indian Party or out of funds raised by way of ADRs / GDRs by the Indian Party, as hitherto.
(iii) It has been decided further to retain the limit of 400% of the net worth of the Indian Party for the financial commitments funded by way of eligible External Commercial Borrowing (ECB) raised by the Indian Party as per the extant ECB guidelines issued by the Reserve Bank of India from time to time.
(iv) A table indicating queries and clarification thereto has been attached as annex for the benefit of all stakeholders with this Press Release.
(v) Necessary amendments to Notification No.FEMA.120/RB-2004 dated July 7, 2004 will be accordingly notified in due course by the Reserve Bank of India.