RBI further relaxes Forex Rules
RBI further relaxes Forex Rules The Reserve Bank of India (RBI), on Tuesday (September 25), further relaxed the rules for overseas investment and loan repayment norms for companies, individuals and mutual funds. The eased norms will encourage more outflows and is a step towards capital account convertibility. According to the new norms, ceiling on investments on overseas joint ventures and wholly owned subsidiaries by Indian companies has been raised to 400% of the net worth of the Indian company. This enhanced limit for the first time will also be applicable for partnership firms. Listed companies can now invest 50% of the net worth as against 35% for portfolio investments abroad. Further, the requirement of 10% reciprocal share holding in Indian company by that overse as company has been removed. The repayment of external commercial borrowings (ECBs) without RBI consent has been enhanced from USD 400 million to USD 500 million, subject to compliance with the minimum average maturity period. Mutual Funds can invest overseas an aggregate of USD 5 billion against earlier limit of USD 4 billion. The existing limit under liberalized remittance scheme (LRS) is being enhanced from USD 100,000 to USD 200,000 per financial year. The above measures have been taken to accelerate the implementation of the third phase of the recommendations of the Committee on Fuller Capital Account Convertibility (CFCAC) with regards to the foreign exchange outflows, said RBI in a release.
