RBI makes sweeping changes in overseas direct investment

New Delhi, June 15 (UNI) In a major liberalisation of overseas direct investment, the the Reserve Bank of India (RBI) announced that 300 per cent of the net worth of a company can be used for overseas investment.

Till date the overseas investment of an Indian party, in all its Joint Ventures (JVs) and/or Wholly Owned Subsidiaries (WOSs) abroad engaged in any bonafide business activity, could not exceed 200 per cent of its net worth.

In what can be seen as a major fillip to the acquistion aspirations of Indian companies, the order will provide greater flexibility to Indian parties (companies incorporated in India or created under an Act of Parliament) for investments abroad by enhancing investment upto 300 per cent of the net worth.

However, the limit applicable to registered partnership firms for overseas investment will continue to be 200 per cent of their net worth, RBI said in a statement.

Accordingly, AD Category -I banks may allow overseas investments under the Automatic Route up to 300 per cent of the net worth of the Indian party (other than registered partnership firms), as on the date of the last audited balance sheet.

MORE UNI