The Reserve Bank of India (RBI), on Tuesday, decided to accelerate the implementation of third phase of the recommendations of Committee on Fuller Capital Account Convertibility (CFCAC) regarding foreign exchange outflows.
The implement is being done in consultation with the Centre, on a review of the current macro economic situation in the country, said RBI in a release. Accordingly, Investment in overseas Joint Ventures or Wholly Owned Subsidiaries (WOS) by Indian companies will now be permitted up to 400 per cent of the net worth of Indian company under the automatic route.
The enhanced limit will also be available to registered partnership firms. Secondly, in order to provide greater opportunities to listed Indian companies for portfolio investment abroad, the existing limit of 35 per cent of the net worth for portfolio investments by listed companies is being increased to 50 per cent of the net worth.
Portfolio investment
Also, requirement of 10 per cent reciprocal share holding in listed Indian companies by overseas companies for the purpose of portfolio investment outside the country by Indian listed companies has been dispensed with. The existing limit for prepayment of External Commercial borrowings (ECBs) without RBI approval is being increased from $400 million to $500 million, subject to compliance with minimum average maturity period as applicable to the loan. The aggregate ceiling for overseas investments by mutual funds, registered with Sebi is being increased from $4 billion to $5 billion.
