The Reserve Bank of India has today issued certain clarifications with respect to the applicability of the revised guidelines in respect of overseas direct investment notified on August 14, 2013 to facilitate genuine outward investment requirements of the Indian companies. The clarifications/answers to the queries raised by different stakeholders are contained in its AP/Dir Circular No. 30 Dated September 04, 2013. Among others, it has been clarified that in respect of funding of overseas direct investments by way of External Commercial Borrowings, instead of limit of 100 per cent of the net worth, the earlier limit of 400 per cent of the net worth will continue to apply.

It may be noted that the Reserve Bank of India had announced the revised guidelines for overseas direct investment by Indian parties on August 14, 2013. This measure had been taken in the context of current macro-economic situation. It was not the intention of the Reserve Bank of India to restrict bona-fide and genuine overseas direct investment transactions by Indian companies.

Alpana Killawala

Principal Chief General Manager

External commercial borrowings funding limit maintained, preserving prior higher net worth ceiling for overseas direct investment. The Reserve Bank confirmed in AP/Dir Circular No.30 that funding of overseas direct investments by way of External Commercial Borrowings will continue to be subject to the earlier limit of 400 per cent of net worth rather than the revised 100 per cent ceiling, addressing stakeholder queries arising from the August 14, 2013 guidelines revisions.