Mumbai: Encouraged by comfortable forex reserves, Reserve Bank Monday relaxed the norms for Indian companies investing abroad by doing away with the ceiling for raising funds through pledge of shares, domestic and overseas assets.
"It has been decided that banks may permit creation of charge pledge on the shares of the JV/WOS... (irrespective of the level) of an Indian party in favour of a domestic or overseas lender for securing the funded or non-funded facility...Under the automatic route," RBI notification said while modifying the Overseas Direct Investments norms.
Earlier, the fund raising for the purpose of overseas investment by Indian companies were subject to various limitations.
In addition to joint ventures (JVs) and Wholly Owned Subsidiaries (WOSs), the RBI has announced similar concession for pledging of shares in case of step down subsidiary.
"The matter relating to the setting up or acquiring the multi-layered structure of overseas entities by the Indian party, wherever applicable, is under the examination of the Reserve Bank and the decision taken in this regard will be conveyed in due course for necessary compliance at Indian party level," it said.
India's foreign exchange reserves in the week to December 19 surged by a whopping USD 3.163 billion to USD 319.997 billion on the back of a massive jump in foreign currency assets.
Last week, reserves had increased by USD 2.172 billion to USD 316.833 billion, RBI data showed.
In the week to July 25, 2014, the reserves had touched USD 320.56 billion, an inch away from the life-time high of USD 320.79 billion on September 2, 2011.
