Indian parties can invest overseas with greater ease

The Reserve Bank of India (RBI), through circulars issued on 28 March and 2 April, has liberalized its policy to better facilitate Indian investments overseas. The RBI has amended the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2004, as follows:

1. A charge may be created on the movable and immovable property and other financial assets of Indian parties and their group companies with prior approval from the RBI, provided these entities obtain a “no objection” from their Indian lenders. The charge created will be considered within the overall permitted limit (presently 400% of the net worth) for Financial Commitment;
2. Bank guarantees issued by a resident bank on behalf of an overseas joint venture (JV) or wholly owned subsidiary (WOS) of an Indian party which is backed by a counter guarantee or collateral by the Indian party, will be used to calculate the financial commitment of the Indian party and will be reported accordingly;

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   The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.