RBI relaxes various norms on overseas direct investments

The Reserve Bank of India has relaxed various norms on overseas direct investments to offer more flexibility to the Indian companies and individuals. The RBI said in a notification that proposals from the Indian party for creation of charge in the form of pledge or mortgage on the immovable or movable property and other financial assets may be considered by it. On bank guarantee for computation of financial commitment, the RBI said, the bank guarantee issued by a resident bank on behalf of an overseas Joint Venture of the Indian party, which is backed by a counter guarantee or collateral, shall be reckoned.

Keeping in view the nature of the compulsorily convertible preference shares (CCPS), the RBI said, CCPS shall be treated at par with equity shares and the Indian party is allowed to undertake financial commitment. Meanwhile, the RBI also relaxed various norms overseas investments by resident individuals as well.