This Article is From Jul 03, 2014

RBI Restores Overseas Investment Limit

The Reserve Bank of India (RBI) on Thursday restored the overseas investment limit of Indian companies to 400 percent of the firm's net worth after the rupee rebounded from last year's record low levels against the dollar.

Last August, the RBI cut the overseas investment limit for companies to 100 percent of their net worth from 400 percent, in a move to curb dollar outflows and stem the rupee's slide.

Any foreign investment worth more than 100 percent of a company's value required the central bank's approval.

The restriction on capital outflow was seen as delaying overseas acquisitions and investment plans by India Inc at a time when many companies are scouting markets abroad to beat the domestic economic slowdown.

On Thursday, the central bank said it had decided to restore the limit of overseas investments to the limit prevailing before August 2013.

But any investment exceeding $1 billion in a financial year will need the prior approval of the Reserve Bank of India, it added.

Copyright: Thomson Reuters 2014