The Reserve Bank of India (RBI) has relaxed overseas investment norms for Indian corporate by raising their borrowing limit. The RBI has enhanced the overseas direct investments(ODI) to 400 percent of a company's net worth from 100 percent for all companies.
The RBI’s notification has highlighted that any financial commitment (FC) exceeding $1 billion or its equivalent in a financial year would require prior approval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (within 400% of the net worth as per the last audited balance sheet).
Last year, RBI had reduced the ODI limit to 100 percent due to prevailing macro-economic situation mainly rupee depreciation. Rupee had depreciated to all-time low at 68.80 against the dollar August last year owing to high capital outflows by foreign institutional investors, amid concerns over the US fed tapering programme. The RBI's restriction was not applicable on public sector firms like Oil India and ONGC Videsh.