Mumbai: The Reserve Bank of India had on Tuesday announced measures to reduce foreign exchange outflows by resident Indians in the latest of a slew of measures intended to support the battered rupee. "The present set of measures is aimed at moderating outflows," the RBI said in a statement.
The central bank cut the limit for overseas direct investments (ODI) under the automatic route for all new transactions by 75 per cent. The RBI added the reduced limit would also apply to remittances made by Indian companies setting up unincorporated entities outside of the country in the energy and natural resources sectors, but would not apply to ONGC Videsh Ltd, the foreign unit of Oil and Natural Gas Corp, or Oil India Ltd.
The central bank also reduced the limit for remittances made by resident individuals under the liberalised remittance scheme to $ 75,000 from $ 200,000 per financial year. The RBI also said use of remittances for purchases of property outside India would not be allowed.
Here's the statement issue by the Reserve Bank of India:
Keeping in view the current macroeconomic situation, the Reserve Bank of India has today announced the following measures:
(i) Reduced the limit for Overseas Direct Investment (ODI) under automatic route for all fresh ODI transactions, from 400% of the net worth of an Indian Party to 100% of its net worth. This reduced limit would also apply to remittances made under the ODI scheme by Indian Companies for setting up unincorporated entities outside India in the energy and natural resources sectors. This reduction in limit, however, would not apply to ODI by Navratna PSUs, ONGC Videsh Limited and Oil India in overseas unincorporated entities and incorporated entities, in the oil sector.
(ii) Reduced the limit for remittances made by Resident Individuals, under the Liberalised Remittance Scheme (LRS Scheme), from USD 200,000 to USD 75,000 per financial year. Resident Individuals have, however, now been allowed to set up Joint Venture (JV)/Wholly Owned Subsidiary (WOS) outside India under the ODI route within the revised LRS limit.
(iii) While current restrictions on the use of LRS for prohibited transactions, such as, margin trading and lottery would continue, use of LRS for acquisition of immovable property outside India directly or indirectly will, henceforth, not be allowed.
The present set of measures is aimed at moderating outflows. However, any genuine requirement beyond these limits will continue to be considered by RBI under the approval route.
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