As announced by Finance Minister Jaswant Singh, Reserve Bank of India has notified a slew of measures, including retention of funds raised through American/Global Depository Receipts by Indian companies, saying that these relaxations will be effective till June 30, 2003, subject to a review.
The apex bank, notifying the regulations following Singh's announcement towards capital account convertibility at the NRI convention last week, said Indian entities may retain abroad funds raised through ADRs/GDRs for any period to meet their future forex needs.
Further, pending repatriation or utilisation of foreign resources raised, the entity may invest these funds in deposits or certificate of deposit or other products offered by banks who have been rated not less than AA(-) by Standard and Poor/Fitch IBCA or Aa3 by Moody's.
They can also place the amount in deposits with a branch outside India of an authorised dealer in India; and treasury bills and other monetary instruments of one year maturity having the minimum rating.
The corporates would be required to report the details of such funds raised and retained abroad within 30 days from the date of closure of the issue.
On corporates raising External Commercial Borrowings, RBI said they may retain the funds abroad in a bank account for their future requirements subject to certain conditions. The account should be closed as soon as forex requirements were met and unspent balance should be repatriated immediately.
RBI said the conditions include payment to overseas supplier, if any, has to be made against import documents like Bill of Lading/Airway Bill. Deposits held abroad should not be utilised for any fund based or non-fund based facilities in India, it added.
Referring to remittances of assets of foreign nationals, the apex bank has removed the present dispensation of permitting different amounts for various purposes and enhanced the overall limit to $1 million per calendar year.
Accordingly, authorised dealers can remit upto $1 million, out of balances held in non-resident ordinary accounts/sale proceeds of assets, on production of an undertaking and certificate by a person making the remittance.
The existing prohibition regarding repatriation of assets to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Iran, Afghanistan, Nepal and Bhutan shall continue.
RBI has also decided to remove the limit of $20,000 for purchase of foreign securities by resident individual.
Accordingly, remittances for acquisition of foreign securities under ESOP scheme may be permitted by ADs as per the terms of offer without any monetary limit.
The apex bank said it would now also permit Indian corporates who have set up overseas offices to acquire immovable property outside India for their business as also staff residential purposes with the prior permission of the apex bank.
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