The Reserve Bank of India on Thursday clarified that overseas entities owned by non-resident Indians can enjoy all the facilities available to any foreign investor, including the automatic route for foreign direct investment.
This essentially meant that even though overseas corporate bodies are banned from operating, other foreign entities will continue to enjoy all facilities.
"OCBs were a special animal created under Fera in the early 1990s to facilitate foreign exchange inflows. They were a special category enjoying the benefits of the NRIs. Now they are banned but that does not mean that other NRI-owned companies cannot operate in India," said an RBI source.
The central bank had on September 16 de-recognised OCBs in India as an eligible class of investor under various rules and schemes available for foreign investment.
RBI in a press statement on Thursday explained that derecognition of OCBs as a separate category of investor meant withdrawal of special facilities made available to OCBs.
It added that "entities owned by NRIs would continue to enjoy all the facilities available to other foreign investors."
This removes the earlier feeling among NRI companies that they were being discriminated against foreign companies.
It had been felt that the directive issued by the central bank would have affected the operations of software development centres, business process outsourcing and call centres in the country, many of which are owned by non-resident Indians through corporate entities.
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