RBI cuts overseas investment cap to keep outflows under check

Central bank has also reduced remittance cap for resident individuals, under LRS from $200,000 to $75,000 per financial year

The central bank has drastically cut overseas investment caps for companies and individuals to keep the rupee under check.

The Reserve Bank of India (RBI) has said the limit for overseas direct investment (ODI) under the automatic route from all fresh transactions is reduced to 100% of networth from 400% earlier.

The new limit will also apply to remittance made by Indian companies, barring  navratna public sector undertakings (PSUs)--ONGC Videsh and Oil India, setting up unincorporated entities outside India in the energy and natural resources sectors, the central bank said.

RBI has also reduced remittance cap for resident individuals, under the liberalised remittance scheme (LRS) from $200,000 to $75,000 per financial year.

Resident Individuals have, however, now been allowed to set up joint venture (JV) and wholly owned subsidiary outside India under the ODI route within the revised LRS limit, RBI has said,

“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,” it further said.


RBI said these new set of measures were aimed at moderating outflows and it will continue to consider genuine requirement under the approval route.