RBI introduces more capital control measures to defend rupee

Central bank has reduced limit for ODI by domestic companies under automatic route to 100%

As a part of its fight to prop up the battered rupee, Reserve Bank today unveiled a slew of measures aimed at curbing forex outflows.

While the measures are aimed at moderating outflows, RBI added that genuine requirement beyond these limits will continue to be considered under the approval route.

The central bank has reduced the limit for overseas direct investment (ODI) by domestic companies under automatic route from 400% of the net worth to 100%.

"This reduced limit will also apply to remittances made under the ODI scheme by domestic companies for setting up unincorporated entities overseas in the energy and natural resources sectors," the apex bank said.

It said the reduction will not apply to ODIs by Navratna PSUs, ONGC Videsh and Oil India in overseas unincorporated entities and incorporated entities.

The RBI also reduced the limit for remittances made by resident individuals under the liberalised remittances scheme (LRS) from USD 2 lakh to USD 75,000 a year. Resident individuals are however, allowed to set up joint ventures/ wholly-owned subsidiaries outside under the ODI route within the revised LRS limit.

The RBI also said while the new curbs on the use of LRS for prohibited transactions like margin trading and lottery will continue, use of LRS for acquisition of immovable property outside directly or indirectly will, henceforth, not be allowed.