Overseas FDI rules eased
The new overseas investment norms notified on Monday night have relaxed the rules for India Inc. The Foreign Exchange Management (Overseas Investment) Rules, 2022, has made it tougher for defaulters and others being probed by investigative agencies and regulators to shift funds out of the country.
Clarity on overseas direct investment and overseas portfolio investment has been brought in and various overseas investment-related transactions that were earlier under the approval route are now under the automatic route, a government release said.
No Indian resident shall be allowed to make investments in foreign entities that are engaged in real estate activity, gambling in any form and dealing with financial products linked to the Indian rupee without the central bank’s specific approval.
Alleged bank defaulters and fraudsters must secure a no objection certificate (NOC) from their lender or concerned regulators and investigative agencies before making any ‘‘financial commitment’’ abroad. This NOC shall be mandatory for any person who has a bank account classified as an NPA or is labelled a wilful defaulter by any bank or is under investigation by a financial regulator, the ED or the CBI.
This will make it difficult for bank defaulters and fraudsters to acquire assets abroad, often as a precursor to leaving the country. Atul Pandey, partner at Khaitan & Co, said: “A new concept of portfolio investment has been introduced for investment in listed securities which would involve minimal compliances.”