RBI Eases Norms On FDI By Firms For Ops Flexibility.

The Reserve Bank of India (RBI) on Friday relaxed norms for Indian companies’ foreign direct investments by allowing listed companies to write-off up to 25% of their stake in overseas joint ventures and wholly owned subsidiaries while restructuring balance sheets of such ventures and subsidiaries.

The RBI said unlisted companies can also write-off 25% of their stake while restructuring the balance sheets of joint ventures or subsidiaries but only with prior approval from the central bank.
It also allowed companies to issue guarantees to a first level operating subsidiary of a wholly owned subsidiary, irrespective of whether the subsidiary is a special purpose vehicle or an operating company.

Earlier, guarantees were allowed only if the wholly owned subsidiary was a special purpose vehicle.

In 2006, the RBI had allowed companies to divest their stake in overseas joint ventures and wholly owned subsidiaries involving write-offs without prior approval, but with riders.

Companies could divest their stake only if the overseas joint ventures and wholly owned subsidiaries were listed on stock exchanges, the Indian company had a net worth of up to Rs100 crore if it was listed, and an unlisted Indian company’s stake in the overseas venture did not exceed $10 million.

Source : dnaindia.com