Proprietary cos’ offshore investment capped at 10% of exports
MUMBAI: The Reserve Bank today reviewed rules for foreign investment by proprietary companies and partnerships, introducing caps on such investments among other measures.
The amount to be invested should not exceed 10 per cent of the average of last three years’ export realisation or 200 per cent of the net-owned funds of the entity, whichever is less, the RBI said in a notification.
The entity should be classified as a ‘status holder’ as per the Foreign Trade Policy. It should also have a proven track record wherein the export outstanding does not exceed 10 per cent of the average export realisation of the preceding three years and should also have a consistently high export performance, the regulator said.
The entity should not have come under adverse notice of any law enforcement agencies like the Directorate of Enforcement, Central Bureau of Investigation and the Income Tax Department.
It should not appear in the exporters’ caution list of the Reserve Bank or in the list of defaulters to the banking system in the country, the notification said.
Apart from this, an authorised dealer bank should also ensure that the entity is KYC compliant and is engaged in the proposed business and has turnover as indicated, the RBI said.
