RBI doubles bank credit limit to Indian JVs, subsidiaries overseas
07 November 2006
Mumbai: The Reserve Bank of India (RBI) has doubled the limit of banks for extending credit and non-credit facilities to Indian joint ventures and wholly owned subsidiaries abroad to 20 per cent of their capital funds.
The RBI decision allows banks increase their lending to Indian joint ventures or subsidiaries for funding their overseas expansion.
The limit of 20 per cent of the unimpaired capital funds (Tier I and II capital) from the existing limit of 10 per cent would be applicable only to joint ventures where the Indian company has at least 51 per cent stake.
The decision to enhance the prudential limit was taken to facilitate the expansion of Indian corporates' business abroad, RBI said in a circular to all banks.
The RBI, in its mid-term review of annual credit policy on October 31, had said that the limit on credit and non-credit facilities extended by banks would be enhanced to 20 per cent to help Indian corporates expand their overseas business.