Corporates can invest ventures up to 100% of their net worth

Mumbai: As part of the latest relaxation in capital account transactions announced by Finance Minister Jaswant Singh in Budget 2003-04, corporates can now make such investment even if it is not in the area of the core activity they are engaged in, Reserve Bank of India (RBI) has said.

Corporates will also be permitted to invest in such ventures up to 100 per cent of their net worth from only 50 per cent earlier. Till now, Indian corporates were permitted to invest under the automatic route in an overseas joint venture, or a wholly owned subsidiary engaged in the same core activity, which constituted at least 50 per cent of its average turnover.

Prepayment of external commercial borrowings (ECBs) under the automatic route has also been permitted without any limit by removing the current ceiling of $100 million. Earlier, any prepayment out of market purchases beyond $100 million required the prior approval of the RBI.

The RBI has said this facility will be available until further notice, subject to review.