RBI eases restrictions on capital outflows

Also allows Indian companies more discretion to raise funds.

The Reserve Bank of India, the central bank, yesterday partially relaxed some of the restrictions imposed last month on capital outflows from residents. This includes allowing Indian companies more leeway if they are raising funds via external commercial borrowings (ECBs). Companies raising ECBs will be allowed to invest up to 400% of their net worth abroad. RBI in August reduced the overseas direct investment limit to 100% of a company's net worth for all companies, except for a few state-run firms. It also said the restriction of 100% of net worth shall not apply to financial commitments funded out of exporters' forex account or if funds are raised via either American or global depositary receipts. RBI also clarified that overseas direct investment limits would not be applicable on commitments made on or before August 14.