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RBI doubles the limit of the banks to extend credit to Indian JVs abroad

In April, 2003 Indian banks were permitted to extend credit/non-credit facilities to Indian Joint Ventures (JVs)/Wholly Owned Subsidiaries (WOS) abroad up to the extent of 10 per cent of their unimpaired capital funds (Tier I and Tier II), subject to certain conditions.

Reserve Bank of India (RBI) has on 6th November 2006, enhanced the prudential limit on credit and non-credit facilities extended by banks to Indian Joint Ventures (where the holding by the Indian company is more than 51%)/Wholly Owned Subsidiaries abroad from the existing limit of 10 per cent to 20 per cent of their unimpaired capital funds (Tier I and Tier II capital).

This enhancement of funded and non funded credit facilities to Ventures abroad with more than 51 percent holding by Indian companies, will facilitate the expansion of Indian corporate business globally.

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