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Financing of acquisition of equity in overseas companies

RBI has decided on 7th June 2005, to allow banks to extend financial assistance to Indian companies for acquisition of equity in overseas joint ventures/wholly owned subsidiaries or in other overseas companies, new or existing, as strategic investment, in terms of a Board approved policy, duly incorporated in the loan policy of the bank. Such policy should include overall limit on such financing, terms and conditions of eligibility of borrowers, security, margin, etc.

3. While the Board may frame its own guidelines and safeguards for such lending, such acquisition(s) should be beneficial to the company and the country.

4. The finance would be subject to compliance with the statutory requirements under Section 19(2) of the Banking Regulation Act, 1949.

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