16.8.13

Dollar Crunch

The Reserve Bank of India rolled out the big guns in a bid to protect the rupee. It tightened the limit for how much individuals and companies can invest abroad without seeking permission and banned the import of gold coins and medallions.
Companies will now have to seek RBI permission if they want to invest any amount beyond their net worth abroad. Investment in oil and gas exploration and those by navratna PSUs are the sole exception to the new rule. So far, companies were allowed to invest up to four times their net worth.
Similarly, for individuals, the annual cap on automatic outflows has been slashed from $200,000 (over Rs 1.2 crore at current exchange rate) to $75,000 (around Rs 45 lakh). Besides, there is now a ban on overseas real estate purchases. At $1.2 billion during the last financial year, outflows under this route, known as the Liberalized Remittance Scheme, were a tiny fraction of money going out of the country, finance ministry officials said the move was meant to signal that the government is serious about preventing a free fall of the rupee.

DOLLAR CRUNCH
FOR INDIVIDUALS
Annual limit under Liberalized Remittance Scheme cut from $200,000 to $75,000 per individual This can’t be used to buy immovable property overseas, such purchases now need RBI nod Even gifts to relatives abroad can’t exceed $75,000, unless RBI clears them
FOR COMPANIES
Companies will now need RBI nod to invest overseas beyond 100% of their net worth. Earlier limit was 400% Navratna PSUs, oil and gas exploration exempted
FOR GOLD
Ban on import of coins and medallions. Import norms, for export and jewellery included, tightened further.

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