RBI raises banks' limit to extend credit to JVs

Reserve Bank of India has allowed banks to increase their lending to Indian joint ventures or subsidiaries for funding their overseas expansion.

RBI doubled the limit of banks for extending credit and non-credit facilities to Indian JVs and wholly-owned subsidiaries abroad to 20 per cent of their capital funds.

The decision to enhance the prudential limit was taken to facilitate the expansion of Indian corporates' business abroad, the central bank said in a circular to all banks.

The limit of 20 per cent of the unimpaired capital funds (Tier I and II capital) from the existing limit of 10 per cent would be applicable only to JVs where the Indian company has at least 51 per cent stake.

RBI said in its mid-term review of annual credit policy statement on October 31, it had said that the limit on credit and non-credit facilities extended by banks would be enhanced to 20 per cent to help Indian corporates expand their overseas business.

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