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RBI allows Indian cos, investors to invest in overseas funds without restrictions

Business Standard  

Investors and companies based in India will now be able to invest in overseas funds, including those set up in the United States and Singapore, without any restrictions. The move follows an amendment by the Reserve Bank of India (RBI) regarding Overseas Portfolio Investments (OPIs).The RBI has issued a circular amending the Foreign Exchange Management (Overseas Investment) Directions, 2022, lifting several restrictions. The amendments remove restrictions, which permitted Indian Limited Partners (LPs) to invest only in units issued by overseas funds. Now, investment is allowed in any instrument, regardless of its form whether in units or not. The changes do away with the condition that the investment could only be made in funds that were directly regulated by the financial regulator of the host country and not those regulated through their investment managers (IMs). Owing to the restrictions, new funds had to be set up in jurisdictions such as Cayman Islands and Mauritius to ensure that investments from Indian LPs would be possible. Additionally, the regulatory change will also give General Partners the flexibility to establish their funds in commercially favorable jurisdictions without having to worry about whether Indian investments would be permitted.