Our Bureau

Mumbai, Sept. 7

Indian entities in the financial sector investing directly in overseas ventures engaged in financial and non-financial activities have to obtain approvals from domestic and foreign regulators, according to an RBI notification. The Indian entity should be registered with the regulatory authority in India.

The domestic entity is also required to earn a net profit during the preceding three financial years and fulfil capital adequacy norms as laid down by the regulators.

Indian entities setting up joint ventures or wholly owned subsidiaries for trading in overseas commodities exchanges would require clearance from the Forward Markets Commission.

Trading on the commodities exchanges will be considered as a financial activity.

Unregulated Indian entities (those which do not report to any regulator) engaged in financial services may invest in overseas non-financial sector activity through a joint venture or wholly owned subsidiary.

The investment shall not exceed 100 per cent of the net worth of the Indian company.

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(This article was published in the Business Line print edition dated September 8, 2006)
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