Finance Minister P Chidambaram tonight said the steps announced by RBI to curb investment by Indian companies abroad should not be "overinterpreted" as a "capital control" measure on corporates and that the apex bank will revisit it at an appropriate time.
"The RBI circular(on overseas direct investments) should not be overinterpreted as a capital control measure on corporates," Chidambaram told PTI.
"These are, I believe, measures that are temporary and I am sure that RBI will revisit it at an appropriate time," he said.
The Reserve Bank today reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under automatic route from 400 per cent of the net worth to 100 per cent.
"I think the most point to make is that corporates are not being discouraged from assets acquiring abroad or companies acquiring abroad or invest abroad," he added.
Stating that there is an "automatic" route and also an "approval" route, Chidambaram noted the limit for ODI under the automatic route has now been lowered by RBI from 400 per cent of the net worth to 100 per cent of net worth.
But if a corporate makes out a case that it requires more money to acquire an asset abroad or acquire a business abroad, the RBI will give approval, Chidambaram said.
"The approval route is available to corporates," he added.
RBI measures are aimed at easing pressure on the Rupee which continues to depreciate against the US dollar as well as to restrict outflow of foreign currency.
The Rupee fell 24 paise to an all-time closing low of 61.43 against the dollar today.
The RBI also reduced the limit for remittances made by resident individuals under the liberalised remittances scheme (LRS) from USD 2 lakh to USD 75,000 a year.
Earlier today, Economic Affairs Secretary Arvind Mayaram said more steps would be taken to stabilise Rupee.
"We are reviewing the possibility for different kinds of instruments to be made available to the investors...This is not the last time that we are coming up with measures. As and when it is required, we will step in with more policy measures to ensure stable Rupee," Mayaram said.
