Amid continuing pressure on the rupee, the RBI today announced stern measures, including curbs on Indian firms investing abroad and a reduction of outward remittances, to restrict the outflow of foreign currency.
The central bank reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent. Oil India and ONGC Videsh are exempt from this limitation.
"This reduced limit would also apply to remittances made under the ODI scheme by Indian companies for setting up unincorporated entities outside India in the energy and natural resources sectors," the apex bank said.
The RBI 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. Resident individuals are, however, allowed to set up joint ventures or wholly owned subsidiaries outside under the ODI route within the revised LRS limit.
The measures are aimed at restricting the outflow of foreign currency, thus reducing pressure on the rupee. The rupee fell 24 paise to an all-time closing low of 61.43 against the dollar.
The RBI also notified that incremental non-resident deposits (FCNR and NRE) with a maturity of three years and above will be exempt from maintenance of statutory balance with the central bank.
In New Delhi, Economic Affairs Secretary Arvind Mayaram said more steps would be taken to stabilise the rupee, while Finance Minister P Chidambaram said a freefall of the rupee would not be allowed.
"We are reviewing the possibility for different kind 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 measures, more policy measures to ensure a stable rupee," Mayaram said.
