Sunday, January 3, 2016

Extension of Credit Facilities to Overseas Step-down Subsidiaries of Indian Corporates


Revised Guidelines for fresh sanctions/renewals
 
Banks may extend facilities to the step-down subsidiaries of Indian companies, to finance projects undertaken abroad.
 
The immediate overseas subsidiary must be directly controlled by the Indian parent company and must directly hold a minimum 51% of its shareholding.
 
All the step-down subsidiaries, must be a wholly owned subsidiary or its entire shares shall be jointly held by the immediate parent company and the Indian parent company and / or its wholly owned subsidiary. The immediate parent should, wholly or jointly with Indian parent company and / or its wholly owned subsidiary, have control over the step-down subsidiary.
 
Banks shall make additional provision of 2% (in addition to country risk provision) against standard assets, to cover the additional risk.
 
Based on RBI Circular dt 31/12/15. Please visit www.rbi.org.in for any further clarification if required….. Poppy