As announced by the Finance Minister Jaswant Singh, the Reserve Bank of India has notified a slew of measures, including retention of funds raised through American/Global depository receipts by Indian companies, saying that these relaxations will be effective till June 30, 2003, subject to a review.The apex bank, notifying the regulations following Singh’s announcement towards capital account convertibility at the nri convention last week, said Indian entities may retain abroad funds raised through ADRs/GDRs for any period to meet their future forex needs.Further, pending repatriation or utilisation of foreign resources raised, the entity may invest these funds in deposits or certificate of deposit or other products offered by banks who have been rated not less than aa(-) by Standard and Poor’s/Fitch ibca or AA3 by Moody’s.They can also place the amount in deposits with a branch outside India of an authorised dealer in India; and treasury bills and other monetary instruments of one year maturity having the minimum rating. The corporates would be required to report the details of such funds raised and retained abroad within 30 days from the date of closure of the issue.On corporates raising external commercial borrowings (ECBs), RBI said they may retain the funds abroad in a bank account for their future requirements subject to certain conditions. The account should be closed as soon as forex requirements were met and unspent balance should be repatriated immediately. RBI said the conditions include payment to overseas supplier, if any, has to be made against import documents like Bill of Lading/Airway Bill. Deposits held abroad should not be utilised for any fund based or non-fund based facilities in India, it added.
