RBI steps not “capital control” measures: P Chidambaram

Finance Minister P Chidambaram said the steps announced by RBI to curb investment by Indian companies abroad is not a “capital control” measure and the apex bank will revisit it at an appropriate time.

“These are, I believe, measures that are temporary and I am sure that RBI will revisit it at an appropriate time. So, this is not to be understood as capital control,” Chidambaram told. The Reserve Bank 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. He said the RBI has just limited the ODI 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.

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.

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.