Overseas Direct Investment: banks tighten scrutiny of ODI funds
Why in the news
Lenders are checking overseas investments of Indian firms more closely as net FDI inflow shrank.
Key facts
- The cap is four times net worth.
- Since mid-2022 firms can write off unviable investments more easily, so banks are careful.
- Real estate and banking are barred for ODI.
About ODI
Indian entities invest abroad via a Joint Venture or a Wholly-Owned Subsidiary to expand, enter markets or spread risk.
Routes
| Route | Process |
|---|---|
| Automatic | Documents to an Authorised Dealer Category-I Bank; no RBI permission; financial services need regulator approvals |
| Approval | Applied through the AD bank, which forwards to RBI |
Exam angle
- ODI limit: four times net worth.