What changed
RBI clarified that domestic VCFs registered with SEBI are permitted to invest only in equity and equity-linked instruments of offshore VC undertakings. Such VCFs must approach SEBI for prior approval, and no separate RBI permission is required.
What it means for you
This simplifies the process for SEBI-registered VCFs looking to invest abroad, as they only need SEBI's nod, not RBI's. Banks should update their procedures to reflect that no RBI approval is needed for these investments, reducing compliance burden.
What you must do
- Inform AD Category-I bank customers about this clarification.
- Ensure no separate RBI permission is sought for VCFs with SEBI approval.
- Update internal guidelines to reflect the single-regulator approval process.
Who it affects
SEBI-registered Domestic Venture Capital Funds, AD Category-I banks handling overseas investments, Customers of AD Category-I banks involved in VC investments
Do VCFs need RBI approval for overseas investments now?
No, SEBI-registered VCFs only need prior approval from SEBI; RBI permission is not required separately.
What types of instruments can VCFs invest in offshore?
They can invest only in equity and equity-linked instruments of offshore Venture Capital Undertakings.