Master Direction - Overseas Investment (Updated as on April 01, 2026)
UR
- Applies toAll regulated entities
- StatusIn force
- IssuedJul 24, 2024
- Amendmentsnone tracked
- Length29 points in 3 sections · 3 min read
The four dates on this rule
- PublishedJul 24, 2024The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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27 of the 29 points name no product and bind every product. All products.
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Ten percent voting rights, control
Ten percent or more of the voting rights counts as control of a foreign entity.
2. Ten percent stake, direct investment
Buying 10% or more of a listed foreign company counts as direct investment, not portfolio.
3. Once direct, stays direct
An investment classed as direct stays that way even if the stake later falls.
4. Automatic route for most deals
Most overseas investments need no prior approval, only the normal automatic route.
5. Pakistan needs Government approval
Investment in Pakistan, or in a strategic sector, needs the Central Government's own approval.
6. RBI approval above $1 billion
Commitments over USD 1 billion in a year need RBI's own prior approval too.
7. NPA or default needs NOC
An NPA account or a wilful-defaulter tag means a no-objection letter is needed first.
8. No cash for overseas deals
An overseas investment may not be paid for in cash.
9. No routing money via branch
Money may not be sent to your own overseas branch to fund an investment.
10. Restructuring needs a certificate
Writing off restructuring losses needs a certificate showing the audited numbers.
11. No money without a UIN
The bank sends money abroad only after RBI issues a Unique Identification Number.
12. Incomplete filing counts as none
A half-finished report counts as no report at all.
13. Late filer gets no money
The bank freezes new money to that entity until the late report is filed.
14. No third layer of subsidiaries
A structure that already has two or more subsidiary layers may not add a third.
15. Mismatched swap, six month sale
A share swap that does not fit the rules must be sold off within six months.
16. No gifting an investment abroad
An overseas investment may not be gifted to someone living outside India.
17. Office property, 15% of sales
An overseas office property may cost up to 15% of average annual sales, or 25% of net worth if higher.
18. One bank per foreign company
All investors in one foreign company must route their transactions through the same bank.
19. Bank fined for skipped form
The bank itself can be fined if it sends the money without the completed form.
20. Bank checks it is genuine
The bank checks the deal is real and follows the Know Your Customer rules.
21. Suspicious deals go to enforcement
A suspicious transaction is sent straight to the Directorate of Enforcement.
22. Start-up costs, USD 100,000 limit
Costs before a foreign company is even set up may not exceed USD 100,000 a company.
23. Bank answers for the report
The bank itself answers for whether the online report is correct.
Do it
1. Pricing policy, two months
The bank needed a board-approved pricing policy within two months of this rule.
2. Proof of investment, six months
Proof of the investment is due within six months, or the money must come back.
3. Late report, three year window
A late report can still be filed, with a fee, up to three years late.
4. Three people sign off online
Filing online needs three separate people: a maker, a checker, and an approver.
Background
1. JV and WOS renamed
RBI replaced the old JV and WOS terms with one new term, foreign entity.
2. Individuals investing abroad since 2013
Since August 2013, an ordinary resident has been allowed to invest abroad directly.