The Reserve Bank of India on Friday said unlisted companies can directly list on stock exchanges abroad to raise funds for acquisitions or retiring overseas debts, a move which may help India containing high current account deficit.
As of now, unlisted companies are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets.
"On a review, it has now been decided to allow unlisted companies incorporated in India to raise capital abroad, without the requirement of prior or subsequent listing in India, initially for a period of two years...," RBI said in a notification.
However, it said, such companies can list abroad only on exchanges in International Organization of Securities Commissions (IOSCO)/ Financial Action Task Force (FATF) compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements.
"The capital raised abroad may be utilised for retiring outstanding overseas debt or for bona fide operations abroad including for acquisitions," RBI added.
In case the funds raised are not utilised abroad, it said, the company should repatriate the funds to India within 15 days and park it with scheduled bank. RBI further said the unlisted Indian company should comply with the instructions on downstream investment and the criteria of eligibility who can raise funds through ADRs/GDRs would be as prescribed by the government.
Earlier, the Finance Ministry had said the scheme will be implemented on a pilot basis for a period of two years.
The government aims to bring down the CAD to below $60 billion this fiscal, as against $88.2 billion in the last financial year.
Rupee value versus US dollar has been affected severely because of high CAD and other global factors.
RBI further said the ADRs/ GDRs should be issued subject to sectoral cap, entry route, minimum capitalisation norms, pricing norms as applicable as per FDI regulations.
The pricing of such ADRs/GDRs to be issued to a person resident outside India would determined in accordance with the FEMA norms.