Financing of Joint Ventures
Banks are allowed to extend credit/non-credit facilities (viz. letters of credit and guarantees) to Indian Joint Ventures/Wholly-owned Subsidiaries abroad and step-down subsidiaries which are wholly owned by the overseas subsidiaries of Indian Corporates. Banks are also permitted to provide at their discretion, buyer’s credit/acceptance finance to overseas parties for facilitating export of goods and services from India. The above exposure will, however, be subject to a limit of 20 percent of banks’ unimpaired capital funds (Tier I and Tier II capital)and would be subject to the conditions laid down in this regard in the Master Circular on ‘Loans and Advances – Statutory and Other Restrictions’ dated July 1, 2015.