The Hindu Business Line : RBI help sought on automatic route misuse

THE Foreign Investment Promotion Board (FIPB) has written to the Department of Economic Affairs (DEA) to take up the issue of misuse of the automatic approval route by a section of foreign investors with the RBI.

The board has directed the DEA to take up the matter with the RBI for creating necessary and adequate safeguards in its automatic approval route so that companies submitting false declaration can be identified at the earliest.

The move comes in the wake of the fact that several companies had approached the FIPB for `post-facto' approvals in cases which otherwise demand prior approval from the FIPB.

It has been found that a number of companies have availed the RBI's automatic route and have carried out activities which do not qualify for the automatic route according to the existing policy framework, officials said.

The RBI, in a recent communication to the Secretariat for Industrial Assistance (SIA) has informed that it does not undertake `post-facto' scrutiny of the FC-GPR forms submitted by the companies, as it was the responsibility of the company concerned to ensure that it is covered under the automatic route.

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RBI help sought on automatic route misuse