ARTICLE · 06 JUNE 2007

Overseas Investment By Venture Capital Funds

Mulla & Mulla & Craigie Blunt & Caroe

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The Reserve Bank of India ("RBI") has, vide its circular dated 30<SUP>th</SUP> April 2007, and in consultation with the Securities and Exchange Board of India ("SEBI"), decided to permit investment by Indian Venture Capital Funds (VCFs), registered with SEBI, in equity and equity-linked instruments of off-shore venture capital undertakings.

IndiaFinance and Banking

Shardul Thacker

The Reserve Bank of India ("RBI") has, vide its circular dated 30^th April 2007, and in consultation with the Securities and Exchange Board of India ("SEBI"), decided to permit investment by Indian Venture Capital Funds (VCFs), registered with SEBI, in equity and equity-linked instruments of off-shore venture capital undertakings. Such investments would however be subject to an overall cap of USD 500 million as well as regulations issued by SEBI in this regard.

SEBI will allocate limits to individual VCFs upon such terms and subject to such conditions as it may deem necessary.

Accordingly, domestic VCFs registered with SEBI and desirous of investing in off-shore venture capital funds, would be required to obtain the prior approval of SEBI. As per the said Circular, separate authorization from the RBI would not be necessary in respect of such investments.

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