INTRODUCTION:
In a decisive regulatory move, the Reserve Bank of India (RBI) has instructed Indian companies with unresolved issues in their past Overseas Direct Investment (ODI) transactions to settle such cases by August 25, 2025. The direction is clear: entities failing to regularise past lapses will be barred from making any further investments outside India.
This follows a communication issued by the RBI in the last week of April 2025 to all Authorised Dealer (AD) banks and financial institutions, instructing them to notify Indian corporates about any outstanding ODI-related non-compliances under the old regulatory framework.
BACKGROUND: WHY THE DIRECTIVE WAS ISSUED:
While the overseas investment framework was simplified in 2022, several legacy ODI transactions remain unresolved — either due to procedural delays, missing approvals, or reporting failures.
To bring closure to these cases, the RBI has made it mandatory for entities to either compound their non-compliances with the RBI or have them adjudicated before the Enforcement Directorate (ED). This process must be completed on or before August 25, 2025, failing which companies will be restricted from making new overseas investments.
ACTION POINTS FOR COMPANIES:
For businesses with past ODI exposure, the implications are serious. To remain eligible for future overseas investments, entities must:
- Conduct a compliance audit of all historic ODI transactions.
- Consult with their AD banks to identify any pending regulatory issues.
- Initiate appropriate corrective steps, either by filing for compounding or preparing for adjudication before the ED.
Entities failing to act by the August deadline may find themselves shut out of global investment opportunities.
CONCLUSION:
The RBI’s April 2025 directive is more than just a deadline. It is a call to action for Indian businesses to reassess their global investment strategies through a compliance-first lens. By addressing legacy issues through compounding with the RBI or adjudication before the ED, companies can protect their international ambitions and future-proof their operations.
With only a few months left, this is the right time to clean the slate and move forward on a stronger regulatory footing.
Disclaimer:This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement.
CLICK HERE DOWNLOAD PDF
