RBI relaxes norms for Foreign Venture Capital Investors in startups

RBI Foreign Venture Capital InvestorsForeign Venture Capital Investors (FVCIs) can invest in Indian startups without prior permission of the RBI, the central bank said on Thursday. Sebi-registered FVCIs have also been permitted to invest in unlisted firms in sectors like biotechnology, nanotechnology and dairy without prior permission of the RBI. They will not require any approval from Reserve Bank and “can invest in…equity or equity linked instrument or debt instrument issued by an Indian ‘startup’ irrespective of the sector in which the startup is engaged.

The RBI said the extant regulatory provisions have been reviewed and amended in order to further liberalise and rationalise the investment regime for FVCIs and to give a fillip to foreign investment in the startups.

As per the amendment, FVCIs will not require any approval from RBI and can invest in “equity or equity linked instrument or debt instrument” issued by an Indian company in certain sectors whose shares are not listed.

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