The Reserve Bank of India has agreed to notify foreign direct investment rules in limited liability partnerships, a form of business organization that is popular globally but has not taken off in India. The government had last year allowed foreign investors to pick up stakes in LLPs through the 100% automatic FDI approval route but the proposal did not take effect as the RBI did not notify the rules under the Foreign Exchange Management Act. The central bank considered LLPs a 'loose structure'. "We had sought certain clarifications from the government. Now that we have received them, the RBI will shortly issue the guidelines," a RBI spokesperson told ET. However, officials in the ministry of corporate affairs reiterated that no changes will be made to the LLP Act. "We have repeatedly written to the RBI to revise its stance on LLPs and the existing Act. We are hopeful that they would soon be notified," a senior ministry official said.
Source: Economic Times
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