Loan defaulters and those under investigation require a NOC to invest overseas.

On Tuesday, the finance ministry made it more difficult for people who have fallen behind on loans and are under investigation by law enforcement agencies to engage in foreign companies. The new rules announced by the Department of Economic Affairs require them to obtain a no-objection certificate (NOC) from their lenders, or the relevant authorities or investigation agency, before making abroad investments.

Any individual with a bank account that is considered a non-performing asset, is identified as a wilful defaulter by any bank, is under investigation by a financial services regulator, the Enforcement Directorate (ED), or the Central Board of Investigation (CBI) would be required to provide this NOC.

However, it may be assumed that the lenders and any relevant regulatory body or investigative agency have no objections to the proposed transaction if they fail to provide the NOC within 60 days of receiving an application. The Reserve Bank of India will continue to oversee the Overseas Investment Rules and Regulations, which were notified under the Foreign Exchange Management Act (FEMA) (RBI). These will replace all current laws governing foreign investments, as well as the purchase and sale of real estate outside of India.

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