Section 18A(1) in The Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004
(1)An Indian party may create charge (by way of mortgage, pledge, hypothecation or otherwise) on its assets [including the assets of its group company, sister concern or associate company in India, promoter and / or director] in favour of an overseas lender as security for availing of the fund based and/or non-fund based facility for its Joint Venture (JV) or Wholly Owned Subsidiary (WOS) or Step Down Subsidiary (SDS) outside India.Provided that(a)The value of the facility is reckoned as financial commitment for the Indian party and the total financial commitment of the Indian party remains within the limit stipulated by the Reserve Bank from time to time for overseas direct investments in the JV / WOS;(b)The overseas lender is regulated and supervised as a bank as per the law of the host country;(c)A `No Objection' is obtained from the domestic lender in whose favour if charge is already created on the domestic assets; and(d)Subject to the additional terms and conditions prescribed by the Reserve Bank from time to time.
