RBI, SEBI tighten scrutiny of overseas investments by firms and family offices amid rupee pressure: Report
June 3, 2026
RBI and SEBI are closely examining overseas investments and offshore structures amid concerns over capital outflows, valuation practices and rupee stability.
The Reserve Bank of India and the markets regulator SEBI have tightened checks on overseas investments by firms and family offices, issuing at least 10 queries in the past three weeks to determine any potential misuse of the investment route, a Reuters report said, quitting peoples familiar with the developments.
Indian currency has come under sharp pressure from surging oil prices and foreign money outflows, prompting higher taxes on precious metal imports and calls to conserve foreign exchange.
RBI sends queries
In a rare move over the past three weeks, the Reserve Bank of India has sent at least 10 queries to ascertain whether funds were routed overseas without a clear business purpose or tangible asset backing, the report stated.
“The scrutiny is not about curbs but about the pace of capital outflows and why and whether they are exacerbating pressure on the currency and reserves,” a source told Reuters.
India’s capital account is only partially open. Companies can invest abroad through the overseas direct investment (ODI) route, subject to limits tied to net worth and for specific purposes. Individuals may remit up to $250,000 annually under the Liberalised Remittance Scheme (LRS) for uses such as education, healthcare and investments.
Regulators are focusing on large overseas investments routed through opaque structures, inflated valuations of offshore assets, and potential misuse of ODI routes for private wealth management by individuals and family offices, the sources said.
Details of queries
According to RBI data, overseas direct investment rose 11% year-on-year to $48.39 billion in financial year 2025–26, while individuals remitted $28.9 billion abroad.
Under current rules, regulated entities must secure sectoral no-objections and file valuation reports with the RBI for ODI remittances. Larger or complex deals may also need prior RBI approval.
The SEBI has also recently slowed no-objection letters for its regulated firms seeking to establish overseas structures, the report added.
Focus on family offices
The report said that, in particular, regulators are taking a closer look at offshore remittances by family offices, many of which are structured as corporate entities. This allows them to access higher remittance limits under ODI, compared with the individual remittance caps.
The RBI is examining at least two instances of family offices using the ODI route for managing personal wealth, a source told Reuters.
The RBI could also scrutinise instances where corporates have established overseas investment arms, as such structures are often used for capital market exposure rather than genuine strategic expansion abroad, the report added.
Separately, SEBI, while approving proposals from its regulated entities – including funds and wealth management firms – to set up overseas structures, is flagging cases where its assessments indicate aggressive valuations in capital market and private asset investments, one of the three sources said.
Valuations are typically conducted by SEBI-registered merchant bankers. Regulators are also scrutinizing whether bankers are assigning inflated valuations.
[The Financial Express]
