The total financial commitment of the Indian party, in all the Joint Ventures / Wholly Owned Subsidiaries put together, shall not exceed 400% of the net worth of the Indian party as on the date of the last audited balance sheet. For the purpose of determining the ‘total financial commitment’ within the limit of 400% as specified above, the following shall be reckoned, namely:
a. 100% of the amount of equity shares;
b. 100% of the amount of compulsorily and mandatorily convertible preference shares;
c. 100% of the amount of other preference shares;
d. 100% of the amount of loan;
e. 100% of the amount of guarantee (other than performance guarantee) issued by the Indian party;
f. 100% of the amount of bank guarantee issued by a resident bank on behalf of JV or WOS of the Indian party provided the bank guarantee is backed by a counter guarantee / collateral by the Indian party.
g. 50% of the amount of performance guarantee issued by the Indian party provided that the outflow on account of invocation of performance guarantee results in the breach of the limit of the financial commitment in force, prior permission of the Reserve Bank is to be obtained before executing remittance beyond the limit prescribed for the financial commitment.