The finance ministry on Tuesday made it tougher for loan defaulters and those facing probe by investigative agencies to invest in overseas entities. They will now have to secure a no-objection certificate (NOC) from their lenders, or the regulators or probe agencies concerned before making overseas investments, according to the new norms notified by the department of economic affairs (DEA).

This NOC will be mandatory for any person who has a bank account classified as a non-performing asset, or is labelled a wilful defaulter by any bank, or is under investigation by a financial service regulator, the Enforcement Directorate (ED) or the Central Board of Investigation (CBI).

However, if the lenders or the relevant regulatory body or investigative agency fail to furnish the NOC within 60 days of receiving an application, it may be presumed that they have no objection to the proposed transaction.

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The revised norms for overseas investments by Indians are also aimed at simplifying the extant framework on overseas investment to make it easier for Indian firms to invest abroad and expand their global footprint.

According to the DEA notification, no Indian resident will be permitted to make investments in foreign entities that are engaged in real estate business, gambling in any form and dealing with financial products linked to the Indian rupee without the central bank’s specific approval.

In a statement, the finance ministry said clarity on overseas direct investment and overseas portfolio investment has been brought in and “various overseas investment-related transactions that were earlier under the approval route are now under automatic route, significantly enhancing ease of doing business”.

The ministry said, in line with the amendment to the Foreign Exchange Management Act, 2015, outward investments rules have been framed by the government in consultation with the central bank. At present, the overseas investment by a resident in India is governed by the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015.

The Overseas Investment Rules and Regulations, notified under the Foreign Exchange Management Act (FEMA), will continue to be administered by the Reserve Bank of India (RBI). These will subsume all existing norms relating to overseas investments as well as the acquisition and transfer of immovable property outside India.

“In view of the evolving needs of businesses in India in an increasingly integrated global market, there is a need for Indian corporations to be part of global value chain. The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics,” the finance ministry said in the statement.