Mumbai: Partly driven by slowdown fears and drying inflows, the Reserve Bank of India (RBI) has allowed a string of foreign venture capital funds to invest in the country. The shift in the mood may have a lot to do with the foreign funds changing their charter of investments and making upfront commitments to convince the RBI, reported The Economic Times.

The regulator has cleared the applications of six foreign VC funds in the last two months with the decision pending on many other funds. Advisors to some of the funds say that among other things, this could have been achieved only after they changed the charter to insert a specific clause that there will be no investment in real estate sector.

Till now, the funds were only giving an undertaking, which, in other words, was just a letter to the RBI stating that they will stay away from properties - a simple declaration which the regulator thought was inadequate.

Significantly, foreign VCs are refraining from making any mention of sectors which have certain sensitivity in terms of foreign direct investment. For one, as funds spell out the segments they would be interested to invest in, there is no reference to industries like retail, non-banking finance companies and banking.

Just like properties, where the inflow of foreign money and a subsequent asset bubble have worried the RBI, these are businesses where foreign investments are closely watched by the central bank as well the government. Meanwhile, some funds underscore sectors like power, manufacturing and BPO in their 'investment objective' - a move that could go down well with authorities.

Vikram Shroff, senior associate (funds practice) at the law firm Nishith Desai Associates - which has been an advisor to several funds -feels there is a change. "Some of the recent foreign venture capital fund applicants have taken into consideration the regulators' concerns and have attempted to include additional provisions in their constitution and certain other documents, which may eventually assist in a speedier approval process," he says. VCs are now capitalizing their firms.