The Reserve Bank of India (RBI) has announced some policy measures as follows:
1. Issue of Shares for Consideration Other Than Cash
In its recent foreign direct investment (FDI) policy, the Government of India had announced additional methods for issue of shares for consideration other than cash, such as: (a) import of capital goods/ machinery/ equipment (including second-hand machinery); (b) pre-operative/ pre-incorporation expenses (including payments of rent, etc.). The RBI has now implemented these schemes by prescribing the detailed conditions on which this share issuance facility will be available to Indian companies.
2. Extension of Time for Buyback of FCCBs
Several investors holding foreign currency convertible bonds (FCCBs) in Indian companies have not exercised their conversion options because the prevailing market prices of underlying shares are lower than the conversion price. In order to provide exit options to such investors, the RBI has been permitting buyback of FCCBs by Indian companies. The facility has now been made available until March 2012, both under the automatic route as well as the approval route. Some of the policy reasons behind this move are reported in the Times of India and the Hindu Business Line.