The RBI has published a paper by its Deputy Governor, Rakesh Mohan, titled “Capital Flows to India”. Although it approaches the topic predominantly from an economy and policy standpoint, it is also helpful in identifying the different types of flows (debt and equity) and carries a historical account of capital flows since liberalisation in 1991.
Minimum Pricing Norms Eased for GDRs/FCCBs
In yet another move to boost the capital markets, the Government has relaxed the minimum pricing norms for the issue of securities (being GDRs/ADRs/FCCBs) to foreign investors. This comes on the heels of similar relaxations provided to qualified institutional placements (QIPs) some weeks ago. There are two changes proposed: (i) the minimum price will be the average weekly high and low prices for...
Easier Access to Foreign News Magazines
The Government has liberalised the policy for foreign print media, which now allows foreign news and current affairs magazines to publish Indian editions. This will allow Indian readers to access these magazines at more affordable rates. LiveMint has a report: “India has decided to allow the publication of local editions of foreign news and current affairs magazines, lowering a significant hurdle...
Revisiting the Foreign Venture Capital Regime
In a previous post on this blog about four months ago, we had extolled the virtues of an economy possessing a favourable venture capital regime. We had also highlighted some of the progressive developments in the Indian venture capital market that were induced by favourable regulations issued by SEBI and RBI. However, the perception of regulators in respect of venture capital firms (especially...
Warrants to Foreign Investors
The Economic Times reports that there is a proposal within the Government to bring the issue of warrants by Indian companies to foreign investors within the automatic route where foreign direct investment is otherwise permitted under the automatic route. This move, if crystallized through a formal policy pronouncement, will dispel some of the confusion that has been recently caused whereby...
Press Note 1: Changes Expected
Press Note 1 of 2005 issued by the Department of Industrial Policy & Promotion (DIPP) requires foreign companies to obtain the prior permission of the Foreign Investment Promotion Board (and thereby making the automatic route for investment ineligible) if they had a joint venture with another Indian partner in the same field. This condition is applicable for joint venture existing in January...
The Impending FCCB Conundrum
Foreign currency convertible bonds (FCCBs) have been issued by Indian companies, whereby investors have the option to convert these debt instruments into equity. Such conversion would normally occur when the market price of equity shares at the time of conversion is higher than the conversion price. But, with the markets now moving in the wrong direction, it is unlikely that the FCCB holders will...
FDI: Reporting Under Automatic Route
Whenever foreign investors subscribe to an issue of shares by an Indian company, there are certain reporting requirements that need to be complied with. In terms of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, the reporting obligations arise at two stages: (i) within 30 days of receipt by the amount of consideration by the...
SWFs as FIIs; Other Amendments to FII Regulations
SEBI has announced a fairly detailed set of amendments to the SEBI (Foreign Institutional Investors) Regulations, 1995. One of the key amendments relates to the recognition of sovereign wealth funds (SWFs) as a category of investors eligible to invest into the Indian markets as FIIs. This marks a significant move because it makes clear the Indian regulators’ policy approach towards SWFs in the...
Foreign Currency Borrowings: FCEBs and ECB
In an earlier post, we had analysed the notification of the Government of India permitting the issuance of Foreign Currency Exchangeable Bonds (FCEBs). The Reserve Bank of India (RBI) was expected to prescribe detailed guidelines on the mechanism for the issuance of FCEBs. It is now reported in LiveMint that the detailed guidelies would be issued by the RBI within a month. Separately, we can...
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