(The following post is contributed by Raghav Sharma, who is an associate with a law firm in Delhi) This post relates to Mr. Somasekhar Sundaresan’s article titled “RBI cuts sorry figure over norms for share transfers” wherein the author has highlighted certain ambiguities arising from the Reserve Bank of India’s (“RBI”) A.P. (DIR Series) Circular No. 49 dated May 4, 2010 (the “May Circular”)...
ECB Process for Infrastructure Finance Eased
The Reserve Bank of India has issued a circular bringing external commercial borrowings (ECBs) by designated Infrastructure Finance Companies (IFCs) within the automatic route subject to certain limits. The relevant portion of the circular is extracted below: On a review of the policy, it has been decided to modify the extant ECB policy in respect of the Infrastructure Finance Companies (IFCs) i...
Changes to Minimum Pricing Norms for Transfers of Indian Securities
(In his previous post, Tanmay Amar examined the new base pricing norms for issue of securities by Indian companies to non-resident investors. He now follows it up with an analysis of the new RBI circular, which is hot off the press, that amends pricing norms for transfers of securities between a resident investor and a non-resident investor) Introduction This post discusses the revised guidelines...
Core Investment Companies – Draft RBI Guidelines
(The following post has been contributed by Vijay Kumar, a lawyer and a company secretary by qualification, who is practising as an Advocate in the Chennai High Court with the law firm of Iyer and Thomas) Non – Banking Finance Companies have been classified as a. Asset Finance Company b. Investment Company c. Loan Company The Reserve Bank of India (RBI) is now proposing to introduce a third...
Changes to Minimum Pricing Norms for FDI in Unlisted Companies
(The following post is from Tanmay Amar, senior associate at Luthra & Luthra. Tanmay discusses a significant change to the minimum pricing norms for issue of shares by Indian companies to foreign investors. This change is bound to affect the manner in which valuations are to be arrived at, especially for investments by financial investors such as private equity funds. It is not clear as to...
Southern Technologies and Sticky Interest – Part II
We discussed the recent decision of the Supreme Court in Southern Technologies that rejected a challenge to the constitutionality of ss. 36(1)(vii) and 43D of the Income Tax Act, 1961. The Court held that non-banking-financial institutions [“NBFC”] must account as income interest received from loans that are, for commercial purposes, bad debts. Four important issues were considered in the case:...
Legal Risks and Financial Sector; Capital Controls
Recent developments in the financial sector have witnessed a sea-change in the nature of legal risks faced by banks and financial institutions. Regulators, banks and financial institutions, as well as their legal advisors (both in-house and external) are required to constantly keep pace with the change. In that context, a recent speech by Shyamala Gopinath, Deputy Governor of the Reserve Bank of...
Venture Capital – Foreign and Domestic: Some Comparisons
Consistent with the expansion of the venture capital industry in India, the regulatory regime has been formulated with a view to foster such growth. While the domestic venture capital industry is governed by the SEBI (Venture Capital Funds) Regulations, 1996, the foreign venture capital industry (investing into Indian companies) is governed by the SEBI (Foreign Venture Capital Investors)...
Recent RBI Policies
RBI/2008-09/ The Reserve Bank of India (RBI) has announced some policies last week. The salient features are as follows: 1. External Commercial Borrowings (ECB) Policy – Liberalisation By a Circular dated January 2, 2009, the RBI dispensed with the requirement of all-in-cost ceilings on ECBs under the approval route, until June 30, 2009. This relaxation has now been extended until December...
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