[The following guest post is contributed by Vaibhav Parikh, who is a business lawyer associated with the Aditya Birla Group] “Disruption” is often used as a generic term to describe situations where smaller and newer companies with fewer resources are able to successfully challenge established incumbent businesses and upset status quo. Although a case has been made that it brings visibility to an...
Issue of Convertible Notes by Startups Permitted
[The following guest post is contributed by Bhushan Shah & Neha Lakshman from Mansukhlal Hiralal & Company. The views expressed in the post are personal] A convertible note is an instrument issued as debt and convertible into equity of a startup at the option of the holder, upon a future contingency taking place, usually when the startup obtains an additional round of investments...
Measuring outputs v. outcomes: Did the restriction on foreign investment in local debt achieve the intended outcome?
[The following guest post is contributed by Anurag Dutt, Arpita Pattanaik and Bhargavi Zaveri, who are researchers at the Finance Research Group at the Indira Gandhi Institute of Development Research, Mumbai.] A good policymaking process requires significant regulatory capacity. Before the policy is enacted, the State must (a) identify a market failure and an appropriate intervention to address...
Foreign Portfolio Investments in Unlisted Non-Convertible Debentures
[The following post is contributed by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai.] Last month, the Reserve Bank of India (“RBI“) allowed Foreign Portfolio Investors (“FPIs“) to invest in unlisted non-convertible debentures (“NCDs“). This has been done by way of an amendment to the Foreign Exchange Management (Transfer or Issue of...
Regulation of invoice discounting start-ups: Is RBI proposing a disproportionate regulation?
[The following guest post is contributed by Srinivas Medisetty, who is presently working as a legal counsel in Ola (ANI Technologies Private Limited) advising on the regulatory and litigation aspects of the company. Views expressed are personal.] The Securities and Exchange Board of India (“SEBI”) as the capital market regulator rightly stepped in to regulate crowd funding through investment in...
Demonetization and the Income Tax Act
[The following guest post is contributed by Kailash Nath P S S, who is a lawyer and a chartered accountant, and is currently associated with Wadia Ghandy & Co., Mumbai. Views expressed here are personal and do not reflect the firm’s views.] Introduction The recent move of the Central Government exercising its powers u/s 26(2) of the Reserve Bank of India Act, 1934 (“RBI Act”), to withdraw the...
Foreign Investments in Category III Alternative Investment Funds
[The following guest post is contributed by Kemi Gupta, who is a 5th year B.A., LL.B (Hons.) student at NALSAR University of Law] In a matter of only a few years,[1] India’s alternative investment industry has grown to Rs. 20,700 crore in size,[2] and is yet claimed to be in its early stages. Alternative investment funds (“AIFs”) constitute any privately pooled investment...
Attempt at Easing Out the NPA Crisis: An Analysis of the RBI’s Reform Efforts
[The following post is contributed by Neelasha Nemani, who is a 5th year student at National Law University Odisha (NLUO), Cuttack.] The “bad loan crisis” that has gripped India’s large banking sector didn’t just happen overnight. This problem has long since been the elephant in the room; in other words, it has been the most obvious impending risk that neither the legislature nor the regulator...
Liberalization of RBI’s Policies
The Reserve Bank of India (RBI) last week issued a series of circulars liberalizing and streamlining its policies on various types of equity investments as well as on external commercial borrowings (ECBs). The key pronouncements are highlighted below: 1. Foreign Investment in “Other Financial Services” In the case of non-banking finance companies...
The Inapplicability of Money Lending Laws to Regulated NBFCs
[The following guest post is contributed by Munmi Phukon, who is a Senior Manager in the Corporate Law Division at Vinod Kothari & Co.] Introduction In 2011, a landmark judgment of the Gujarat High Court in Radhe Estate Developers Vs. Versus Mehta Integrated Finance Co. Ltd. and Ors (the ‘Gujarat Ruling’) contested the very fact of applicability of the Bombay Money Lending Act, 1946 (the...
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