Skip to main content

FDI Allowed via Partly Paid Shares Warrants

By
Prior govt nod not required for raising money via these instruments in areas where FDI is allowed under automatic route
The government has decided to consider foreign investments in partly paid shares and warrants eligible instruments under the foreign direct investment policy , bringing greater flexibility in their use to raise capital.
“The government has reviewed the extant FDI policy...to allow partly paid shares and warrants as eligible capital instruments for the purpose of the FDI policy ,“ the department of industrial policy and promotion (DIPP) said on Tuesday in a notification amending the consolidated FDI policy circular 2015.
Till now warrants and partly paid shares could be issued to foreign investors only after approval through the government route.
Bringing them under eligible foreign investment instruments means that prior government permission will not be required for raising money through these instruments in sectors where FDI is allowed under the automatic route. “DIPP has synchronised its rules with the RBI guidelines, which was treating it (partly paid shares and warrants) as capital instruments already . It is a good step as it removes another ambiguity and brings such FDI under automatic route,“ said Devraj Singh, executive director-tax and regulatory services, at EY. The government has also inserted a new clause in the policy that says: “An Indian company may issue warrants and partly paid shares to a person resident outside India subject to terms and conditions stipulated by the Reserve Bank of India in this behalf, from time to time.“
In another step towards improving ease of doing business in the country , the DIPP , in a separate note, clarified that facility sharing agreements within two group companies will not be treated as real estate business provided the arrangements are at arm's length price. DIPP has also added the condition that in accordance with the relevant provisions of the Income Tax Act 1961 the annual lease rent earned by the lessor company should not exceed 5% of its total revenue. Madan Sabnavis, chief economist at CARE Ratings, the notifications were in line with the government's move to remove hindrances at policy levels for investors.
“FDI in the country has been increasing because of such steps now being taken,“ he said. India has attracted FDI of $9.5 billion in AprilJune, up 31% over the corresponding period last year, even as the government relaxed FDI norms in various sectors including the railways, medical devices, insurance and pension, construction and defence.
The Economic Times, New Delhi, 16th Sept. 2015

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more