Skip to main content

Cabinet raises FDI limit threefold to 15% in stock exchanges

By
The Union Cabinet on Wednesday approved raising of the foreign shareholding limit to 15 per cent from the existing five per cent in Indian stock exchanges.
A depository, a banking or insurance entity or a commodity derivative exchange will be among those allowed to raise stake. The Cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides the secondary market, in stock exchanges.
The approval follows the Budget announcement by the finance minister earlier this year, concerning reforms in foreign direct investment policy with respect to enhancement of the limit in bourses.
“The move will help in enhancing global competitiveness of Indian stock exchanges, by accelerating/facilitating the adoption of latest technology and global best practices,” the government stated on Wednesday evening.
The change in norms is likely to encourage more foreign exchanges to increase their stake in Indian exchanges.
Top foreign shareholders in the National Stock Exchange are GS Strategic Investments, SAIF II SE Investments Mauritius, Gagil FDI Ltd (Cyprus) and Aranda Investments (Mauritius) Pte. Each of these holds five 5 per cent. The BSE exchange's top foreign shareholders are Singapore Exchange and Deutsche Boerse AG, with 4.7 per cent each.
The composite cap for foreign investment in stock exchanges is 49 per cent and any of these investors may now individually raise their stake to 15 per cent.
“NSE has always aligned itself with global best practices. The exchange believes the government's decision is in sync with the spirit of globalisation,” said Chitra Ramkrishna, managing director.
“We welcome the move. It will bring best exchanges in the world to acquire significant minority stake in Indian exchanges, which will connect these exchanges to savings pools across the world and bring best-in-class practices here,” added a BSE spokesperson.
The FDI rise was first proposed by the Securities and Exchange Board of India in 2012. This was turned down by the Bimal Jalan committee but the regulator again sent its proposal in June 2014 to the finance ministry. The ministry subsequently wrote to the market regulator for its feedback in November last year.
Business Standard New Delhi, 28th July 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more