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Jun 1, 2001
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Money > Business Headlines > Report Jun 1, 2001 |
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HLCC meet to focus on umbrella cap on foreign stake in Indian companiesJanaki Krishnan The high level committee on capital markets at its meeting -- slated to take place on June 4 -- will discuss the possibility of shifting to an umbrella cap on foreign holding in Indian companies clubbing foreign direct investment and foreign institutional investors' exposures. At present, the government stipulates caps in foreign holdings under different heads like FDI, FII, non-resident Indians as well as overseas corporate bodies. The move by the HLCC is significant in the context of the recent controversy created in the public issue of Mid-Day Multimedia wherein the question was raised as to whether foreign investors would be allowed to subscribe to the issue (in the form of portfolio investments) since print media is a restricted sector for foreign direct investments. Eventually the central government took the view that foreign investors should not be allowed to invest in the issue. Sources said that the high level group can only make recommendations and ultimately it was up to the government to take the final view. The RBI is learnt to be in favour of having separate limits for the two instead of clubbing foreign holdings in the form of portfolio investments and FDI together under a single limit. Both RBI governor Bimal Jalan and Securities & Exchange Board of India chairman DR Mehta are on the HLCC. Recently the government relaxed foreign investment in certain sectors allowing 100 per cent foreign direct investment. This leaves no room for any portfolio investments. The extant norms for FDI in private banks stipulate that foreign banks/ institutions can hold up to 20 per cent stake and the NRIs can hold similar stake. In the insurance sector foreign companies can take a stake of up to 26 per cent in the venture. Powered by YOU MAY ALSO WANT TO READ:
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