Mumbai :The Securities and Exchange Board of India (Sebi) diluted its controversial circular issued on April 10, which laid down the know-your-client (KYC) and ownership norms for foreign portfolio investors (FPIs).
In a reversal of stance, the market regulator has allowed both resident and non-resident Indians (NRIs), along with overseas citizens of India (OCIs), to invest in Indian markets through the FPI route, subject to certain conditions. The earlier circular virtually barred individuals with India connection from investing or managing a foreign fund.
The regulator, however, reiterated that the KYC requirements for FPIs would have to be in line with the rules under the Prevention of Money Laundering Act (PMLA).
The latest announcement comes after the April 10 circular led to a pushback from overseas investors, particularly those with an India connection. Certain investors had even approached the prime minister’s office, seeking a rethink. The latest circular incorporates measures prescribed by the former Reserve Bank of India deputy governor H R Khan-led committee earlier this month.
Sebi has said a single NRI, OCI and resident Indian can make contribution of not more than 25 per cent in foreign fund. The aggregate contribution of these investors can be 50 per cent of an FPI. Resident Indians can contribute through the RBI’s liberalised remittance scheme (LRS), which allows an investment of $250,000 per individual in a financial year.
Sebi has said an NRI, OCI or resident Indian should not be in control of FPI.
The regulator has allowed NRIs, OCIs as and locals to act as investment managers (IM) of an FPI, provided they fulfill certain conditions. These include the IM should be “appropriately regulated” in its home jurisdiction and registers itself with Sebi.
Further, Sebi has allowed all existing FPIs and new applicants a time period of two years to meet the new conditions.
This is more than just six months of time period recommended by the Khan committee. Also, the regulator has provided 90 days to ensure compliance in case of temporary breach of the conditions. Market players said the new rules will give a boost to FPI flows into India.
“The circular will be welcomed by the resident Indian and NRI fund managers,” said Rajesh Gandhi, partner, Deloitte Haskins & Sells. “Along with domestic structures such as mutual funds and alternative investment funds (AIFs), Indian residents can now invest through global funds under the LRS route.”
“All-in-all this is a welcome move by Sebi as it addresses important irritant to the FPI community,” said Tushar Sachade, partner –financial services, PwC India.
In separate circular, Sebi has said the KYC norms for FPIs will have to as per the PMLA and the FPIs need to maintain a list of beneficial owners. The move is to curb prevent money laundering, said experts.
Those FPIs that issue participatory notes (p-notes) will also have to identify end beneficial owners of p-note subscribers. Sebi has also put in place higher disclosure requirements for so-called category-III and category-II FPIs from “high-risk jurisdiction”.
The regulator has said such investors would be required to do this exercise every year.
Experts said the timely disclosures would increase the compliance burden for the FPI community. Also, the investment threshold for investors from high-risk jurisdiction will be only 10 per cent.
RBI needs to ensure stability: Shaktikanta Das
New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.
India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.
The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.
Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.
India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.
The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.
Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud
Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.
The PNB has intimated the action to the stock exchanges.
“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.
“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.
“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.
According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.
After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.
According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.
“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.
According to him, in the past, low-level officers would have been the scapegoats for such massive scams.
“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.
In this new world, data is the new wealth: Ambani
Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.
Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.
“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.
Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”
He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”
Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”
Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.
“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.
While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”
The greatest possibility comes from the exchange of these idea, he added.
“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.
“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.