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The committee said the gold refinery industry was mainly governed by unorganised refineries and these refineries need funds for their growth and development.

Mumbai , Oct. 15

IN a bid to give boost to the real estate and gold jewellery businesses, a SEBI committee has suggested venture capital funds (VCFs) be allowed to invest in real estate and do financing of gold jewellery.

The Advisory Committee on Venture Capital, under the Chairmanship of Dr Ashok Lahiri, has called for relaxing some of the existing norms, which include removal of lock-in shares after listing, and investment in NBFCs.

The committee in its report for public comments said that there is a need for quality housing and commercial facilities in the country and for this investment in real estate by VCF be allowed.

Currently, VCFs are not permitted to invest in companies engaged in the real estate sector.

The report pointed out that foreign investors have been allowed to invest in specific sectors such as integrated townships and barring VCF from such sectors is difficult to justify.

On the issue of investment in gold financing, the committee said the gold refinery industry is mainly governed by unorganised refineries and these refineries need funds for their growth and development. The funds can be made available at the seed stage by way of venture capital funding, the committee suggested.

The committee also notes that the fresh gold market is dominated by the open general license (OGL) imports, which is predominantly controlled by banks and corporates (both public and private) while small-scale outfits are unable to compete with the financial muscle of banks and financing corporations.

"There seems little logic in excluding gold imports from the purview of venture capital funding particularly when it is known that gold jewellery exports have displayed an impressive double digit growth even with adverse constraints or little policy support in fund availability," it said.

However, the committee suggests that such financing should be restricted to gold financing for jewellery alone and not for pure trade and speculation in gold.

The committee has suggested that VCFs be permitted to invest in NBFCs engaged in the business of leasing and hire purchase as several NBFCs are engaged in funding the various infrastructure projects such as roads, ports and bridges.

Removal of the lock-in of shares after listing for VCFs has also been suggested. Other suggestions of the committee include increasing the limit for investment in listed companies, VC be allowed to invest in offshore VCs.

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