• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

To enable companies explore possibility of raising capital internally

TALKING TOUGH: The Chairman of Securities and Exchange Board of India, Mr M. Damodaran and the president of The Bengal Chamber of Commerce and Industry, Mr Aloke Mookherjee, at the seminar on "Recent developments in Capital Markets" organised by The Bengal Chamber of Commerce and Industry in Kolkata on Tuesday. - A Roy Chowdhury .

Kolkata , May 9

The Indian Depository Receipts (IDRs) may now become a reality, thanks to the market regulator's decision to revisit the proposal on these securities.

The possibility of IDRs, which have so far remained only in the government's wish-list, is being increasingly seen as important in the current context, Mr M. Damodaran, Chairman, SEBI, said here on Tuesday.

Companies have been raising large amounts of resources from overseas markets, a trend that is often being viewed as `export' of the local capital market.

Removal of restrictions

The regulator, given this backdrop, intends to consider the removal of what have been billed as restrictions for prospective issuers. The idea is to get more quality companies explore the possibility of raising capital internally rather than seek options that are available elsewhere.

Justifying the recent decision to allow listed companies to raise funds from the domestic market through qualified institutional placement of securities, Mr Damodaran said the new norm will encourage corporates to consider the local market more effectively. He was addressing a meeting on the capital market organised by Bengal Chamber of Commerce here.

"Money has continued to come from abroad. Retail investors in India too have poured in money either directly or through mutual funds. Huge amounts have been raised lately by fund houses," he said while referring to some of the recent NFOs.

Commenting on retail investments in government securities, the SEBI chief said the experiment has not taken off successfully.

"While Indian investors already have access to a wide range of options, we will see that the products that are lacking here are brought to the table," the SEBI chief added.

Quality IPOs

The regulator, which seeks to get more stocks listed on Indian bourses, has underlined the significance of having quality IPOs in the emerging context. It is also hoping to get more investors stay put for longer periods in Indian stocks. "We have expressed our intention to merchant bankers. If there is one issue where due diligence has not been done, we will deal with it appropriately", Mr Damodaran said. The recent IPO grading proposal will add value to SEBI's stance, it is expected. A grading should not be seen as a price recommendation; nor should there be a commitment that the price will be sustainable on a long-term basis, it is pointed out.

SEBI, in its attempt to ensure quality and protect investors' interest, will not really be concerned with the level of indices. At another level, it hopes to ensure that companies comply with governance standards in "substance" and not in "form" alone.

More Stories on : Overseas Borrowings | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Quality norms eased for wheat imports

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line