Financial Daily from THE HINDU group of publications
Saturday, Jun 12, 2004
Financial Daily from THE HINDU group of publications Saturday, Jun 12, 2004 |
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Markets
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Mutual Funds Money & Banking - RBI & Other Central Banks RBI mulls allowing investments in overseas index funds Our Bureau
Mumbai , June 11 THE Reserve Bank of India is considering allowing Indian investors, including mutual funds, to invest in overseas index funds. The proposal was discussed at a high-level committee of financial regulators on Friday. A regulatory source said that the Securities and Exchange Board of India (SEBI) had been entrusted with the task of formulating the criteria for such investments. However, the final clearance had to come from RBI as it involves foreign exchange outflow. The investments were likely to be restricted to $25,000, the amount freely convertible under the current RBI rules, the source said. He said several mutual funds had represented to SEBI to allow them to invest in overseas index funds. Last year, mutual funds were allowed to invest in the stocks of overseas parent companies listed on Indian exchanges. Even though that allowed local funds to invest in stocks such as Unilever, Nestle and GlaxoSmithkline, not many funds took that opportunity saying it was too risky and expensive. In comparison to stocks, investing in index funds abroad is less risky and relatively inexpensive. The panel comprising the RBI Governor, Dr Y.V. Reddy, the SEBI Chairman, Mr G.N. Bajpai, the Insurance Regulatory and Development Authority chief Mr C.S. Rao, the Finance Secretary, Mr D.C. Gupta, and the Secretary (Financial Sector), Mr N.S. Sisodia, also discussed recent developments in the capital market and regulatory co-ordination in stock market-related issues, an RBI release said here.
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