Mumbai, Feb. 20
GULF-based non-resident Indians (NRIs) have sought permission for direct trading facility in shares of Indian companies.
Currently, these NRIs have to go through broking firms in India to buy or sell shares.
Under the existing SEBI regulations, Indian brokers are allowed to set up trading platform overseas only under a 100 per cent owned entity. Gulf countries do not allow 100 per cent foreign ownership for broking firms. Such ventures are allowed only in partnership with a local entity holding majority stake.
A pre-budget memorandum sent to the Finance Minister by a Dubai-based financial service firm has pointed out that this "catch-22 situation" exists only in the Gulf region which is probably the only region in the world where NRIs are looking for investment in Indian shares. NRIs who live in North America and Europe are unlikely to show any interest in trading on the Indian markets on a regular basis.
But for NRIs in the Gulf, India is still home and they are most comfortable investing in India, it pointed out.
In 2003-04, NRI remittance to India amounted to $22 billion (more than twice the incremental FII investment during 04) of which 75 per cent came from the Middle East countries. The Gulf States have in place a satisfactory regulatory framework for entities in the financial services sector and strict action is taken against violators of law, the memorandum said.