Comments
The K.M. Chandrashekhar committee set up to unify foreign investment norms last December met for the first time in Mumbai on Monday according to sources.
Two sub-committees have been formed, sources said. One is to harmonise the FDI/FII categories bearing in mind that not all FII investment is short-term, and FII investments above a particular threshold should be deemed FDI.
Portfolio & FDI
It may be recalled that ‘Report of the Working Group on Foreign Investment’ under the chairmanship of U.K. Sinha (then Chairman and Managing Director of UTI Mutual Fund), suggested investment into listed or unlisted securities at a level below 10 per cent of shares would be considered portfolio investment.
“Investment above 10 per cent would be considered FDI and would require compliance with existing FDI rules, regulations and procedures. This is the standard OECD distinction and practice as well of peer countries such as Brazil, South Korea, South Africa and Turkey, which have comparably sized domestic markets and democratic governance,” the report had said.
The second sub-committee would look to strengthen know your client (KYC), and process related issues. This has been mooted to dispense with the registration requirement of FIIs with SEBI, once KYC is strengthened. The meeting discussed the possibility of entrusting the responsibility of KYC to qualified depository participants (QDPs) after elevating them to a custodial depository participant (CDP).
Attended by more than 20 members, the agenda was to relax entry norms for a diverse category of foreign investors such as FDI / FII/ QFI/NRI/FVCI and the like.
Also on the agenda was to classify them into distinctly identifiable groups for ease of handling with respect to KYC norms, taxation and other processes.
Representatives of Ministries of Finance and Overseas Affairs, FIIs, lawyers, audit firms, stock exchanges, depositories and custodians participated in the deliberations.
The next meeting of the committee is expected to be held in mid-March.
>raghavendrarao.k@thehindu.co.in
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.