Amending the Foreign Exchange Management Regulations, the RBI said that its prior permission would not be necessary where the company whose shares are being transferred is engaged in any financial service.
The liberalisation would help the entire financial services sector, including the non-banking finance companies.
Besides, the RBI permission has also been done away with for transfer of shares between residents and non-residents in cases where the Foreign Investment Approval Board (FIPB) has already given its clearances and the SEBI guidelines have been adhered to.
These steps have been taken “as a measure to further liberalise and rationalise the procedures and policies governing foreign direct investment in India,” the RBI said.
However, it was made clear that the transactions will have to comply with the Sebi regulations, FDI sectoral caps, and the pricing guidelines as specified by RBI.
Although FDI inflows during April-August have gone up by 95 per cent to US$17.37 billion, the government and the Reserve Bank are keen to maintain robust foreign exchange reserves in the wake of volatility in the stock market leading to outflows by institutional investors.
The country has foreign exchange reserves of US$318 billion but the pressure on rupee is matter of concern for an economy which depends on large commodity imports.
Overseas investments by Indian companies in September was US$3.46 billion.
Elaborating on the modifications, RBI said during transfer of shares by any non-resident
to an Indian citizen or entity, its prior approval would no longer be required even when the pricing guidelines under the Foreign Exchange Management Act (FEMA) are not met if the “original and resultant” investment are in line with existing FDI policy.
This also includes adherence to FEMA regulations, sectoral caps, reporting requirements,
documentation and so on.
Besides, the RBI nod will also not be necessary provided the transfer is certified by Chartered Accountants stating that the step has been taken in compliance guidelines and regulations of the Sebi.
Commercial realty under disclosure norms
Mumbai, pti: The Reserve Bank has asked banks to bring in a disclosure clause under which commercial real estate players will also have to mention in their advertisements the name of the bank to which a property has been mortgaged.
“On a review, it has been decided that the provisions contained therein (relating to disclosures) will be applicable to commercial real estate also,” RBI said.
Earlier, the central bank has made it mandatory for banks to inculcate the provisions relating to disclosure of a mortgage property in advertisements for ‘private builders’ at the time of inviting public to buy flats or a property.
Currently, a builder has to disclose in his advertisements like brochures the name of the bank to which the property is mortgaged.
With this notification, commercial realty will also come under the ambit of such disclosures.
