Garg said that there is nothing new in the Sebi circular of April 10.
New Delhi: To calm the markets, economic affairs secretary S.C. Garg on Tuesday said that overseas investors of Indian origin are allowed to buy up to 5 per cent in any security under current regulations.
Market regulator Sebi also said that it was “preposterous and highly irresponsible” to claim that $75 billion will move out of India because of the April 10 regulatory move.
Mr Garg said that there is nothing new in the Sebi circular of April 10.
Sebi in its April directive had said that NRIs, persons of Indian origin (PIOs) and overseas vehicles set up by Indian financial services groups cannot be ‘beneficial owners’ of foreign portfolio investors (FPIs).
Lobby group Asset Management Roundtable of India (AMRI) had warned that Indian stock markets could tumble and the rupee may fall further ahead of the general elections if a contentious KYC circular issued by the Sebi is not scrapped soon.
It had said that circular issued by (Sebi this April on enhancing the KYC norms for foreign portfolio investors (FPIs), has ended up placing a blanket ban on investments through funds managed by overseas citizens of India (OCI cardholders), Persons of Indian Origin (PIOs), NRIs and even regulated domestic institutions.
The group had said that the immediate impact of the new norms, if not amended, would be that $75-billion investment managed by overseas citizens of India (OCIs), persons of Indian origin (PIOs) and non-resident Indians (NRIs) will be disqualified from investing into India, and the funds will have to be withdrawn and liquidated within a short time-frame.
Mr Garg said there is nothing new in the Sebi circular of April 10 and asserted that Sebi last month extended the deadline of the circular until December and wondered that why there was much ado about the proposed guidelines.
The secretary said, “April 10 circular has been put off to December. There is nothing in operation at the moment ... Why there is so much ado.”
Mr Garg said NRIs are permitted to invest in Indian securities with the limit of 5 per cent up to which they are permitted to invest in single securities. "If some NRI is a beneficial owner then that has been defined. If you have economic interest as well as you manage that is not permissible,” he said.