SEBI to sign MoUs with seven countries to attract foreign investors


SEBI has decided to sign MoUs with six countries Argentina, Turkey, Kuwait, Qatar, Ireland and Latvia to attract foreign investors to Indian stock market
New Delhi: With an aim to attract foreign investors from a larger number countries to the Indian capital markets, regulator Securities and Exchange Board of India (SEBI) may soon sign bilateral memorandum of understandings (MoUs) with its counterparts in at least six countries, reports PTI.
At the same time, SEBI will request the market regulators across various countries to allow the Indian market intermediaries operating in their jurisdictions to solicit business from interested qualified foreign investors (QFIs) at those places.
The steps are being taken by SEBI pursuant to suggestions made by the Ministry of Finance in this regard and would help attract more overseas investments through the QFI route, a senior official said.
The QFI framework was first put in place about a year ago and individuals, groups or associations from 45 countries, including Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Switzerland, UAE, UK and the US, are currently eligible to invest through the QFI route.
Foreign investors are allowed to invest directly through QFI route in stocks, mutual funds and corporate bonds through demat accounts opened with SEBI-registered Depository Participants, after meeting KYC (Know Your Client) norms applicable in the Indian markets.
However, the absence of an MoU between SEBI and the respective regulators in seven other countries (Argentina, Republic of Korea, Turkey, Kuwait, Qatar, Ireland and Latvia) make the entities in those jurisdictions ineligible to put money as QFIs into the Indian capital markets, the Finance Ministry had informed SEBI.
At the same time, certain restrictions imposed by SEBI's counterparts in a number of countries make it difficult for the entities in those jurisdictions to invest in India through the QFI route, the official said.
In order to remove these bottlenecks, SEBI has decided to sign MoUs with six countries -- namley Argentina, Turkey, Kuwait, Qatar, Ireland and Latvia.
SEBI would also seek to expedite the process in cases where it has already taken initiatives to enter into bilateral MoUs with regulators in other countrries.
SEBI is of the view that a bilateral MoU might not be required with its counterpart in Republic of Korea, as it is already a member of international body Financial Action Task Force (FATF) and a signatory to global market regulators' grouping IOSCO's multilateral memorandum of understanding (MMoU).
As per the current regulations, those permitted to invest as QFIs include individuals, groups or associations who are resident in a foreign country that is a Member of the FATF or a member of a group which is member of FATF and a Signatory of IOSCO's MoU, or a signatory of a bilateral MoU with SEBI.
QFIs do not include entities like FIIs, their sub-accounts and foreign venture capial investors. NRIs are also allowed to invest as QFIs, provided they have closed their demat accounts opened as NRI.
Originally, the QFI definition was limited to the 34 member countries of FATF.
In response to several enquiries from the Gulf region, the scope of the scheme was expanded in June 2012 to include residents of the member countries of Gulf Co-operation Council (GCC) and European Commission (EC) as these bodies / organisations are members of FATF.
With respect to the restrictions imposed by certain jurisdictions towards Indian intermediaries, SEBI has proposed to take up such issues proactively with their respective regulators to make it easier for entities in those countries to invest in India as QFIs.
SEBI would request the regulators in such jurisdictions, wherever appropriate, to exempt registered Indian intermediaries from any additional registration requirements for soliciting business from qualified residents in foreign jurisdictions.
The move follows concerns raised by market participants in the recent past that certain jurisdictions impose regulatory restrictions on Indian Intermediaries on soliciting investments from their investors, if such intermediaries have not obtained a prior registration with the regulatory authorities of such jurisdiction.
Observing that such restrictions pose a significant challenge to the QFI scheme, the Ministry of Finance had suggested that SEBI might take up the matter proactively with the regulators in such jurisdictions.
The issues were discussed in the last meeting of SEBI's board, where it was observed that the appropriate steps would be initiated by SEBI Chairman without further approval of the regulator's board.


Suzlon shareholders' wealth plunges by Rs4,100 crore in a year

Suzlon Energy, which has failed to get more time to repay overseas debt worth $221 million, has taken a severe beating in the past many months resulting in investors' wealth plunging by around Rs4,123 crore

New Delhi: Investors in debt-laden Suzlon Energy saw their wealth erode by a staggering Rs4,100 crore in less than a year, as value of the wind turbine maker's shares more than halved from its 52-week high of Rs39.10, reports PTI.
Shares of Suzlon Energy, which has failed to get more time to repay overseas debt worth $221 million, has taken a severe beating in the past many months.
The scrip that touched the 52-week high of Rs39.10 on October 2011 has since then tumbled to close at Rs15.90 on 12 October 2012 on the BSE.
The steep slide in value of Suzlon shares has resulted in investors' wealth plunging by Rs4,123 crore in a year.
While the company's market capitalisation currently stands at Rs2,826 crore, it was valued at Rs6,949 crore when Suzlon shares touched 52-week high last year.
The price of Suzlon shares reached a 52-week low of Rs14.75 on 31st August this year.
One of the world's largest wind turbine makers, Suzlon is grappling with high debt levels, sluggish market conditions and stiff competition in recent times.
On Thursday, Suzlon shares plummeted over 5% in intra-day trading in the wake of bondholders rejecting a proposal to extend the time to repay $221 million debt.
The shares slumped over 5% to Rs15.70 before paring the losses to close at Rs16.20, still down 2.11% on that day. On Friday, it shed another 1.8%.
The wind turbine maker has a debt burden of $2.2-2.3 billion. Suzlon is one of the major Indian companies to default on debt obligations. The company's foreign currency convertible bonds (FCCBs) worth $220.8 million (about Rs1,172 crore) were maturing on 11th October and the company was hoping to get bondholders' nod for more time to repay the debt.
Suzlon had issued $200 million zero coupon convertible bonds (ZCCBs) and $20.8 million 7.5% Convertible Bond. The company on 18th September had sought extension for redeeming these bonds.
"We are continuing our engagement with bondholders and expect to have an acceptable solution at the earliest," Suzlon Group Chief Financial Officer Kirti Vagadia had said on Thursday.
Regarding bondholders' refusal to extend repayment period, Ambit Capital said in a report that it does not bode well for the company's financial position and hence is negative even for the equity shareholders.
Meanwhile, State Bank of India, which has a total exposure of Rs3,500 crore to Suzlon, had said the entity should look at leveraging the balance-sheet of its German subsidiary REpower.
Suzlon posted a loss -- after shares in associates’ profit and minority interest -- of Rs848.97 crore at the end of June 2012 quarter.


RBI most known regulator among Indians: Survey

About 74% of those who know these regulatory agencies have reported benefiting directly or indirectly from their regulations, says the survey

New Delhi: The Reserve Bank of India (RBI) is the most known regulator followed by electricity and telecom sectoral watchdogs, Telecom Regulatory Authority of India (TRAI) and Central Electricity Regulatory Commission (CERC), reports PTI quoting a study by CUTS International.


"Awareness regarding regulatory bodies is limited to recognition of their names and knowledge about their basic mandate," according to the study prepared by CUTS International, a non-governmental organisation (NGO) with support of the Consumer Affairs Ministry.


Geography-wise, the awareness regarding regulatory agencies is highest in northern and western region as compared to other three regions, it said.


The study also observed that "about 74% of those who know these regulatory agencies have reported benefiting directly or indirectly from their regulations, while the remaining 26% respondents do not agree to this".


The survey "State of Indian Consumers 2012' conducted in 22 states and union territories with a sample size of 11,499 highlighted that among eight regulators, RBI was widely known among people with 40% respondents saying they recognise at least the name of the regulator.


The next in terms of people's awareness were the TRAI (27%), CERC (26%), Pension Fund Regulatory and Development Authority-PFRDA(25%), Insurance Regulatory and Development Authority-IRDA (24%).


The least known regulators were Securities and Exchange Board of India (SEBI) and Food Safety and Standards Authority of India (16% each) and Forward Markets Commission-FMC (8%), the study revealed.


On awareness about government laws that seek to protect consumers, the study said, only about 20% were aware of the Consumer Protection Act or had heard about the act.


Awareness regarding consumer protection and related acts is highest in southern region as compared to other regions, it added.


"It is the best known act followed by Weights and Measures Act and Food Safety and Standards Act. Legal Metrology Act, Contract Act and Competition Act are the most uncommon acts recognised by least number of respondents," the study said.


The purpose of the study was to understand the real status of the common consumers at grassroots with regard to level of awareness and in terms of realising the basic consumer rights, it added.


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