The Reserve Bank of India (RBI) on Thursday relaxed foreign direct investment (FDI) regulations to allow non-resident investors to exit their investments subject to the conditions of a minimum lock-in period and without any assured returns.
The relaxation is expected to facilitate higher FDI inflows as the country witnessed a decline in FDI in the current year.
According to the RBI, there is a minimum lock-in period of one year or a period as prescribed under FDI regulations, whichever is higher (in defence and construction development sector, a lock-in period of three years has been prescribed).
“The lock-in period should be effective from the date of allotment of such shares or convertible debentures or as prescribed for defence and construction development sectors as amended from time to time,” the RBI said in a circular.
“On a review, it has now been decided that optionality clauses may henceforth be allowed in equity shares and compulsorily and mandatorily convertible preference shares/ debentures to be issued to a person resident outside India under the FDI scheme,” the RBI said.
‘May postpone debt switch plan to next fiscal’
New Delhi: In order to maintain stability in debt market the Reserve Bank may postpone its Rs 50,000 crore debt-switch programme to next fiscal, RBI Deputy Governor HR Khan said.
“Discussions are going on. It (debt switch not happening this year) is one possibility. There is probability that we may not do it. But who said we will not totally do it. This is one of the the possibilities that it may not happen this year but we are working on it,” he said here. pti