Panel to smoothen FII investment process: UK Sinha

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UK Sinha, Chairman and Managing Director, UTI Asset Management Company, says the committee will look to smoothen the FII investment process. On November 19, the Centre set up a 16-member panel headed by Sinha to conduct a four-month review of its foreign portfolio investment, venture capital, and private equity rules.

The committee, he says, will elicit views from the members, industry at large. But was quick to add that it won't take a position on the larger macro-economic policy.

He says the market terms the P-Notes policy as liberal. "The articulation on the P-Note policy needs more clarity. There is lack of clarity on procedures of foreign money coming in. We need policy flow that is consistent." However, he does not rule out government intervention on FII inflows in extreme situations.

Sinha calls for stricter know your customer (KYC) requirements.

Here is a verbatim transcript of the exclusive interview with UK Sinha on CNBC-TV18. Also watch the accompanying video.

Q: I would like to get a sense of this high powered group that the government has put in place under your leadership. The note that I was reading which the government has put out says that it is aimed at rationalizing foreign investments into India other than foreign direct investment (FDI) which includes portfolio investment etc, what is this committee going to be looking at when you say rationalizing, what is the issue that you are going to be looking at?

A: If you look at it from the point of view of the government, let us go back about a year to year and a half ago. The general feeling among the practitioners is that the government has been changing its stance along with the regulators depending upon its view on the macroeconomic situation and that perhaps there is no clear direction about the government's intentions. Government has been telling again and again that the direction has been clear and it is all stipulated.

The feedback the government has received is that there are views in the minds of the market participants that there are obstacles. Even if there are things about the government policy which are well articulated there are obstacles in the investment process.

So as a part of the consultative process which the government has been doing, it has been decided to form this committee. If you look at the committee, you will discover that it has as permanent invitees people from the legal profession as well. So it has people who are participating in the market, it has people who have background of the government and also legal practitioners and the way the committee will work is that it will elicit views not only from the committee members but also from the industry at large and already that process has begun. So the whole idea is to find out what we can do to smoothen the process. Of course the committee will not be taking any position on the larger issue of the macroeconomic policy that is outside its domain.

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