RBI clarifies on FDI exits using call & put options

Much confusion has prevailed over the pricing of FDI exits using call & put options. Earlier this month, an RBI circular linked such exits in unlisted shares to return on equity. Today in an exclusive interview to CNBC-TV18, RBI executive director G Padmanabhan clarified that the return on equity can be calculated on an annualised basis. That will come as a big relief to foreign investors.

Padmanabhan also said that DCF-based pricing guidelines are not effective and that RBI is working to rewrite and liberalise all pricing guidelines for foreign investment.There is a lot of work taking place. Government and the Reserve Bank of India (RBI) are looking to revamp foreign direct investment (FDI) guidelines to make it simpler. So, today the problem that has cropped up is that these are two different regimes and as a result of which two separate pricing guidelines apply. Padmanabhan said the idea is to make this all uniform as quickly as possible, the work is on. When it will be completed, I do not know, he added.