Chairman of SEBI UK Sinha today said that post the relaxation of qualified foreign investor norms he expected to see better response from foreign investors.
Chairman of market regulator SEBI UK Sinha today said that post the relaxation of qualified foreign investor norms he expected to see better response from foreign investors.
The Securities Exchange Board of India (SEBI) at the beginning of this year allowed foreign investors to directly invest in the Indian equity market in a bid to boost foreign inflows.
Sinha says that the new QFI regime aims at making it easier for foreign investors to invest in India. “You could only invest as a foreign institutional investor or as a sub-account, so it was to make it easy for those who are not an FII or not a sub account,” he explained.
Sinha also says that investors are coming into India, but they first try to understand if there is a slowdown in the policy process etc. “We should be able to communicate with them that we mean business and that we are going to improve our system both on policy and execution,” he said.
Sinha goes on to say that they are looking into means and ways at improving the system to make the process of divesting stake easier for corporates.
He said that they have already increased the avenues through which corporates can pare down their stake to adhere to the minimum public shareholding norms, and that they are looking into feedback given on the same. “We have received some input about offer for sale, asking to make it little simpler, and SEBI is examining that,” he said.
Below is an edited transcript of his interview. Also watch the accompanying video.
Q: Not too much of investments coming in in the past one year. Do you expect a healthier response now?
A: The qualified foreign investor (QFI) regime was implemented following a report for a committee which I happen to chair and the report came out in 2010. The whole idea is to make it easy for people who are not able to invest from outside India. You could only invest as a foreign institutional investor or you could invest as a sub-account. So it was to make it easy for those who are not an FII or not a sub account.
We have come out with a receipt where the qualified depository participants could handle their accounts. We received some feedbacks that more liberalization and more opening up is required. That’s what has been done and it has been done in consultation with the government and the Reserve Bank of India.
One of the important problems was that how many days can he keep his rupee account and if it is to be part of a cold account or can he have an individual account. Those things have now been made liberal, so I do hope people who have a view about India will find it easier to invest.
Q: Any extension to corporates to meet minimum public share holding norms because some of the corporate houses are asking for an extension?
A: They might have asked you, they have not asked us, so the problem is that do you believe in good governance in the publicly listed companies or not. There has to be governance, there has to be a certain minimum percentage of public share holding and that is not something which has come overnight. The time given was three years and if some reason people have not come out it’s their problem.
As far as SEBI is concerned, we have provided some more avenues to them so that they can meet that requirement. Earlier there only two avenues available to them and now we have provided two more. It is true that we have received some input about offer for sale, asking to make it little simpler and SEBI is examining that. So we are open to looking into ways and means how to improve the system and make it easier for corporates.
Q: What is your view on reforms and the economic scenario?
A: I think I do not have any extra channel of feedback which is not available to people like you. People are coming to India, and they are coming in large numbers today, to understand whether there is slowdown in the policy process or whether there is a slowdown in the growth and they want to understand the system.
I attended a conference where there atleast 100 meetings with corporates, so they are trying to understand. We should be able to communicate to them that a major part of our problem is linked to the global developments, and if we can also communicate with them that we need business, we are going to improve our system both on policy and execution.