RBI to allow only fully convertible instruments under FDI
The Reserve Bank of India today clarified that only fully convertible debt instruments will be permitted under the Foreign Direct Investment (FDI) policy.
By PTI |
MUMBAI: The Reserve Bank of India today clarified that only fully convertible debt instruments will be permitted under the Foreign Direct Investment (FDI) policy.
"It is clarified that henceforth, only instruments which are fully and mandatorily convertible into equity, within a specified time will be reckoned as part of equity under the FDI Policy and eligible to be issued to persons residing outside India", the RBI notification said here.
The RBI has issued the clarification to prevent corporate from circumventing the provisions of the FDI policy by issuing hybrid instruments like optionally convertible or partially convertible debentures, which are intrinsically debt-instruments.
The central bank has further clarified that companies, which have already received funds from outside India for issue of partially or optionally convertible instruments on or before June 7 may issue such instruments.
The existing investment in instruments, which are not fully and mandatorily convertible into equity may continue till their current maturity, it said.
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The SEBI-registered foreign institutional investors (FIIs), it further said, would be eligible to invest in listed non-convertible debentures or bonds issued by Indian companies subject to ceilings prescribed from time to time. Download
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