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Domestic Developments 4. According to the latest estimates of the Central Statistical
Organisation (CSO), the GDP growth in 2000-01 is likely to be about 6.0 per
cent as compared with 6.4 per cent and 6.6 per cent in the previous two
years. The growth in agricultural sector was at 0.9 per cent during 2000-01
as against 0.7 per cent in the previous year. The growth in mining and
quarrying sector was expected to be significantly higher at 4.5 per cent as
compared with 1.7 per cent a year ago. The overall growth performance of the
industrial sector during 2000-01 is estimated to be somewhat lower than that
in the previous year. Combined with the continued good performance of the
services sector, particularly of information technology related services,
the economy is expected to show a growth rate of 6.0 per cent or very close
to it, despite low agricultural growth. 5. The Gujarat earthquake has caused considerable damage. While the
immediate loss of production may not be sizeable, the cost of restoration of
infrastructure is expected to cause a fiscal strain on the state reflecting
loss of revenue and financing of relief and rehabilitation. Production of
principal agricultural commodities from the state such as oilseeds, cotton
and tobacco may suffer. While there has not been major damage to large
industrial installations, industrial environment could be affected because
of infrastructural constraints. Despite these negative factors, on an
overall reckoning, the impact of the quake on GDP growth is estimated to be
small. In order to enable the state government to deal with the situation,
the Reserve Bank has taken several initiatives which are reviewed in the
Part III of this Statement. 6. The annual rate of inflation on a point-to-point basis as measured by
variations in the wholesale price index (base 1993-94 = 100) worked out to
4.9 per cent in 2000-01 as against 6.8 per cent a year ago. While inflation
on account of manufactured products (weight 63.7) at 3.7 per cent was
modest, primary articles (weight 22.0) showed a marginal decline of 0.3 per
cent. The rise in WPI was mainly due to increase in prices of ‘fuel,
power, light and lubricants’ sub-group (weight 14.2) which recorded a
substantial increase of 15.3 per cent on top of an increase of 26.9 per cent
a year ago. Inflation as reflected in consumer price index (CPI) was much
lower at 3.0 per cent (on a point-to-point basis) and 4.0 per cent (on an
average basis) up to end-February 2001. 7. During 2000-01, the annual growth in money supply on a point-to-point
basis, was higher at 16.2 per cent as against 14.6 per cent a year ago. This
overall monetary expansion captured large inflows amounting to about
Rs.26,000 crore of India Millennium Deposits (IMDs). Net of IMD inflows, the
annual growth in M3 would work out to 13.9 per cent. Among the
components, the growth in aggregate deposits of the scheduled commercial
banks at 17.8 per cent was higher than that of 13.9 per cent in the previous
year. The expansion in currency with the public was lower at 10.8 per cent
(about Rs.20,400 crore) as against 11.7 per cent (about Rs.19,800 crore) in
the previous year. This could partly be attributed to lower agricultural
activity and partly to the larger base in the previous year on account of
Y2K uncertainties. 8. The increase in reserve money during 2000-01 at 8.3 per cent (about
Rs.23,200 crore) was comparable to that of 8.1 per cent (about Rs.21,000
crore) in the previous year. While the monetisation of Central Government
deficit was about Rs.9,000 crore, the expansion in reserve money largely
emanated from increase in net foreign exchange assets (NFEA). On the other
hand, claims on banks and commercial sector showed a decline of about
Rs.5,800 crore reflecting easy liquidity conditions. 9. The year-on-year growth of non-food credit in the range of 19 - 22 per
cent during the first three quarters of the year (April-December 2000) was
significantly higher than that in the previous year. Expansion in credit
during this period partly reflected the increase in stocks of fertilizers,
sugar, petroleum and automobiles. Moreover, credit flow to infrastructure
sector and retail segment was relatively high. Consumer credit had also
expanded in line with accelerated production of consumer durables. The pace
of credit growth has, however, decelerated since December 2000 which is in
line with subdued industrial activity. For the year as a whole, non-food
credit has registered a lower growth of 14.3 per cent (Rs.58,800 crore) as
against an increase of 16.5 per cent (Rs.58,200 crore) in the previous year. 10. The total flow of funds from scheduled commercial banks to the
commercial sector including banks’ investments in bonds/debentures/shares
of public sector undertakings and private corporate sector, commercial
paper, etc., are estimated at about Rs.71,500 crore (15.1 per cent) as
against Rs.71,600 crore (17.9 per cent) in the corresponding period of the
previous year. Total flow of resources to the commercial sector, including
capital issues, global depository receipts (GDRs) and borrowing from
financial institutions are placed at about Rs.1,49,000 crore as compared
with Rs.1,38,000 crore in the previous year. 11. The increase in food credit was much higher at Rs.14,300 crore as
compared with Rs.8,900 crore in the corresponding period of the previous
year reflecting larger scale of procurement operations. The buffer stock of
foodgrains peaked to 46.8 million tonnes at end-February 2001. The
opportunity costs arising from fiscal and monetary perspectives of such
large buffer stock operations need to be carefully considered. As the gap
between the procurement and issue prices widen, the large buffer stock tends
to result in the food subsidy assuming the nature of producers’ subsidy
rather than benefiting the targeted consumers. In this context, the reforms
in the management of the food economy announced in the Union Budget 2001-02
such as enlarging the role of state governments in both procurement and
distribution of foodgrains for Public Distribution System (PDS), review of
the operations of the Essential Commodities Act (1955) to facilitate free
inter-state movement of foodgrains and reduction in the list of essential
commodities are meant to enhance the efficiency of the food procurement and
distribution system. 12. As per the revised estimates in the Union Budget, the fiscal deficit
of the Central Government for 2000-01 was placed at Rs.1,11,972 crore as
against budget estimate of Rs.1,11,275 crore. This containment of fiscal
deficit facilitated the task of monetary and debt management as the market
borrowing programme of the Central Government (Rs.1,15,183 crore gross and
Rs.73,787 crore net) could be put through without undue pressure on interest
rates. The state governments' net market borrowings of Rs.12,880 crore were
almost the same as Rs.12,886 crore in the previous year. The estimated
reduction in fiscal deficit to 4.7 per cent of GDP for 2001-02 and the
promise of the Fiscal Responsibility Legislation should provide an enabling
environment for smooth conduct of debt management. 13. As emphasised in the previous policy statements, the overall monetary
management becomes difficult when a large and growing borrowing programme of
the government, year after year, puts pressure on the absorptive capacity of
the market. The banking system even now holds government securities of
around 35.0 per cent of its net demand and time liabilities as against the
minimum statutory requirement of 25.0 per cent. In terms of volume, such
holdings above the statutory liquidity ratio (SLR) amounted to as much as
Rs.1,00,000 crore, which is substantially higher than the net annual
borrowings of the government. In this context, the effort towards fiscal
consolidation aimed at in the Union Budget for 2001-02 is a very welcome
development. The reduction in fiscal deficit coupled with lowering of
interest rates on contractual savings would facilitate a move towards a
favourable interest rate regime. This should also help in releasing
government resources for much needed investment in physical and social
infrastructure, which in turn could stimulate private investment. Further
gains from a sustained fiscal consolidation will be realised over a period
of time through stabilisation of inflationary expectations in the economy. 14. The average cost of primary issuance of Government of India (GOI)
dated securities came down to 10.95 per cent during 2000-01 from 11.77 per
cent in the previous year, a decline in interest cost of over 80 basis
points. There was also a perceptible downward shift in secondary market
yields on government securities across the maturity spectrum during the
second half of the year. The yield on government securities with one-year
residual maturity which had peaked to 10.82 per cent in August 2000 from
9.23 per cent in April 2000 has subsequently moderated to 9.05 per cent by
March 2001. Thus, there has been a reduction in yield of as much as 180
basis points (or 1.8 percentage points) in these securities since August
2000. Similarly, the yield on government securities with 10-year residual
maturity which had risen from 10.37 per cent in April 2000 to 11.57 per cent
in September 2000 fell to 10.36 per cent by March 2001. 15. In view of the easy liquidity conditions and softer interest rate
environment, the overall monetary conditions are at present reasonably
comfortable. However, last year’s experience once again confirms that
monetary management has now become much more complex than was the case even
a few years ago. This is because of several factors, such as the on-going
integration of financial markets across the world, the phenomenal increase
in financial turnover, liberalization of the economy, and the rapidity with
which unanticipated domestic and international tremors get transmitted to
financial markets across the world because of the new technology. It will be
recalled that at the beginning of the last financial year, the Reserve Bank
had taken steps to ease monetary policy. However, these measures had to be
quickly reversed (in July 2000), in view of unfavourable international
developments, particularly successive increases in interest rates in major
industrial economies. The need to quickly change the policy stance in the
light of emerging situation has also been the experience of other monetary
authorities including the US and European central banks. It is important to
emphasise this, as, in case the present economic circumstances change, it
may again become necessary to take appropriate monetary measures which may
not be in consonance with the present easy conditions. Keeping these
realities in view, it is particularly important for banks and financial
institutions to make adequate allowances for unforeseen contingencies in
their business plans, and fully take into account the implications of
changes in the monetary and external environment on their operations. 16. A factor which further complicates the conduct of monetary policy
during certain periods is the difficulty in the correct assessment of the potential
inflationary pressures based on the latest available data for the current
period. While the WPI and CPI inflation rates generally move in tandem,
there were periods in which one rate widely differed from the other in
opposite directions. For instance, during the period 1995-96 to 1998-99, the
CPI inflation ruled significantly higher than the WPI, while during
1999-2000 and 2000-01, the reverse is true. Secondly, while there is little
disagreement that in the medium to long-run, inflation is largely caused by
monetary expansion, in the short-run inflation could be affected by
non-monetary and supply side factors. It may be recalled that during the
early part of 1998-99, the headline inflation rate as measured by variations
in WPI had shown a sharp increase following substantial rise in prices of
certain food items such as fruits and vegetables and in October 1998, a
conscious decision was taken, not to tighten the reins of monetary policy,
since such an increase in prices emanated from temporary supply problems.
The inflation rate reversed itself as the supply situation improved, and the
monetary policy stance taken earlier proved to be correct. (However, the
position could have turned out to be different if inflationary pressures had
persisted or accelerated due to emergence of unexpected demand or supply
side pressures.) 17. We faced a similar situation in most part of 2000-01 when the
increase in the overall inflation rate emanated from the sharp increase in
international crude prices. If the increase in prices on account of
petroleum related sub-group is excluded from the WPI, the inflation rate
which peaked to 4.8 per cent in mid-January 2001, has since come down to 2.6
per cent by end-March 2001. It, therefore, becomes extremely important to
appreciate the underlying inflation rate from different angles before
building up an appropriate policy stance. The Reserve Bank will continue its
on-going work on further refinement of the methodology for assessment of the
inflationary outlook based on different indices and a set of monetary
indicators which could best guide the formulation of monetary policy in a
changing environment. 18. In the Statement of April 1999, a mention was made about the need for
developing a robust short-term operational model for better understanding of
the transmission mechanism of the monetary policy. In line with this, a
liquidity assessment model is being structured, on the basis of available
data, so as to assess both the mechanism and inter-linkages among different
segments of the financial system. External Developments 19. There were significant changes in the external environment after
April 2000 when the last annual Policy Statement was presented. It may be
recalled that during the year 1999-2000, despite a sharp increase in oil
prices, foreign currency assets of India had increased by US $ 5.5 billion
and forex market was generally stable. This position changed markedly during
the first half of the year 2000-01, particularly during the period mid-May
to mid-August 2000. In view of the continued high oil prices, combined with
successive increases in interest rates in the US and Europe and lower
capital inflows, there was a decline in India’s foreign currency assets by
US $ 2.5 billion in the first six months of the year. Forex markets also
witnessed considerable instability with rupee depreciating against US dollar
by 5.3 per cent between April and September 2000. During this period, US
dollar also appreciated against other major currencies, such as the Euro and
the Pound Sterling. 20. The second half of the year, however, saw a sharp turnaround in the
forex market. India’s foreign currency assets increased by about US $ 7.0
billion, and exchange rate movements were generally orderly and range-bound.
This favourable development was largely due to restoration of confidence in
India’s external prospects in view of the highly successful launch of the
India Millennium Deposits (IMD) scheme by the State Bank of India, which
attracted deposits of US $ 5.5 billion. It is significant that, excluding
the effect of IMD scheme, there was actually an increase of US $ 1.5 billion
in India’s foreign currency assets during the second half of the year (as
against a decline of US $ 2.5 billion during the first half of the year on a
comparable basis). 21. The sharp turnaround in the foreign exchange situation and the
behaviour of forex markets during the previous year is highly instructive
for management of the external sector. As mentioned above, the behaviour of
the forex market was sharply different during the two halves of the year,
even though there was no significant change in the ‘real’ economy or
important economic variables, such as, the growth rate, trade deficit or oil
prices. Reserves in the first half of the year averaged US $ 36.7 billion,
which was several times higher than the additional cost of oil imports or
even the size of anticipated current account deficit. Exports also did well
throughout the year with an average growth (in US dollar terms) of 20.1 per
cent in the first half and 16.3 per cent in the second half (up to February
2001). In May 2000, the Reserve Bank had also announced that, as and when
necessary, it would directly meet the foreign exchange requirements for
imports by the Indian Oil Corporation as well as government debt service
payments in order to meet the temporary demand-supply gaps. Yet, forex
markets showed considerable instability and anxiety during the first half as
compared with the second half of the year. An analysis of the behaviour of
the market during these two periods, leads to following broad conclusions. The day-to-day movements, in the short-run, in foreign exchange markets
have little to do with the so-called ‘fundamentals’ or country’s
capacity to meet its payments obligations, including debt service. Any
adverse news, and ‘expectations’ generated by it tend to play a
paramount role. Adverse expectations are also generally self-fulfilling
because of their adverse effect on "leads and lags" in
export/import receipts and payments, remittances and inter-bank positions. In view of inter-bank activity, which sets the pace in forex markets,
transaction volumes in "gross" terms are several times higher,
and more variable, than "net" flows. Exchange rates are more
sensitive to "gross" flows, and variability in "gross"
flows in turn is sensitive to exchange rate expectations. Any initial adverse movement, following bad news or unfavourable
development may get exacerbated because of greater inter-bank activity.
Given the "bandwagon" effect of any adverse movement and the
herd behaviour of market participants, the situation can lead to further
buying or hedging activity among non-bank participants. The "Daily
Earnings At Risk" (DEAR) strategies of risk management tends to
reinforce herd behaviour. There is a natural tendency to do what everyone
else is doing in the event of any adverse development rather than taking a
contra position, particularly in thin and underdeveloped markets dominated
by a few leading operators. Developing countries generally have smaller and localised forex markets
where nominal domestic currency values are expected to show a depreciating
trend, particularly if relative inflation rates are higher than those of
major industrial countries. In this situation, there is a greater tendency
among market participants to hold long positions in foreign currencies and
to hold back sales when expectations are adverse and currencies are
depreciating, than the other way round when currencies are appreciating
and expectations are favourable. Thus, market behaviour is not symmetrical
in both directions. The tendency of importers/exporters and other end-users to look at
exchange rate movements as a source of return without adopting appropriate
risk management strategies, at times, creates severe uneven supply-demand
conditions, often based on "news and views". A self-sustaining
triangle of supply demand mismatch, increased inter-bank activity to take
advantage of it and accentuated volatility triggered by negative
sentiments, not in tune with fundamentals can be set in motion, requiring
quick intervention/response by authorities. 22. The above realities of the foreign exchange markets make the task of
determining appropriate exchange rate and market intervention policies
extremely difficult for central banks all over the world. In principle, and
in theory, there is a strong case for either freely floating exchange rates
(without intervention) or a currency board type arrangement of fixed rates.
In practice, however, because of the operational realities of foreign
exchange markets, empirical research shows that most countries have adopted
intermediate regimes of various types including fixed pegs, crawling pegs,
fixed rates within bands, managed floats with no pre-announced path, and
independent floats with foreign exchange intervention moderating the rate of
change and preventing undue fluctuations. By and large, barring a few, most
countries have some variety of "managed" floats and central banks
intervene in the market periodically. 23. Part of the reason for concern with exchange rate is also the likely
effect of adverse developments in forex market on the real economy, as has
been seen in East Asia, Russia, Mexico and Brazil a couple of years ago, and
Turkey and Argentina currently. The "contagion" effect is quick,
and a sharp change in the currency value can affect the real economy more
than proportionately. Exporters may suffer if there is unanticipated sharp
appreciation and debtors or other corporates may be affected badly if there
is a sharp depreciation, which can also lead to bank failures and
bankruptcies. 24. Against this background, India’s exchange rate policy of focusing
on managing volatility with no fixed rate target while allowing the
underlying demand and supply conditions to determine the exchange rate
movements over a period in an orderly way has stood the test of time.
Despite several unexpected external and domestic developments, India’s
external situation continues to remain satisfactory. RBI will continue to
follow the same approach of watchfulness, caution and flexibility in regard
to forex market in the current year also. 25. Our own experience last year, has highlighted the importance of
building up foreign exchange reserves to take care of unforeseen
contingencies, volatile capital flows and other developments which can
affect expectations adversely. The emerging economies have to rely largely
on their own resources during external exigencies (or contagion) as there is
no international "lender of last resort" to provide additional
liquidity at short notice on acceptable terms. Thus, the need for adequate
reserves is unlikely to be eliminated or reduced even if exchange rates are
allowed to float freely. Sharp exchange rate movements can be highly
disequilibrating and costly for the economy during periods of uncertainty or
adverse expectations, whether real or imaginary. These economic costs are
likely to be substantially higher than the net financial cost, if any, of
holding reserves. The success of the IMD scheme last year, and the
confidence generated by it was a crucial factor in stabilizing India’s
forex markets and containing risks to the real economy in the second half of
the year. 26. The overall approach to the management of India’s foreign exchange
reserves in recent years has reflected the changing composition of balance
of payments, and has endeavoured to reflect the "liquidity risks"
associated with different types of flows and other requirements. The policy
for reserve management is thus judiciously built upon a host of identifiable
factors and other contingencies. Such factors, inter alia, include:
the size of the current account deficit; the size of short-term liabilities
(including current repayment obligations on long-term loans); the possible
variability in portfolio investments and other types of capital flows; the
unanticipated pressures on the balance of payments arising out of external
shocks (such as the impact of the East Asian crisis in 1997-98 or increase
in oil prices in 1999-2000); and movements in the repatriable foreign
currency deposits of non-resident Indians. Taking these factors into
account, India’s foreign exchange reserves are at present comfortable.
However, there can be no cause for complacency. We must continue to ensure
that, leaving aside short-term variations in reserve levels, the quantum of
reserves in the long-run is in line with the growth in the economy and the
size of risk-adjusted capital flows. This will provide us with greater
security against unfavourable or unanticipated developments, which can occur
quite suddenly. 27. The developments in respect of India’s balance of payments,
particularly exports, also require continuous vigilance. Fortunately, in
2000-01, exports have done well and it is essential to keep up the momentum
to ensure that balance of payments do not become a constraint on economic
growth. In the past, several measures were introduced to ensure timely
delivery of credit to exporters and remove procedural hassles. As indicated
in the Mid-term Review of October 2000, the suggestions received from
exporters and export trade organisations were examined by RBI and the
Bankers' Group and guidelines were issued to banks to further simplify
procedures for export credit. These include adopting a flexible approach in
negotiating bills drawn against LCs over and above the sanctioned limits,
delegating discretionary/higher sanctioning powers to branches,
authorisation to branches for disbursing a certain percentage of
enhanced/ad-hoc limits pending sanction, to incorporate all sanctions
including waiver of submission of order/LC for every disbursal and export
credit and submission of a statement of orders/LCs in hand at periodical
intervals in the sanction letter and advise ECGC immediately about the terms
of sanction to facilitate faster claim settlement. 28. RBI has been arranging seminars at major exporting centres for the
benefit of exporters and branch level bank officials for resolving the
problems relating to export credit and meeting foreign currency
requirements. RBI has also been holding meetings of All India Export
Advisory Committee (AIEAC) at quarterly intervals for deliberating on the
issues raised by exporter organisations and taking appropriate action.
Further, exporters have also been advised that they can call on concerned
senior officials of RBI on any working day during a designated time-slot
without prior appointment for redressal of their grievances. In order to
have a feedback on simplification of procedures by RBI for export credit
delivery as also the level of exporters’ satisfaction with bank services,
it is proposed to conduct a survey with the help of an independent outside
agency. 29. As a step towards simplification of procedures in the field of
exports, all status holders (export/trading/super trading houses) and
manufacturer exporters who are exporting more than one-half of their
production and recognised as such by the Directorate General of Foreign
Trade (DGFT), have recently been extended a simplified facility to write off
their export outstandings to the extent of 5.0 per cent of their average
annual export realisation in the preceding three years. 30. For mitigating the problems of exporters due to the severe
earthquake, guidelines have been issued to banks for providing
relief/concessions. These include extending the period of packing credit,
conversion of dues into short-term loans repayable in suitable instalments
and relaxation in NPA classification norms. 31. In the recent period, procedure of financial transactions such as
remittances, investments and maintenance of bank accounts, etc., for
non-resident Indians (NRIs) has been considerably simplified and the
feedback from the NRIs on this count has been very positive. The Reserve
Bank would continue to welcome suggestions for further improving various
facilities pertaining to NRIs. 32. Foreign Institutional Investors (FIIs) can invest in a company under
the portfolio investment route up to 24.0 per cent of the paid-up capital of
the company which could now be increased to 49.0 per cent (40.0 per cent
earlier) by the concerned Indian company by passing a resolution by its
Board of Directors followed by passing of a special resolution to that
effect by its General Body. 33. In order to encourage foreign investment, foreign direct investment (FDI)
is permitted under the automatic route for most activities except in certain
circumstances and for a very small negative list. New foreign investment
proposals in the IT sector have been allowed automatic approval irrespective
of whether the investor has an existing joint venture or technical
collaboration in the country. No monetary ceilings have been placed on
investment under the automatic route. Foreign Investment Promotion Board (FIPB)
now considers applications for FDI up to 100 per cent for oil refining
sector, business-to-business e-commerce and internet service providers
(ISPs) subject to certain conditions. FDI under the automatic route has been
permitted up to 100 per cent for all manufacturing activities (with certain
exceptions) in Special Economic Zones (SEZs). As announced in the Union
Budget, FDI in Non-Banking Financial Companies (NBFCs) will be put on the
automatic route. Foreign equity participation up to 26 per cent has been
allowed in the insurance sector subject to issue of necessary licence by the
Insurance Regulatory and Development Authority (IRDA). The Reserve Bank has
given general permission to Indian companies which are eligible under the
automatic route or have SIA/FIPB approval to issue shares to their foreign
collaborators, subject only to certain reporting requirements. 34. Continuing with the policy of liberalisation of the capital account
following the announcement made in the Union Budget in March 2001, a number
of steps have been taken to improve liquidity in the ADR/GDR market and to
give opportunity to Indian shareholders to divest their shareholding in the
ADR/GDR market abroad. Thus, two-way fungibility in ADR/GDR issues of Indian
companies has been introduced, subject to sectoral caps, wherever
applicable. Stockbrokers in India have now been allowed to purchase shares
and deposit these with the Indian custodians for issue of ADRs/GDRs by the
overseas depository to the extent of those being converted into underlying
shares. Indian companies have been permitted to sponsor ADR/GDR issues with
an overseas depository against shares held by a shareholder, who wish to use
this option subject to compliance with Foreign Currency Convertible Bonds
and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and
guidelines issued by the Government. 35. Indian companies wishing to make acquisitions of foreign companies or
direct investment abroad in Joint Ventures/Wholly Owned Subsidiaries can now
invest up to US $ 50 million on an annual basis through automatic route
without being subject to the three year profitability condition. Additional
block allocation of foreign exchange over the limit of US $ 50 million is
available to companies with proven track record, subject to certain
conditions. Companies may invest 100 per cent of the proceeds of their ADR/GDR
issues for acquisitions of foreign companies and direct investments in Joint
Ventures and Wholly Owned Subsidiaries. Any Indian company that has issued
ADRs/GDRs may now acquire shares of foreign companies engaged in the same
area of core activity up to an amount of US dollar 100 million or an amount
equivalent to ten times of their exports in the previous year, whichever is
higher. Earlier, such stock swap facility was available only to Indian
companies in certain sectors. Partnership firms providing certain specified
professional services, viz., chartered accountancy, legal services, medical
and health care services, information technology and entertainment software
related services are allowed to invest abroad in foreign concerns in the
same line of activity subject to certain criteria. 36. In order to provide stimulus to the growth of the venture capital
industry in India, Securities and Exchange Board of India (SEBI) has been
made the single point nodal agency for registration of both domestic and
overseas venture capital funds which are allowed to invest through the
automatic route, subject to SEBI regulations. General permission has been
granted to SEBI registered Foreign Venture Capital Investments (FVCIs) to
invest in Indian Venture Capital Undertakings (IVCUs) or in a Venture
Capital Fund (VCF) and divest its investments at any price mutually
acceptable to the buyer and the seller. 37. In order to provide appropriate information, "Frequently Asked
Questions" (FAQs) on various topics relating to foreign exchange
matters have also been made available on RBI’s website. In addition, for queries
from public relating to specific transactions, eight dedicated e-mail
addresses have been provided on RBI’s website covering different types of
transactions. 38. The Reserve Bank will continue with its efforts to simplify
procedure, reduce documentation requirements and further liberalise
opportunities for productive investment in India by NRIs and others and by
Indian corporates abroad. Further suggestions by experts, corporates and
market participants in these areas would be welcome. |
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