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RBI okays NRI investment in Indian shares, debentures at face value

27 Sep 2012 Evaluate

The Reserve Bank of India (RBI) has allowed non-residents including NRI’s to make investments in an Indian company at the face value of shares or debentures, subject to their eligibility to invest under the FDI scheme. Earlier, a person residing outside India was allowed to purchase shares or convertible debentures of an Indian company under Foreign Direct Investment (FDI) Scheme and only up to the extent and subject to terms and conditions set under the FDI scheme.

Also, the person buying shares who proposes to be the collaborator or acquires the entire share holding of a new Indian enterprise is required to obtain prior permission from the government, in case he/she has a previous company or joint-venture in the country through investment in shares or debentures.

Furthermore, under this scheme, price of shares issued to non-residents shall not be less than the price worked out in accordance with the SEBI guidelines, in case if the issuing company is listed on any recognized stock exchange in India. As per RBI guidelines, the fair valuation of shares should be worked out by a chartered accountant as per the guidelines issued by the Controller of Capital Issues, in all other cases. The move is likely to benefit both the NRIs and economy in general as now NRIs will be able to reverse some extra wealth they earned abroad to this country.

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