NEW DELHI, June 22: The centre, in a bid to woo non-resident Indians (NRIs) for containing the fall-out of economic sanctions and arresting the sliding capital markets, has further relaxed portfolio investment norms for them. The finance ministry has segregated the ceilings for NRIs, PIOs (Persons of Indian Origin) and OCBs (Overseas Corporate Bodies owned by such persons) to the extent of at least 60 per cent from that of foreign institutional investors (FIIs).As per the revised investment norms, the aggregate portfolio investment ceiling for NRIs/PIOs/OCBs would be 10 per cent of the paid-up equity capital of a company and this would have nothing to do with the ceiling of 24/30 per cent fixed for FIIs. The FIIs would continue to enjoy a separate aggregate ceiling.
Effectively, this would mean that aggregate foreign investment in a company, including that of the FIIs/NRIs/PIOs/OCBs, can go up to a maximum of 40 per cent of the paid-up capital.
The finance minister in the budget had raised theinvestment limit by a single NRI/PIO/OCB, for purchase of shares in a company through stock exchanges, under the portfolio investment scheme from 1 per cent to 5 per cent.
And the aggregate limit for all NRIs/PIOs/OCBs from 5 per cent to 10 per cent. The centre had issued a notification giving effect to these changes on June 11. These new limits for the NRIs/PIOs/OCBs were, however, a part of the aggregate ceiling of 24 per cent for all FIIs/NRIs/PIOs/OCBs in the paid-up capital of a company which could be raised to 30 per cent by a board/general body resolution.
It was pointed out that as the aggregate investment limit has been reached in the case of several companies, the enhancement of NRI/PIO/OCB limit would not provide greater freedom in practice in these cases.
The finance ministry, in a bid to provide greater margin of flexibility for the NRI/PIO/OCB investment, has decided that the individual and aggregate ceiling for portfolio investment ceiling would be exclusive of the aggregate portfolioinvestment ceiling for FIIs.
At a time, when the developed world is turning hostile in the aftermath of the Pokharan explosions, the Bharatiya Janata Party-led coalition is pinning lot of hopes on the NRIs.
Apart from increasing the limits for NRI/OIO/OCB investment investments, the finance minister has also promised to give a special status for NRIs.
The government will soon chalk out a scheme for issuance of a Persons of Indian Origin (PIO) card for those living abroad. This would ensure promised visa-free regime for NRIs in addition to some special economic, educational, financial and cultural benefits for them.
Proposals are also afoot to launch Resurgent India Bond and Millennium Scheme of the UTI to facilitate greater participation of the NRIs, the need for which has become more pressing with the setting in motion of the economic sanctions by the US and lowering of the country's credit rating by Moody's Investors Service.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
