RBI eases stock option norms

Continuing with its on-going foreign exchange liberalisation, the Reserve Bank of India on Monday removed the riders on the acquisition of foreign securities under employees stock option (ESOP) scheme.

A resident individual, who is an employee or director of an Indian office or branch of a foreign company in which the foreign holding is not less than 51 per cent, is now permitted to acquire foreign securities under ESOP without any monetary limit. Earlier, it was possible only if the shares under ESOP were offered at a concessional price.

"As a measure of further liberalisation, it has now been decided to dispense with the condition that the shares should be offered at a concessional price," RBI said.

It has also permitted sale of the shares so acquired, without prior permission of the central bank, provided the proceeds thereof are repatriated to India.

Corporate India, however, is not very enthused about this as most some of the companies have stopped giving ESOPs to their employees.

This is on account of lack of clarity in regard to accounting practices of ESOPs. Software major Infosys and private sector ICICI Bank have recently announced their plans to stop offering ESOPs and instead offering other incentives to their employees.