Overseas corporate bodies (OCBs) had exceeded the Reserve Bank of India guidelines on investments in two companies--Shonkh Technology and DSQ Biotech. The Mauritius-based Kensington Investment Ltd had breached the investment cap by holding 12.86 per cent in Shonkh Technology and 15.46 per cent in DSQ Biotech.
According to the RBI guidelines, non-resident Indians and OCBs should not exceed 10 per cent of the paid-up capital of a company. The Securities and Exchange Board of India (Sebi) has in its interim report on the market scam said that as on January 3, 2001, KIL held 12.86 per cent of the capital in Shonkh Technology and on January 4, 2001 KIL held 15.46 per cent in DSQ Biotech.
The markets regulator also said that as on March 31, 2001 European Investments Ltd, KIL and Far East Investment Ltd had a combined holding of 10.73 per cent in Global Trust Bank.
Also according to RBI guidelines, OCBs are required to make payments for purchase of shares from inward remittances through normal banking channels or out of the funds maintained in their NRE/FCNR account maintained in India if the shares are purchased on a repatriation basis.
Sebi has said that Wakefield Holdings had made certain purchases through Triumph International and Finance (I)Ltd (TIFIL) which were adjusted with the credit balance in its account.
"The RBI in its inspection report said there were several instances where OCBs had booked purchase orders without having sufficient balances in their NRE accounts," said Sebi.
The OCBs who had made these purchases were Wakefield Holdings, European Investment Ltd, Far East Investment Capital Ltd.
The Sebi report has also said that according to RBI guidelines, OCB investments in a company cannot exceed 5 per cent of the capital of the company. However, some OCBs had breached the 5 per cent limit. Brentfield Holdings, Klensington Investments and Far East Investments had breached the 5 per cent limit in Aftek Infosys, Mascon Global, Shonkh Technology, Global Trust Bank and DSQ Biotech.
