The Securities and Exchange Board of India (Sebi) chairman D R Mehta announced that cumulative foreign institutional investor (FII) inflows into the Indian capital markets stand at $ 7.29 billion as on January 19.
The market regulator is of the view that more money could come in the calendar year 1997 once several areas of FII functioning/operations are streamlined.
The Sebi chief, speaking yesterday at the All India Association of Industries, said that a meeting held last week with leading foreign institutional investors and global custodians brought to light several issues.
Sebi will make the necessary comments based on the recommendations received and suggest changes to the finance ministry for their examination, Mehta said after the seminar.
He denied media reports that there was a slowdown in the policy towards allowing foreign broking houses to set up shop in India.
The cases where the applications are being reviewed (including Citicorp, Schroeder, Cazenove Securities) involve those where the documentation is not complete.
Obviously then, we would wait until the paperwork is in order, he said.
There are currently 427 registered FIIs with the market regulator and about nine cases are pending which the Sebi-RBI combine committee will clear shortly, he said.
Commenting on the new takeover code, Mehta said the Indian corporate world will now look different.
Managements will be more careful about violating any rules. He said that dissent notes had been received from certain committee members relating to specific issues.
Suggestions have come forward that once the acquisition moves up from 50 to 75 per cent, a public offer must be made.
The takeover code deals with not only taking over of managements but also substantial acquisition of shares, he said.
There was dissent among certain committee members as to why investor associations were not involved in the exercise.
There are 8 such associations such a step might help the association but one needs to have a judicial/objective view and not a party-dominated view, Mehta said.
Another issue pertained to making a public offer once the 10 per cent limit had been crossed, making it compulsory for the bidder to pick up the entire quantity of shares. He argued that in the western countries, takeovers were financed by banks but in India this was not the case.
Sebi is currently in the process of widening its vendor network to deal with the investor grievances/redressal issues. Currently, there is just one Mumbai-based vendor and Sebi is likely to decentralise the system whereby vendors with several offices (in 100-150 centres nationwide) will co-ordinate on such issues with the regulator.
Sebi will call on the corporates which have been identified as defaulters.
He reiterated that the stock markets were safe and the integrity maintained despite the sharp price volatility.
The stock exchanges have been on alert and have taken necessary steps.
There is no possibility of a payment crisis currently, he said. We would like to intervene at the markets only when it is absolutely necessary, Mehta said.
