India urged to relax rules on foreign investment

A United States custodian is calling for India to relax rules that determine how investors gain exposure to Indian companies.

BNY Mellon says that by permitting over-the-counter, non-capital-raising depositary receipts, India would make it easier for foreign investors to gain access to the country and encourage foreign investment.

“There is significant international demand for Indian equity in the form of depositary receipts that simply cannot be satisfied via the routes now available,” says Gregory Roath, BNY Mellon’s Asia-Pacific head of depositary receipts.

Depositary receipts for 13 Indian companies are currently listed on the New York Stock Exchange. The receipts represent securities on India’s stock exchanges and are popular among investors who do not have the local custody capability to invest directly in Indian companies.

Depositary receipts for a number of other Indian companies are available on other global exchanges.

Roath says BNY Mellon is often asked by US investors to create depositary receipts for other Indian companies, but says it is restricted from doing so by current regulations.

“Many investors prefer the familiarity and convenience of depositary receipts, are unable to invest directly, or are unable or unwilling to use derivatives,” he says.

By allowing over-the-counter, non-capital-raising depositary receipts, India would join a list of 67 countries that already permit the practice, including Brazil, South Korea and Turkey, says BNY Mellon.

BNY Mellon says it met India’s Ministry of Finance, the Securities and Exchange Board of India and the Reserve Bank of India to discuss the proposal.

©2013 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST