Sectoral caps will not come in way of CDRs
Quotes

Sectoral caps will not come in way of CDRs

Last Updated: Wednesday, August 01, 2012, 22:54
 
 Comment 0
 
Sectoral caps will not come in way of CDRs
New Delhi: Corporate debt restructuring (CDR) being undertaken by banks owned by non-residents will not be hit by sectoral foreign direct investment (FDI) caps.

The move will help such banks to restructure loans of companies which are facing problems on account of economic slowdown and are unable to service their debts.

As per the press note issued by the Commerce and Industry ministry, the investments made by such banks as part of the CDR, loan restructuring and acquisitions of shares due to default in loans "shall not count towards indirect foreign investment".

However, it clarified that investments made by banks owned and controlled by non-residents in their subsidiaries and joint ventures would be treated as foreign investment.

"Downstream investments made by a banking company ... owned and/or controlled by non-residents, under CDR, or other loan restructuring mechanism, or in trading books, or for acquisition of shares due to defaults in loans, shall not count towards indirect foreign investment," it said.

The decision will take immediate effect, it said.

The decision assumes importance as it will allow free hand to such banks in restructuring loans of companies without the fear of getting into a regulatory problems on account of sectoral FDI caps.

Under the existing provisions, downstream investment by an Indian company, owned and or controlled by non-residents, into another domestic company is subject to sectoral FDI caps.

PTI


First Published: Wednesday, August 01, 2012, 22:54


Comments


comments powered by Disqus
Google I/O 2014
Google I/O 2014
Maker Faire @ White House
Maker Faire @ White House
Amazon unveils 3D `Fire` smartphone
Amazon unveils 3D `Fire` smartphone
RIL`s 40th AGM
RIL`s 40th AGM
Samsung Galaxy Tab S
Samsung Galaxy Tab S

Web Wrap
Contact Us : Privacy Policy : Legal Disclaimer
Copyright © Zee Media Corporation Ltd. All rights reserved