GOVT TO ‘TIME’ SHARE ISSUE TO FOREIGN COs

The Government is planning to tighten foreign investment reporting norms to push corporates to issue shares to foreign investors within a fixed period after receiving their funds. With no time frame stipulated, corporates often cancel an investment deal and return the money after using it for many months. In effect, the investments are actually used as short term debts, which the Reserve Bank of India wants to discourage. The move is aimed at addressing RBI’s concerns about misuse of foreign investment rules. It wants to plug loopholes so that companies receiving foreign money issue shares within a stipulated time-frame.