Rbi May Bar Ocbs From Portfolio Investments

The Reserve Bank of India is soon expected to come out with a notification barring all Overseas Corporate Bodies (OCBs) from accessing Portfolio Investment Schemes as part of the drive to clean up the capital markets.

The decision is a follow-up to the recommendations of the two-member committee set up by the RBI and Securities and Exchange Board of India (Sebi) to examine the role of the OCBs and suggest remedial actions. Based on the report of the committee, it has also been decided that Sebi will issue regulations to ensure that OCBs are treated at par with foreign institutional investors (FIIs), including the condition that they maintain the same level of paid-up capital.

The two sets of notifications mean that the OCBs will now be fully controlled by the market regulator instead of both agencies passing the buck, which has been the case till date. Sources said this will also imply that the minimum paid-up capital requirements for OCBs will now be at par with FIIs. It will ensure that the charge against OCBs of investing in the markets without being subject to any sort of controls by either the RBI or Sebi will now be over.

According to government sources, the RBI notification means that the at-par positions of OCBs and NRIs in existence since the nineties would now be over. NRIs