Sebi Team For Japan, Hk To Woo Fiis

The Securities and Exchange Board of India chairman D R Mehta will lead a delegation in early March to make a pitch to Japanese investment institutions and other major institutional investors operating out of Hong Kong.

Mehta apart, the delegation will include Sebi executive director Pratip Kar, Bombay Stock Exchange president Madan Gopal Damani, National Stock Exchange managing director R H Patil and National Securities Depository Ltd managing director C B Bhave. The team is expected to leave on March 8.

Kar told Business Standard:``It is one of the stronger delegations from the capital market. There is tremendous enthusiasm about the Indian market in Japan which can be tapped.''

BSE president Damani said the delegation would aim at channeling the large Japanese investors into the Indian market and in explaining the entire package of capital market reforms which have recently been put in place with Sebi at the helm. Mehta's presence in the delegation is therefore of crucial importance.

The tour of Hong Kong is also important since several of the topmost FIIs operating in Indian markets are doing so with Hong Kong as their base for Asian market operations. Addressing FIIs in Hong Kong would therefore go a long way in explaining to the large foreign funds the steps being taken by the Indian markets regulator and the stock exchanges in easing the trading and settlement systems in the country. Bhave's presence will also underscore the fact that the market has witnessed a systemic change in that the long-awaited depositories system is now a reality.

The timing of the visit is significant in two ways. While it immediately follows the Union Budget, it also comes at a time when FII inflows are not showing any major signs of an upswing, though it remains a net positive every month. However, Sebi is now at a much better position to explain its reforms to the FIIs since several FII reforms have recently been ushered in. While proprietary FII funds are now allowed into India, FII investment is now permitted in corporate debt and even in gilts. A massive interface had also been recently hosted by Sebi to understand the FIIs' problems in operating in the Indian market situation. These steps are expected to gradually lead to a much higher inflow level for FIIs in India.

A year-old proposal from Sebi, that of allowing individual corporates to decide whether or not to allow FII investments in their companies over the 24 per cent limit, is still, however, pending. But Sebi has, on another front, recently finalised a takeover code, which allows complete transparency in the area of takeovers.