Rbi Will Have To Monitor Overseas Corporate Bodies

The onus of monitoring overseas corporate bodies will lie with the Reserve Bank of India (RBI).

The apex bank's notification, to be issued shortly, will broadly conform to the guidelines of the Foreign Exchange Management Act (Fema) in as far as the investment norms of OCBs are concerned.

Top finance ministry officials said after elaborate discussions with the Securities and Exchange Board of India (Sebi) and RBI, it has been decided that the notification specifying detailed guidelines on investment, capitalisation and disclosure norms for OCBs would be issued by RBI.

However, to the extent OCBs participated in the capital markets, it would be Sebi which would oversee their activities.

 

Sebi had called for banning participation of OCBs in the bourses citing their "dubious" role in the stock market scam following this year's budget. However, the RBI notification is likely to ban OCBs from undertaking any portfolio investment schemes.

Meanwhile, the finance ministry has also finalised a proposal to give more teeth to the capital market regulator and further strengthen its board. Sebi had sought additional powers for conducting on-site investigations, seizure of the books of accounts and power to impose greater penalties for offenders in the capital market.

"We have already informed the Cabinet Secretary of the item," an official said. While granting additional powers to Sebi would call for an amendment of the Sebi Act, the ministry has also suggesting making Sebi board a multi-member body on the lines of the Insurance Regulatory Development Authority, he added.

The decision on whether this should be done by issuing an ordinance or wait for the winter session of Parliament would be left for the Cabinet to decide, sources said.