Date:09/06/2007 URL: http://www.thehindu.com/2007/06/09/stories/2007060906971500.htm

Business - Briefly

FDI policy on debentures

MUMBAI: The Reserve Bank of India, in a notification, on Friday clarified that henceforth only instruments which are fully and mandatorily convertible into equity, within a specified time, will be reckoned as part of equity under the FDI policy and eligible to be issued to persons residing outside India.

The RBI has issued the clarification to prevent corporate from circumventing the provisions of the FDI policy by issuing hybrid instruments like optionally convertible or partially convertible debentures, which are intrinsically debt-instruments.