Budget 2017: High net worth NBFCs can access capital markets via IPOs
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New Delhi: Non-Banking Finance Companies (NBFCs) with high net worth will now be able to access capital markets to raise funds as the government, in its budget proposal on Wednesday, allowed them to list their stocks with the exchanges. This will bring such NBFCs at par with their financial market peers, banks and insurance companies.
Presenting the budget for the fourth time in the current government, finance minister Arun Jaitley proposed that high net worth NBFCs can also participate in initial public offerings (IPOs), like banks and insurance companies.
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It is “proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as Qualified Institutional Buyers (QIBs) by Sebi at par with banks and insurance companies, making them eligible for participation in IPOs with specifically earmarked allocations,” Jaitley said.
“This will strengthen the IPO market and channelise more investments,” he added. Along with this, the government will introduce a common application form for registration, opening of bank and demand accounts, and issue PAN for Foreign Portfolio Investors (FPIs).
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Regulators—Sebi and RBI along with the Central Board of Direct Taxes (CBDT)—will jointly put in place the necessary mechanisms and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets, Jaitley said.
The minister also proposed that commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks.