July 1, 2011
The changes in economic scenario after liberalization and the economic growth have raised the interest of Indian as well as Foreign Institutional Investors(FII’s) in the Indian capital market. Though the Government has been liberalizing the Indian economy but the inflation bug seems to have hit the Indian currency too. The finance ministry has decided that with effect from 30th June this year, coins of 25 paisa denomination will not be accepted in transactions and will go into history. This has joined the league of coins of 1, 2, 3, 5 and 10 paisa denomination, that have disappeared from circulation, surviving only in numismatic collections. The Master Circulars by Reserve Bank of India are a one-point reference of instructions issued by the Reserve Bank of India on a particular subject. These are issued on July 1st every year and automatically expire on 30th June of the succeeding year. The topics covered in the Master Circular on Foreign Exchange are Foreign Investment in India, Investment in Joint Ventures and Wholly owned subsidiaries abroad, Import and export of Goods and Services etc. The liberalization initiatives taken by the Reserve Bank and the Central Government have resulted in the gradual integration of the Indian economy with the global economy which is its main emerging feature. RBI signaled further liberalization through its recent circular wherein it has permitted the issue and allotment of shares for consideration other than cash to a person resident outside India upon certain terms and conditions, buyback/ prepayment of FCCB's by Indian Companies etc. Also, this is the first time that RBI has introduced the requirement of filing Annual Return on Foreign Liabilities and Assets by the Companies discontinuing Part B of FCGPR. As we all know that most of the countries of the world which embark on the path to economic development have to depend on foreign capital to some extent. In spite of the potential savings in a developing economy like India, foreign capital helps in speeding up economic activity at every stage of development. Foreign capital brings with it other scarce productive factors, such as technical knowhow, business experience and knowledge which are equally essential for economic development. The Governments initiative to liberalise the inflow of investment in the country, widen the class of foreign investors in India and give more depth to equity markets in the country will undoubtedly speed up the process of economic development. Apart from a number of Green Initiatives taken by the Ministry of Corporate affairs, the initiative taken by the Ministry for appointing a Regional Director for South East Region Directorate Headquartered is commendable. The Regional Director for South East Region Directorate Headquartered at Hyderabad covers the state of Karnataka, Kerala, Andhra Pradesh and Union Territory of Lakshdweep. The major powers delegated to the RD will cover rectification of name, approval for contracts under Section 297, appointment of statutory auditors under certain clauses of Section 224 of the Companies Act, 1956 etc. The office of Regional Director, Ministry of Corporate Affairs has already started functioning in Hyderabad.