Inter-departmental consultations between Ministries of Finance and Corporate Affairs including Securities and Exchange Board of India (SEBI) are at advance stage of maturity for rolling out “relaxed and enlightened” regulations for private equities (PEs) and Venture Capitalists (VCs) so that India attracts larger volumes of their investments in areas of infrastructure, healthcare and clean energy, according to R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs.

Inaugurating ASSOCHAM organized Private Equity Annual Convention 2010 here, Bandyopadhyay also indicated that fresh provisions would also be finalized for PEs and VCs to give them a safer exit route to withdraw their investments after their maturity period is over. The proposed safer exit route would encourage PEs and VCs to hasten their investments in India, he felt.

Currently, safer mechanism for exit route for PEs and VCs is not there and department concerns are working on it so that India is able to attract larger volumes of their investments, pointed out Mr. Bandyopadhyay.

The Secretary, however, urged the VCs and PEs present during ASSOCHAM conference to bring in transparency in their mode of operations and functions as apprehensions are deep routed in minds of policy makers that investments of PEs and VCs fly away sooner than anticipated and thus they would have to bring about intended changes in their modus operandi.

“These investors, therefore, would have to prove policy makers wrong involved in afresh making relaxed and enlighten regulations for them so that policy makers perception about PEs and VCs change and proposed regulations are rolled out earlier than anticipated”, hinted Mr. Bandyopadhyay.

The Secretary, however, added that some rules and regulations are there for PEs and VCs but industry has been consistently demanding that rules currently in vogue need to be modified and rationalized.

It is in view of this that inter-departmental consultations are at final stages and the relaxed rules and regulations would be unveiled by SEBI in due course of time as PEs and VCs fall under its direct jurisdiction, he indicated.

Speaking on the occasion, Director General National Council of Applied Economy Research (NCAER), Dr. Suman Bery said that year 2010 would be difficult and macro management of economic policies would have to be taken keeping in view both demand and supply side constraints.  Inflation would continue to be a concern but gradually the economy would move on intended growth trajectory by 2011 onwards, he said.

Mr. Paul Joseph, Principal Advisor, MCX Stock Exchange said that SEBI would soon notify its decision for a separate Exchange for Medium, Small and Micro enterprises so that this sector which currently faces severe problems for liquidity is able to receive larger volumes of investments from PEs and VCs also.

Among others who spoke on the occasion comprised Mr. Subbu Subramaniam N, Chairman, VCAI, Ms. Kalpana Jain, Co-Chairperson VCAI and Mr. D S Rawat, Secretary General ASSOCHAM.

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September 2021