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Our Bureau

`Corporate bond needs attention'

New Delhi , Nov. 27

The Government is likely to come up with foreign direct investment norms for stock exchanges in a week, a senior Finance Ministry official has said.

"The notification specifying the FDI limit will come out in a week. It will mention separately the FDI limit as well as the FII limit for investment in the stock exchanges," Mr K.P. Krishnan, Joint Secretary in the Finance Ministry, told newspersons on the sidelines of the India Economic Summit 2006 here on Monday.

The Securities and Exchange Board of India had recently issued new guidelines for corporatisation of stock exchanges. These guidelines stipulate that the public should continuously hold at least 51 per cent of the equity in such exchanges. The capital market regulator has also capped the individual investment, direct or indirect, in such exchanges at five per cent.

Earlier, speaking at a session on Financial Markets at the India Economic Summit 2006, Mr Krishnan said that, post-Patil committee recommendations on corporate bond market, the Finance Ministry had asked a law firm to identify the legislative changes that may be required to implement the recommendations of the committee.

"It was found that about 78 pieces of legislation require a change. These changes include administrative as well as legislative change. We are now identifying those that could be done through executive orders and those that may require change in law," Mr Krishnan said.

He pointed out that an issue like definition of "corporate bond" needs attention. "There is no specific definition of a corporate bond. We may have to amend the Companies Act and the SCRA Act for this," he said. On the issue of deepening the capital market, he underscored the need for more good quality issues to tap the capital market.

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