SEBI seeks FII status for foreign venture capitalists

BANGALORE: The Securities and Exchange Board of India (SEBI)

has urged the centre to consider the same status to foreign venture capital

investors (FVCIs) as is given to foreign institutional investors (FIIs).

SEBI chairman D.R. Mehta at the Banktechnology summit

clarified that, this would mean allowing select, full capital account

convertibility to FVCIs as is done in the case of FIIs. Mr. Mehta also said,

"A recommendation has been made to the government to this effect. If

implemented, the recommendation will allow venture capitalists (VCs) from abroad

to bring into and take out from the country, any amount that they wish to. This,

we believe, will help Indian entrepreneurs - who have ideas, but lack capital -

to attract investments from foreign investors."

He also pointed out, if the proposal is accepted, it will

bring relief to entrepreneurs in the country, as typically, VCs look at exit

options after successfully starting operations for start-up companies.

Successful VCs such as The IndUS Entrepreneurs (TiE) president Kanwal Rekhi, has

in the past expressed the inability of VCs to repatriate funds from India and

have cited such reasons as the poor flow of funds into the country in the form

of VC. Earlier, after the inauguration of the Chennai chapter of TiE, Mr. Rekhi

had said, "It's an individual's money. If restrictions don't allow him to

take money out of the country, then VCs will not be willing to take as many

risks as a VC ought to, to help fresh companies."