The Finance Minister has mentioned a number of changes for capital markets. The final budget document may throw up more, but here are five mentioned so far:
ADRs And GDRs
The Finance Minister has said that the regime governing American Depositary Receipts(ADRs) and Global Depository Receipts (GDRs), by which Indian companies can raise capital abroad, has now changed. Earlier such receipts could only issued against an underlying of equity shares, they will now be allowed to be issued for all securities including debt instruments. A committee under MS Sahoo had recommended revamping the same through a report accepted by the government.
Indian Depository Receipts
A revamp was also mentioned of the Indian Depository Receipt (IDR) regime, which allows foreign companies to raise capital in India. The new regime also changes the name of the instrument from IDR to Bharat Depository Receipt or (BhDR).
Clarity For India-Based Offshore Fund Managers
He alluded to clarity on treatment of fund managers of offshore funds, who are working out of India. It was expected that tax treatment would be clarified on if there would be a tax liability on a fund, which may be based abroad; but whose fund manager works out of India.
Single Demat Account
The government has proposed that a single demat account which can be used for different financial products.
The government has said that there would be interoperability of (Know Your Client) KYC norms. This would reduce the need for investors to go through fresh KYC processes, providing identification and other details, while making use of different financial services.