India’s Union Budget 2011 about Invest Policies

INVESTMENT ENVIRONMENT

Foreign Direct Investment

    * Discussions underway to further liberalise the FDI policy.

Foreign Institutional Investors

    * SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirements for equity schemes.

    * To enhance flow of funds to infrastructure sector, the FII limit for investment in corporate bonds issued in infrastructure sector being raised.

Financial Sector Legislative Initiatives

    * To take the process of financial sector reforms further, various legislations proposed in 2011-12.

    * Amendments proposed to the Banking Regulation Act in the context of additional banking licences to private sector players.

Public Sector Bank Capitalisation

·        Rs. 6,000 crore to be provided during 2011-12 to enable public sector banks to maintain a minimum of

Tier I CRAR of 8 per cent.

Recapitalisation of Regional Rural Banks

    * Rs. 500 crore to be provided to enable Regional Rural Banks to maintain a CRAR of at least 9 per

cent as on March 31, 2012.

Micro Finance Institutions

    * “India Microfinance Equity Fund” of Rs. 100 crore to be created with SIDBI

    * Government considering putting in place appropriate regulatory framework to protect the interest of small borrowers.

    * “Women’s SHG’s Development Fund” to be created with a corpus of Rs. 500 crore

Rural Infrastructure Development Fund

    * Corpus of RIDF XVII to be raised from Rs. 16,000 crore to Rs. 18,000 crore.

Micro Small and Medium Enterprises

    * Rs. 5,000 crore to be provided to SIDBI for refinancing incremental lending by banks to these enterprises.

    * Rs3,000 crore to be provided to NABARD to provide support to handloom weaver co-operative societies which have become financially unviable due to non-repayment of debt by handloom weavers facing economic stress.

    * Public sector banks to achieve a target of 15 per cent as outstanding loans to minority communities under priority sector lending at the earliest.

Housing Sector Finance

    * Existing scheme of interest subvention of 1 per cent on housing loan further liberalised.

    * Existing housing loan limit enhanced to Rs. 25 lakh for dwelling units under priority sector lending.

    * Provision under Rural Housing Fund enhanced to Rs. 3,000 crore.

    * To enhance credit worthiness of economically weaker sections and LIG households, a Mortgage Risk

Guarantee Fund to be created under Rajiv Awas Yojana.

    * Central Electronic Registry to prevent frauds involving multiple lending on the same immovable property to become operational by March 31, 2011.

Financial Sector Legislative Reforms Commission

    * Financial Sector Legislative Reforms Commission set up to rewrite and streamline the financial sector laws, rules and regulations.

    * Companies Bill to be introduced in the Lok Sabha during current session.