Regulatory revival: Not an option but a compulsion

By Mohit Saraf and Snigdhaneel Satpathy, Luthra & Luthra Law Offices
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The Reserve Bank of India (RBI) has given foreign investors reason to cheer by bringing clarity to the vexed issue of optionality clauses in foreign direct investment (FDI). The regulator must be applauded for its efforts and courage in altering course on this issue.

Mohit Saraf
Mohit Saraf

The role of any commercial/capital market regulation should be to facilitate business and investments, while preventing any fraudulent transactions or overnight flight of capital, and not to inhibit business with burdensome regulation, particularly as increased foreign exchange inflows are crucial to achieve the government’s objective of double-digit growth.

The quick and positive change towards an assured exit/downside protection, as evidenced by the RBI’s recent monetary statement, will encourage minority/private equity (PE) investment in India and provide foreign investors with better assurances and risk mitigation.

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Luthra & Luthra Law Offices is a full-service law firm with offices in Delhi, Mumbai and Bangalore. Mohit Saraf is a senior partner and Snigdhaneel Satpathy is an associate at the firm. This article is intended for general informational purposes only and is not a substitute for legal advice.

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