The Curious Case Of Pricing Guidelines

RBI introduces a new standards for pricing guidelines amongst other reforms

• All pricing guidelines rationalized from DCF / RoE to "internationally accepted pricing methodologies"; and
• Partly paid shares and warrants can now be issued under automatic route subject to certain terms and conditions.

The Reserve Bank of India ("RBI") this week introduced specific reforms with regard to foreign direct investments ("FDI") in India. Specifically, these reforms are:

• Revision of pricing guidelines in respect of transfer / issue of shares (with and without options) to provide for greater freedom and flexibility for investors; and
• Recognition of partly paid equity shares and warrants as "eligible instruments" for the purpose of FDI and foreign portfolio investment (""FPII") under the automatic route.