Financing Structure

8/19/2019 Financing Structure

1/25

reserve

Preliminary & tentative

For discussion purposes only

Financing structure

MARCH 16, 2004

Confdentia

!@#

GLOBAL TAX ADVISORY SERVICES


2/25

Contents1. Pur!se !" #$e re!r#......................................................................................................................%

2. E&e'u#(ve su))*r+........................................................................................................................4

%. u-(-/ !#(!-s..............................................................................................................................

4. *'#!rs (-"ue-'(-/ #$e "(-*-'(-/ s#ru'#ure...................................................................................11

4.1 C!))er'(* 3us(-ess "*'#!rs..............................................................................................................11

4.2 Re/u*#!r+ "*'#!rs..................................................................................................................................12

. S#ru'#ur(-/ (-ves#)e-#s (-#! I-(*................................................................................................1

6. C*s$ r!"(# re*#r(*#(!-..............................................................................................................15

6.1 Bu+3*'7 !" s$*res.................................................................................................................................15

6.2 C*(#* reu'#(!-....................................................................................................................................1

6.% P*+)e-# !" (v(e-...............................................................................................................................20

6.4 P*+)e-# !" (-#eres# !- e3#...................................................................................................................21

6. Issue !" reee)*3e re"ere-'e s$*res *- ree)#(!- (- '*s$........................................................21

5. Su(#*3((#+ !" *#er-*#(ves..............................................................................................................24

5.1 Se#u s'e-*r(!........................................................................................................................................24

5.2 Su3se8ue-# s'e-*r(!...............................................................................................................................2

C!-"(e-#(* A R(/$#s Reserve Er-s# 9 Y!u-/ 2002 2


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1. Purpose o the report

X (s 'urre-#+ ev*u*#(-/ #$e '*s$ r!"(# re*#r(*#(!- s#r*#e/(es "!r ABC *- #$e )(#(/*#(!- !" #r*e'*s$. H!:ever, '*s$ r!"(# re*#r(*#(!- *- )(#(/*#(!- !" #r*e '*s$ '*--!# 3e ev*u*#e (s;!(-#e"r!) #$e "(-*-'(-/ s#ru'#ure. T$e "(-*-'(-/ s#ru'#ure e&er'(ses s(/-("('*-# (-"ue-'e !- #$e re*#r(*#(!-s#r*#e/(es.

I- v(e: !" #$(s *se'#, #$(s re!r# (s s#ru'#ure (-#! #$e "!!:(-/ se'#(!-s<

• T$e #+('* !#(!-s *v*(*3e #! "u- #$e !er*#(!-s !" ABC=

• S!)e )*;!r "*'#!rs #$*# )*+ (-"ue-'e es(/-(-/ #$e "(-*-'(-/ s#ru'#ure=

• S#ru'#ur(-/ #$e (-ves#)e-# (-#! I-(* (e (s'uss(-/ !#e-#(* e""('(e-'(es #$*# '!u 3e *'$(eve

#$r!u/$ *#er-*#e (-ves#)e-# s#ru'#ures=

• T$e *#er-*#e !#(!-s #$*# *re *v*(*3e "!r '*s$ r!"(# re*#r(*#(!- *!-/ :(#$ #$e re/u*#!r+

*- #*& ()('*#(!-s !" e*'$ !" #$e !#(!-s=

• Ie-#("+(-/ #$e v*r(!us s#*/es !" !er*#(!-s !" * #+('* $(/$ '*(#* !u#*+ r!;e'# 3*se !-

'$*r*'#er(s#('s, :$('$ *re (s*+e (- #$ese v*r(!us s#*/es= )*(-/ #$ese s#*/es */*(-s# #$e#+('* '*s$ r!"(# *''u)u*#(!- *# e*'$ s#*/e *- (e-#("+(-/ #$e #+('* re*#r(*#(!- #!!s #$*#'!u 3e use *# e*'$ s#*/e #! re*#r(*#e #$e '*s$ r!"(#s *''u)u*#(!-.

C!-"(e-#(* A R(/$#s Reserve Er-s# 9 Y!u-/ 2004 % Preliminary & tentative

For discussion purposes only


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2. Executive summary

X (s 'urre-#+ ev*u*#(-/ #$e '*s$ r!"(# re*#r(*#(!- s#r*#e/(es "!r ABC *- #$e )(#(/*#(!- !" #r*e'*s$. H!:ever, su'$ ev*u*#(!- (s -!# "e*s(3e (- (s!*#(!- *- $*s #! 3e '!-s(ere (- '!-;u-'#(!- :(#$#$e "(-*-'(-/ s#ru'#ure. A''!r(-/+, (- #$(s re!r#, :e $*ve ev*u*#e #$e "u-(-/ !#(!-s, #$e r!u#(-/!" (-ves#)e-#s, #!!s "!r r!"(# re*#r(*#(!- *- #$e(r *('*3((#+ *# #$e v*r(!us s#*/es (- #$e !er*#(!-s!" ABC.

Funding options

T$e #+('* !#(!-s *v*(*3e #! "u- #$e '*(#* s#ru'#ure !" #$e r!;e'# '!u '!)r(se e8u(#+, re"ere-'e s$*res *- e3# >(-'u(-/ eer-* '!))er'(* 3!rr!:(-/s?.

Factors influencing the financing structure

T$ere *re * -u)3er !" "*'#!rs #$*# (-"ue-'e #$e e#er)(-*#(!- !" #$e "(-*-'(-/ s#ru'#ure :$('$ '*- 3e(v(e (-#! '!))er'(* *- 3us(-ess "*'#!rs *- Re/u*#!r+ "*'#!rs.

Commercial / business factors

• C*s$ "!: *3((#+ #! serv('e e3#

• S*es s#*3((#+

• I-us#r+ -!r)

• R(s7 *e#(#e

Regulatory factors

• C*s$ #r*< T$e '*s$ #r*s )*+ *r(se 3e'*use !" v*r(!us "*'#!rs (-'u(-/<

− Tr*-s"er #! reserves !- e'*r*#(!- !" (v(e-s=

− Tr*-s"er #! reserves !- ree)#(!- !" re"ere-'e s$*res=

−

Tr*-s"er #! reserves !- (ssue !" reee)*3e e3e-#ures@= *-

− !-'*s$ '$*r/es !- #$e r!"(#s !" #$e '!)*-+ su'$ *s ere'(*#(!-.


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• T*& eu'#(3((#+ !" (-#eres# !- e3#

• R*#e !" (-#eres# !- e3#

• D(v(e- (s#r(3u#(!- #*& >DDT?

• M(-()u) *#er-*#e #*& >MAT?

• D(ves#)e-# '*use (- #$e IPB *r!v*

• C*(#* /*(-s !- re*#r(*#(!- #!!s su'$ *s 3u+3*'7 !" s$*res, '*(#* reu'#(!- e#'

T$e "(-*-'(-/ s#ru'#ure >(e )(& !" e3#, e8u(#+ *- re"ere-'e '*(#*? "!r ABC :!u ee- u!- *#$e *3!ve *r*)e#ers. H!:ever, (- #$e *3se-'e !" se'("(' r!;e'#(!-s !" '*s$ "!:s, -u)3er !" re#*(!u#e#s #! 3e se# u, '*(#* e&e-(#ure *-, s*es r!;e'#(!-s e#', :e $*ve -!# ev*u*#e #$e !#()u)

)(& *# #$(s s#*/e. e :!u 3e e*se #! *ss(s# ABC (- #$e *3!ve )*##er (" :e *re r!v(e :(#$ #$ereev*-# (-"!r)*#(!- *- r!;e'#(!-s.

Structuring investments into India

A-!#$er ()!r#*-# *se'# #! 3e '!-s(ere *# #$(s s#*/e (s #$e s#ru'#ur(-/ !" (-ves#)e-#s. T$ere *re !#e-#(*+ s(/-("('*-# #*& e""('(e-'(es, :$('$ '*- 3e *'$(eve 3+ us(-/ *#er-*#e ;ur(s('#(!-s >(- :$('$X )*+ $*ve !er*#(!-s e&er(e-'e '*(#*? #$*# #! s#ru'#ure (-ves#)e-#s (-#! ABC. S!)e !" #$e 7e+#*& e""('(e-'(es #$*# '!u 3e *'$(eve *re *s "!!:s<

• A !:er r*#e !" :(#$$!(-/ #*& #$*- #$!se res'r(3e u-er !)es#(' #*& *:s "!r *ss(ve

(-'!)e s#re*)s su'$ *s r!+*#+, "ees "!r #e'$-('* serv('es, (-#eres#, e#'. !r e&*)e "ees "!r#e'$-('* serv('es *( 3+ ABC #! * Du#'$ '!)*-+ (s #*&*3e *# 10 (- I-(* u-er #$e I-(*

e#$er*-s D!u3e T*& Av!(*-'e A/ree)e-#s >DTA?= $!:ever "ees "!r #e'$-('* serv('es *( #! * M*ur(#(*- '!)*-+ )*+ -!# 3e #*&*3e (- I-(* u-er #$e I-(* M*ur(#(us DTA.

• V*r(!us I-(*- DTA@s r!v(e #$*# *-+ '*(#* /*(-s *r(s(-/ !- #r*-s"er !" s$*res (- *- I-(*-

'!)*-+ :( -!# 3e #*&*3e (- I-(*. A''!r(-/+, r!u#(-/ (-ves#)e-# #$r!u/$ *-+ su'$ ;ur(s('#(!- '!u *'$(eve s(/-("('*-# e""('(e-'(es *# #$e s#*/e !" (ves#)e-# (- "u#ure >*- eve-*# #$e s#*/e !" re*#r(*#(-/ r!"(#s us(-/ 3u+3*'7s !r '*(#* reu'#(!-s?.

!r e&*)e (- '*se #$e *re-# (s * Du#'$ '!)*-+, *-+ '*(#* /*(-s !- 3u+ 3*'7 !" s$*res 3+ABC :( 3e #*&*3e (- I-(* :$ere*s (" #$e *re-# (s * M*ur(#(*- '!)*-+, * 3u+3*'7 !"s$*res 3+ ABC )*+ 3e s$e#ere "r!) '*(#* /*(-s #*& u-er #$e I-(* e#$er*-s DTA.

• DTA@s #+('*+ *s! r!v(e "!r * 're(# !" I-(*- #*&es */*(-s# #$e #*& (*3((#+ !" #$e *re-# (-

(#s $!)e '!u-#r+ su'$ *s u-er+(-/ #*& 're(#, #*& s*r(-/, 're(# "!r DDT e#'. !r e&*)e (-'*se (v(e- (s *( #! * e#$er*-s *re-#, #$e '!r!r*#e #*&es *( 3+ ABC *- #$e DDT

*( !- #$e (v(e- (s#r(3u#(!- )*+ -!# 3e *v*(*3e *s * 're(# u-er #$e I-(* e#$er*-sDTA1= $!:ever, su'$ 're(# )*+ 3e *v*(*3e u-er *-!#$er DTA.

H!:ever, #$e s#ru'#ur(-/ '*- !-+ 3e e&!re (" #$e G!ver-)e-# :( *!: *- *#er-*#e e-#(#+ >!#$er#$*- Y, :$('$ :e u-ers#*- 'urre-#+ $*s #$e (-ves#)e-# *r!v*? #! )*7e #$e (-ves#)e-# (-#! ABC.

Cash / profit repatriation

1 Pe*se -!#e #$*# * 're(# "!r #$ese #*&es )*+ 3e *v*(*3e u-er #$e !)es#(' *:s !" e#$er*-s, $!:ever, :e$*ve -!# e&*)(-e #$(s *se'#.


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S!)e *#er-*#(ves #$*# )*+ 3e *v*(*3e "!r '*s$ r!"(# re*#r(*#(!- *- #$e #*& *- re/u*#!r+()('*#(!-s !" #$e *#er-*#(ves *re *s "!!:s<

Financial instruments / transactions

• Bu+3*'7 !" s$*res

Bu+3*'7 '*- 3e "u-e !u# !" "ree reserves !r se'ur(#(es re)(u) *''!u-# !r #$e r!'ees !"*-+ !#$er s$*res !r se'ur(#(es. Bu+3*'7 $*s #! 3e *u#$!r(Fe 3+ #$e *r#('es *- * se'(*res!u#(!- -ees #! 3e *sse (- #$e /e-er* )ee#(-/ !" #$e '!)*-+. Bu+3*'7 '*--!# e&'ee2 !" #$e *( u s$*re '*(#* *- "ree reserves !" #$e '!)*-+. As!, #$e 3u+ 3*'7 !" e8u(#+s$*res (- *-+ "(-*-'(* +e*r '*--!# e&'ee 2 !" #$e #!#* *( u e8u(#+ '*(#*.

T$e 3u+3*'7 !" e8u(#+ re"ere-'e s$*res :!u -!# 3e '!-s(ere #! 3e ee)e (v(e- u-er #$e (-'!)e #*& *:s. H!:ever, #$e 3u+3*'7 :!u 3e su3;e'# #! '*(#* /*(-s #*&. P!ss(3ere(e" u-er DTA@s $*s -!# 3ee- e&*)(-e *# #$(s s#*/e.

Re"u- !" s$*re '*(#* #! * -!-res(e-#, #$r!u/$ 3u+3*'7 !" s$*res :!u re8u(re *r!v* !" #$e Reserve B*-7 !" I-(* >RBI? *- )*+ *s! 3e su3;e'# #! RBI v*u*#(!- -!r)s.

• C*(#* reu'#(!-

Se'(* res!u#(!- (s re8u(re "!r reu'#(!-. C!-"(r)*#(!- !" reu'#(!- !" s$*re '*(#* 3+ #$e ;ur(s('#(!-* '!ur# re8u(re. Reu'#(!- !" s$*re '*(#* '*- 3e u-er#*7e- eve- (- '*ses :$ere#$ere *re -! r!"(#s !r reserves.

P*+!u# #! #$e ee-# !" *''u)u*#e r!"(#s !" #$e '!)*-+ #re*#e *s ee)e (v(e->$!:ever -!# #*&*3e (- #$e $*-s !" #$e s$*re$!er?. DDT :!u 3e ev(e !- #$e '!)*-+ *#

#$e r*#e !" 12. >us sur'$*r/e? !- #$e *)!u-# ee)e *s (v(e-. B**-'e *+!u# :!u 3e'!-s(ere *s '!-s(er*#(!- re'e(ve "!r #r*-s"er !" * '*(#* *sse# #*&*3e *s '*(#* /*(-s.P!ss(3e re(e" u-er DTA@s $*s -!# 3ee- e&*)(-e *# #$(s s#*/e.

E&'$*-/e '!-#r! re/u*#(!-s *re 3r!*+ s()(*r #! 3u+3*'7 !" s$*res.


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• P*+)e-# !" D(v(e-

D(v(e- (s *+*3e "r!) 'urre-# +e*rs r!"(#s *"#er r!v((-/ "!r *-+ r(!r +e*rs ere'(*#(!-.

D(v(e- e'*r*#(!- re8u(res * '!)us!r+ #r*-s"er !" * se'("(e er'e-#*/e !" 'urre-# r!"(#s#! reserve. D(v(e- '*- *s! 3e *( !u# !" *''u)u*#e r!"(#s !" rev(!us +e*rs (- '*se !"(-*e8u*'+ !r *3se-'e !" r!"(#s (- *-+ +e*r su3;e'# #! #$e 'er#*(- rues.

D(v(e- (s -!# * eu'#(3e e&e-se :$(e '!)u#(-/ #*&*3e r!"(#s !" #$e '!)*-+. D(v(e-e'*re 3+ I-(*- '!)*-(es (s -!# #*&*3e (- #$e $*-s !" #$e s$*re$!er. DDT (s ev(e !-#$e '!)*-+ *+(-/ (v(e-s *# #$e r*#e !" 12. er 'e-# >us sur'$*r/e?.

D(v(e-s *re "ree+ re*#r(*3e, u-ess se'("('*+ '!-s#r*(-e >(- rese'# !" *r#('u*r se'#!rs? 3+ #$e "!re(/- (-ves#)e-# !('+ !r r!v(e (- #$e "!re(/- (-ves#)e-# *r!v*.

• P*+)e-# !" (-#eres# !- e3#

I-#eres# '*- 3e "ree+ *( eve- :$e- #$ere *re -! r!"(#s.

I-#eres# (s * eu'#(3e e&e-se :$(e '!)u#(-/ #*&*3e r!"(#s !" #$e '!)*-+ *- #*&*3e (-#$e $*-s !" s$*re$!ers. P!ss(3e re(e" u-er DTA@s $*s -!# 3ee- e&*)(-e *# #$(s s#*/e.

I-#eres# (s "ree+ re*#r(*3e. H!:ever, #$e r*#e !" (-#eres# >(- '*se !" !verse*s e3#? $*s #! 3e:(#$(- #$e ()(#s *( !:- u-er #$e eer-* '!))er'(* 3!rr!:(-/ >ECB? /u(e(-es.

• Issue !" reee)*3e re"ere-'e s$*res *- ree)#(!- (- '*s$

Ree)#(!- '*- 3e "(-*-'e !u# !" r!"(#s !" #$e '!)*-+ :$('$ :!u !#$er:(se 3e *v*(*3e"!r (v(e- !r !u# !" r!'ees !" * "res$ (ssue. A #r*-s"er (s re8u(re #! '*(#* ree)#(!-reserve >CRR? !- ree)#(!- !" re"ere-'e s$*res >!#$er:(se #$*- 3+ * "res$ (ssue !" s$*res?.

Ree)#(!- !" re"ere-'e s$*res :!u *##r*'# '*(#* /*(-s !- #$e (""ere-'e 3e#:ee- #$e '!s#!" *'8u(s(#(!- *- #$e v*ue !" #$e '!-s(er*#(!- re'e(ve 3+ #$e s$*re$!er. P!ss(3e re(e"u-er DTA@s $*s -!# 3ee- e&*)(-e *# #$(s s#*/e.

T$!u/$ #$e e&'$*-/e '!-#r! )*-u* !es -!# res'r(3e *-+ /u(e(-es (- '!--e'#(!- :(#$ree)#(!- !" re"ere-'e s$*res *# * re)(u), 3*se !- !ur *s# e&er(e-'e, :e u-ers#*-#$*# #$e RBI !es -!# er)(# ree)#(!- !" re"ere-'e s$*res *# * re)(u).

Recharges

Re'$*r/es "!r v*r(!us '!s#s '*- *s! 3e ev*u*#e *s * )e*-s #! re*#r(*#e '*s$ r!"(#s. T+('*+,ABC :!u use #$e serv('es "*'((#(es e#' !" v*r(!us /r!u '!)*-(es, #$e X 3r*- -*)e e#'. Re'$*r/es "!r eu#*#(!- !" ers!--e, r!v(s(!- !" *sse#s, #r*-s"er !" #e'$-!!/+, r(/$# #! use #r*e)*r7,

r!v(s(!- !" s$*re serv('es e#' '!u 3e '!-s(ere *s * )e*-s #! re*#r(*#e r!"(#s '*s$. T$esere'$*r/es !""er *v*-#*/es su'$ *s #$ese '!s#s *re #+('*+ #*&eu'#(3e e&e-ses, #$ese '!s#s *re

*+*3e eve- (" #$e '!)*-+ (s !er*#(-/ *# * !ss *- s!)e DTA@s #$*# I-(* $*s e-#ere r!v(e "!rver+ 3e-e"('(* #*&*#(!- "!r su'$ '$*r/es.

H!:ever, #$ese *#er-*#(ves *re -!# (s'usse (- e#*( *# #$(s s#*/e s(-'e #$e+ :( ee- !- #$e #er)s!" #$e re'$*r/es *- #$e u-er+(-/ serv('es.

Suitability of alternatives

T$e su(#*3((#+ !" #$e v*r(!us *#er-*#(ves :!u ee- !- #$e s#*/e !" !er*#(!-s !" #$e r!;e'# 3*se!- #+('* '$*r*'#er(s#('s #$*# *re !3serve (- s()(*r $(/$ '*(#* r!;e'#s.


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Set-up stage

T$(s s#*/e :( #+('*+ '$*r*'#er(se 3+ *r/e '*(#* !u#*+s= *''!r(-/+, *-+ '*s$ /e-er*#e v(* s*es:!u 3e use "!r "(-*-'(-/ #$e '*(#* !u#*+s, $(/$ -!-'*s$ ere'(*#(!- '$*r/es, *- !ver* * !ss)*7(-/ $*se.

A''!r(-/+, (- v(e: !" #$e ()(#e !r -! '*s$ r!"(# *''u)u*#(!- #$ere :( 3e ()(#e *+ "!r #$ere*#r(*#(!- s#r*#e/(es. H!:ever, *- ()!r#*-# *se'# #! 3e '!-s(ere *# #$(s s#*/e (s #$*# #$e(ves#)e-# '*use )*+ 3e #r(//ere *# s!)e !(-# (- #$(s s#*/e= *''!r(-/+, #$(s $*s #! 3e *r!r(*#e+

*--e "!r.

Subsequent stage

Pre 3re*7 eve-

T$ere )*+ 3e '*s$ *''u)u*#(!- 3u# -! r!"(# /e-er*#(!-. A''!r(-/+, (-s#ru)e-#s su'$ *s (v(e-*- s$*re3u+3*'7 )*+ -!# 3e "e*s(3e. O#(!-s su'$ *s '*s$ '$*r/es >(e (-#eres#, r!+*#(es e#'? !r'*(#* reu'#(!- >*/*(-s# !sses? )*+ 3e *#er-*#es #$*# '!u 3e e&!re.

P!s# 3re*7 eve-

A# #$(s s#*/e, ABC )*+ $*ve r!"(#s *- surus '*s$, *''!r(-/+ * *#er-*#(ve re*#r(*#(!- !#(!-s'!u 3e ev*u*#e. Pre*+)e-# !" e3#, :$('$ #+('*+ s$!u -!# #r(//er *-+ #*& ()('*#(!-s (- I-(*(s *- *##r*'#(ve !#(!-.


9/25

. Funding options

T$e #+('* !#(!-s *v*(*3e #! "u- #$e '*(#* s#ru'#ure !" #$e r!;e'# '!u '!)r(se !" #$e "!!:(-/#+es !" (-s#ru)e-#s >#$!u/$ v*r(!us $+3r( !#(!-s *re *s! *v*(*3e, #$e s*)e $*ve -!# 3ee-

'!-s(ere "!r #$e ur!se !" #$(s re!r#?<

Equity

• !r)s * *r# !" !:-ers@ '!-#r(3u#(!-.

• Rerese-#s er)*-e-# '*(#* !" #$e '!)*-+.

• Ge-er*+, '*rr(es v!#(-/ r(/$#s r!!r#(!-*#e #! #$e s#*7e $e 3+ #$e s$*re$!er= $!:ever, (-

'er#*(- s(#u*#(!-s, e8u(#+ s$*res :(#$ (sr!!r#(!-*#e r(/$#s )*+ *s! 3e (ssue.

Preference shares

• Pre"ere-'e s$*res "!r) *r# !" #$e !:-ers$( "u-s !" #$e '!)*-+ 3u# *re (s#(-'# "r!) e8u(#+

s$*res s(-'e #$e+ !r(-*r(+ '*rr+ * "(&e r*#e !" (v(e- *- -! v!#(-/ r(/$#s.

• Pre"ere-'e (v(e- (s *+*3e !-+ :$e- * '!)*-+ )*7es r!"(# 3u# (s *( !u# 3e"!re

(v(e- !- e8u(#+ s$*res.

• T$ese s$*res )*+ !r )*+ -!# 3e '!-ver#(3e (-#! e8u(#+ .

•T$e )*&()u) #e-ure !" re"ere-'e s$*res '*- 3e 20 +e*rs.

Debt

ECB’s

• ECB re"er #! '!))er'(* !*-s *v*(e "r!) -!-res(e-# e-ers :(#$ )(-()u) *ver*/e

)*#ur(#+ !" % +e*rs

• !r) * *r# !" #$e e3# "u-s !" * '!)*-+

• ECB@s *re /!ver-e 3+ #$e ECB /u(e(-es (ssue 3+ RBI. -er #$e /u(e(-es, ECB u#!

SD 00 )((!- :(#$ )(-()u) *ver*/e )*#ur(#+ !" "(ve +e*rs '*- 3e r*(se u-er #$e*u#!)*#(' r!u#e >su3;e'# #! se'("(e '!-(#(!-s? >re"er Anneure ! "!r #$e e#*(e ECBGu(e(-es?

• T$ese 3!rr!:(-/s '*- 3e r*(se "r!) "!re(/- '!*3!r*#!rs *- "!re(/- e8u(#+ $!ers

• C*rr+ * "(&e r*#e !" (-#eres# *- re*+)e-# s'$eue >!r '!-vers(!- !#(!-?


10/25

Domestic debentures / loans

• !r) * *r# !" #$e e3# "u-s !" * '!)*-+

• C*rr+ * "(&e r*#e !" (-#eres# *- re*+)e-# s'$eue >!r '!-vers(!- !#(!-?

T$e e3# )*+ *s! 3e r*(se v(* (ssue !" e3e-#ures >su3;e'# #! '!)+(-/ :(#$ #$e re8u(re)e-#s u-er'!)*-+ *:?.


11/25

. Factors in"uencing the fnancingstructure

S!)e )*;!r "*'#!rs #$*# )*+ e&er'(se *- (-"ue-'e !- es(/-(-/ #$e "(-*-'(-/ s#ru'#ure (e #$e )(& !" #$e*#er-*#e "u-(-/ !#(!-s >(- #$e '!-#e !" ABC? (-'ue *s "!!:s<

"#! Commercial / business factors

• C*s$ "!: *3((#+ #! serv('e e3#

De3# '*rr(es * "(&e (*3((#+ (- re/*r #! *+)e-# !" (-#eres#. I- #$(s re/*r, #$e r!;e'#e '*s$"!:s !" * '!)*-+ -ee #! 3e e&*)(-e #! e#er)(-e :$e#$er #$ere :!u 3e su""('(e-# '*s$"!:s #! *+ (-#eres# !- e3#= ese'(*+ (- #$e (-(#(* +e*rs.

• S*es s#*3((#+

T$e !#()u) '*(#* s#ru'#ure :!u *s! 3e * "u-'#(!- !" #$e s*es #re- !" #$e '!)*-+. I-'*se !" ABC, #$e s*es :!u 3e e&e'#e #! (-'re*se *# * $(/$ r*#e (- #$e (-(#(* +e*rs !:(-/ #!#$e *r/e -u)3er !" !u#e#s #$*# :!u 3e se# u (- #$e (-(#(* +e*rs.

• I-us#r+ -!r)

T$e #+('* (-us#r+ -!r) '*- *s! 3e '!-s(ere *s *- (-('*#(ve /u(e "!r e#er)(-(-/ #$e"(-*-'(-/ )(&. Pr()* "*'(e, #$ere *re -! '!)*r*3e '!)*-(es (- #$e (-us#r+ (- I-(*.

• R(s7 *e#(#e

As #$e r!!r#(!- !" e3# (- #$e '*(#* s#ru'#ure (-'re*ses, #$e "(-*-'(* r(s7 !" #$e '!)*-+:!u (-'re*se. As * resu#, #$e r(s7 *e#(#e :!u *s! 3e * e#er)(-*#(ve "*'#!r (- e'((-/#$e !#()u) e3#e8u(#+ r*#(!.


12/25

"#$ %egulatory factors

• C*s$ #r*

T$e )!s# s(/-("('*-# "*'#!r #$*# :( (-"ue-'e #$e "(-*-'(-/ s#ru'#ure (s #$e 're*#(!- !" '*s$#r*s. T$e '*s$ #r*s )*+ *r(se 3e'*use !" v*r(!us "*'#!rs (-'u(-/<

− Tr*-s"er #! reserves !- e'*r*#(!- !" (v(e-s=

− Tr*-s"er #! reserves !- ree)#(!- !" re"ere-'e s$*res=

− Tr*-s"er #! reserves !- (ssue !" reee)*3e e3e-#ures@= *-

− !-'*s$ '$*r/es !- #$e r!"(#s !" #$e '!)*-+ su'$ *s ere'(*#(!-.

T$ese "*'#!rs *re (s'usse 3e!:.

• Tr*-s"er #! reserves

-er #$e r!v(s(!-s !" #$e C!)*-(es A'#, 16 >C! A'#?, *-+ e'*r*#(!- !" (v(e- !-e8u(#+ s$*res !u# !" 'urre-# r!"(#s re8u(res #r*-s"er !" * res'r(3e *)!u-# #! * s#*#u#!r+reserve. T$(s #r*-s"er (s )*e !- *- *s'e-(-/ s'*e, *- ee-s !- #$e er'e-#*/e !" (v(e-s!u/$# #! 3e e'*re<

Proposed dividend &inimum transfer to reserve

Less #$*- 10 !" *(u '*(#* (

1012. !" *( u '*(#* 2. !" 'urre-# r!"(#s

12.1 !" *( u '*(#* !" 'urre-# r!"(#s

120 !" *( u '*(#* 5. !" 'urre-# r!"(#s

E&'ees 20!" *( u '*(#* 10 !" 'urre-# r!"(#s

• Tr*-s"er #! C*(#* Ree)#(!- Reserve >CRR?

T$e C! A'# r!v(es "!r #r*-s"er #! CRR !- ree)#(!- !" re"ere-'e s$*res >!#$er:(se #$*- 3+* "res$ (ssue !" s$*res? #! #$e ee-# !" #$e -!)(-* *)!u-# !" #$e s$*res reee)e !u# !" #$e

r!"(#s, :$('$ :!u !#$er:(se $*ve 3ee- *v*(*3e "!r (v(e-. T$us, #$e *''u)u*#e r!"(#s!" #$e '!)*-+ :!u 3e reu'e #! #$e ee-# #! :$('$ #$e *)!u-# (s #r*-s"erre #! CRR. T$eCRR '*- 3e use "!r (ssue !" 3!-us s$*res.

A''!r(-/+, us(-/ reee)*3e re"ere-'e s$*res *s * "u-(-/ !#(!- :( $*ve #! 3e '*re"u+'!-s(ere (- (/$# !" #$e re8u(re)e-# #! 're*#e #$e reserve.

• Tr*-s"er #! De3e-#ure Ree)#(!- Reserve >DRR?

I" * '!)*-+ (ssues e3e-#ures, (# (s re8u(re #! 're*#e * DRR v(* #r*-s"er !" r!"(#s e*'$ +e*r,#! 're*#e * "u- "!r #$e ree)#(!- !" e3e-#ures. A''!r(-/+, (" e3e-#ures *re use *s *"(-*-'(-/ !#(!-, r!"(#s )*+ -ee #! 3e *r!r(*#e "r!) #$e +e*r !" (ssue (#se" #! /e-er*#e"u-s "!r #$e ree)#(!- !" e3e-#ures.

• !- '*s$ '$*r/es


13/25

A-!#$er s(/-("('*-# re*s!- "!r 're*#(!- !" '*s$ #r*s (s #$e -!-'*s$ '$*r/es su'$ *sere'(*#(!-. $(e su'$ '$*r/es !:er #$e r!"(#s, #$ere (s -! '!rres!-(-/ '*s$ "!:,*''!r(-/+, '*s$ #! #$(s ee-# (s #r*e.

A''!r(-/+, * $(/$ e3# (- #$e '*(#* s#ru'#ure :(#$ * $(/$ (-#eres# '$*r/e '*- $e #! )(#(/*#e#$(s *''u)u*#e '*s$. S()(*r+, !#$er '*s$ re'$*r/es su'$ *s *+)e-# "!r s$*re serv('es e#')*+ *s! $e (- #$(s *se'#.

• T*& eu'#(3((#+ !" (-#eres# !- e3#

De3# (s * '$e*er s!ur'e !" "u-s (- '*se !" * '!)*-+ $*v(-/ s#*3e r!"(#s *- $(/$ re#ur-s.T$(s (s 3e'*use, #$e r*#e !" (-#eres# !- e3# (s "(&e *- #$e (-#eres# (s #*& eu'#(3e :$(e(v(e- !- e8u(#+ (s -!# eu'#(3e "!r #*& ur!ses.

• R*#e !" (-#eres# !- e3#

T$e r*#e !" (-#eres# !- ECB !r !)es#(' e3# :!u *s! 3e * reev*-# "*'#!r "!r e#er)(-*#(!-!" !#()u) '*(#* s#ru'#ure.

I- '*se !" !verse*s e3# (e ECB@s, #$e ECB /u(e(-es r!v(e "!r *(-'!s# 'e((-/s *s "!!:s<

&inimum Average &aturity Period All'in'cost Ceilings over si month (I)*%

T$ree +e*rs *- u #! "(ve +e*rs 200 3*s(s !(-#s

M!re #$*- "(ve +e*rs %0 3*s(s !(-#s

A(-'!s# (-'ues r*#e !" (-#eres#, !#$er "ees *- e&e-ses (- "!re(/- 'urre-'+ e&'e#'!))(#)e-# "ee, re*+)e-# "ee, *- "ees *+*3e (- I-(*- Ruees.

• DDT

De'*r*#(!- !" (v(e- 3+ I-(*- '!)*-(es re8u(res * *+)e-# !" DDT *# #$e r*#e !" 12.>us sur'$*r/e? !- #$e *)!u-# !" (v(e- (s#r(3u#e.

A# #()es, *-+ #*& :(#$$!(-/ !- (v(e- (-'!)e (s 're(#*3e */*(-s# #$e #*& !- #$e (v(e-(-'!)e (- #$e $!)e '!u-#r+ !" #$e *re-#, *''!r(-/+, su'$ (v(e- :(#$$!(-/ (s !-+ * "!:#$r!u/$ '!s#.

H!:ever, #$ere (s *)3(/u(#+ !- #$e *v*(*3((#+ !" DDT *s * 're(# */*(-s# #$e #*& (*3((#+ !" #$e *re-# '!)*-+ (- (#s $!)e '!u-#r+ u-er #$e #er)s !" )!s# DTA@s2 #$*# I-(* $*s.A''!r(-/+, !#e-#(*+, DDT )*+ 3e * e* '!s# >u-ess #$e !)es#(' *:s !" #$e $!)e'!u-#r+ !" #$e *re-# r!v(e "!r 're(# "!r DDT?.

• MAT

MAT (s *+*3e *# #$e r*#e !" 5. >us sur'$*r/e? !" *;us#e 3!!7 r!"(#s, 3+ '!)*-(es:$!se (-'!)e #*& '!)u#e u-er -!r)* r!v(s(!-s, (s ess #$*- 5. !" 3!!7 r!"(#s. B!!7

r!"(#s re"erre #! *3!ve *re su3;e'# #! 'er#*(- *;us#)e-#s 3e"!re e#er)(-(-/ ev+ !" MAT.

O-e !" #$e *;us#)e-#s (- #$e 3!!7 r!"(# >(- e#er)(-(-/ #$e r!"(# "!r MAT? (s #$e 3r!u/$#"!r:*r !sses !r ere'(*#(!-. A''!r(-/+, * $(/$ (-#eres# '$*r/e >v(* $(/$ e3# (- #$e '*(#*s#ru'#ure? s$!u (-'re*se #$e !sses *- )(#(/*#e e&!sure #! MAT.

2 H!:ever, e*se -!#e #$*# #$e I-(* M*ur(#(us DTA r!v(es * 're(# "!r DDT !- (v(e-s e'*re #! *M*ur(#(*- *re-#, */*(-s# #$e M*ur(#(*- #*& (*3((#+ !" #$e *re-#.


14/25

• D(ves#)e-# '*use (- #$e IPB *r!v*

T$e IPB *r!v* *+s !:- #$e '!-(#(!- #$*# ABC :!u $*ve #! (ves# 26 !" (#s e8u(#+ (-"*v!ur !" res(e-# I-(*-s !ver * er(! !" +e*rs. T$ere"!re, ABC :!u $*ve #! "(- *-

e8u(#+ *r#-er (- I-(* "!r #$e re#*( !u#e#s.

T$e *3!ve '!-(#(!- '!u *s! $*ve *- (-"ue-'e !- #$e '$!('e !" #$e !#()* '*(#* s#ru'#ure*- "(-* e3# e8u(#+ r*#(!. A ver+ $(/$ e3# e8u(#+ r*#(! )*+ 3e er'e(ve *s (-'re*s(-/ #$e r(s7!" #$e ve-#ure 3e'*use !" #$e "(&e !3(/*#(!-s #! serv('e e3#= (- '*se #$e '*s$ "!:s ! -!#'!-"!r) #! * u-("!r) *##er-, #$(s r(s7 )*+ 3e *''e-#u*#e.

• C*(#* /*(-s

A-+ #r*-s"er !" * '*(#* *sse# >s$*res !" *- I-(*- '!)*-+ :( 3e '!-s(ere *s * '*(#**sse#? *##r*'#s '*(#* /*(-s #*& (- I-(* !- #$e (""ere-'e 3e#:ee- #$e '!s# !" *'8u(s(#(!- !" #$e*sse# *- #$e '!-s(er*#(!- "!r #r*-s"er.

A''!r(-/+, * s#r*#e/+ #! (ssue 3!-us s$*res */*(-s# reserves *- ree)#(!- !" #$e s*)e (-'*s$, '!u 3e *- e&e-s(ve re*#r(*#(!- s#r*#e/+ *s #$e e-#(re /*(-s >(- #$e $*-s !" #$es$*re$!ers? '!u 3e #*&*3e *s '*(#* /*(-s.

T$e e3# e8u(#+ r*#(! "!r ABC :!u ee- u!- * #$e *3!ve *r*)e#ers. H!:ever, (- #$e *3se-'e !"se'("(' r!;e'#(!-s !" '*s$ "!:s, -u)3er !" re#*( !u#e#s #! 3e se# u, '*(#* e&e-(#ure *-, s*es

r!;e'#(!-s e#', :e :!u -!# 3e *3e #! r!v(e * se'("(' '*(#* s#ru'#ure. e :!u 3e e*se #!*ss(s# ABC (- #$e *3!ve )*##er (" :e *re r!v(e :(#$ #$e reev*-# (-"!r)*#(!- *- r!;e'#(!-s.


15/25

. $tructuring investments into %ndia

X (s * )u#(-*#(!-* '!r!r*#(!- :(#$ (-#eres#s (- v*r(!us *r#s !" #$e :!r *- $*v(-/ !er*#(-/$!(-/ '!)*-(es (- v*r(!us '!u-#r(es. X '*- #$ere"!re ever*/e (#s /!3* rese-'e *- 7-!:e/e !"!er*#(-/ (- v*r(!us '!u-#r(es, "!r (-ves#(-/ (-#! ABC.

$(e, *# #$(s s#*/e, :e $*ve -!# *-*+se #$e *#er-*#e ;ur(s('#(!-s #$*# '!u 3e use #! s#ru'#ure(-ves#)e-#s (-#! ABC, s!)e !" #$e 7e+ #*& e""('(e-'(es #$*# '!u 3e *'$(eve 3+ r!u#(-/ (-ves#)e-#s(-#! I-(* v(* * #*& e""('(e-# s#ru'#ure >us(-/ !-e !r )!re (-#er)e(*#e ;ur(s('#(!-s? *re *s "!!:s<

• V*r(!us DTA@s r!v(e "!r * !:er r*#e !" :(#$$!(-/ #*& #$*- #$!se res'r(3e u-er !)es#('

#*& *:s "!r *ss(ve (-'!)e s#re*)s su'$ *s r!+*#+, "ees "!r #e'$-('* serv('es, (-#eres#, e#'*r(s(-/ #! * -!-res(e-#. A''!r(-/+, (- '*se, *-+ su'$ *ss(ve (-'!)e (s e-v(s*/e #! 3ee*r-e "r!) ABC, *- e""('(e-# DTA '!u 3e use%.

• V*r(!us DTA@s #$*# I-(* $*s s(/-e r!v(e #$*# *-+ '*(#* /*(-s *r(s(-/ !- #r*-s"er !" s$*res

(- *- I-(*- '!)*-+ :( -!# 3e #*&*3e (- I-(*. A''!r(-/+, r!u#(-/ (-ves#)e-# #$r!u/$ *-+su'$ ;ur(s('#(!- '!u *'$(eve s(/-("('*-# e""('(e-'(es= 3e'*use '*(#* /*(-s #*& '!s#s *re *su3s#*-#(* '!s# (- ()e)e-#(-/ *-+ re*#r(*#(!- s#r*#e/+ su'$ *s '*(#* reu'#(!-, !r 3u+ 3*'7 !" s$*res e#' >(s'usse (- e#*( (- #$e -e se'#(!-?.

• DTA@s #+('*+ *s! r!v(e "!r * 're(# !" I-(*- #*&es */*(-s# #$e #*& (*3((#+ !" #$e *re-# (-

(#s $!)e '!u-#r+. D(""ere-# DTA@s '!u r!v(e v*r(!us "!r) !" #*& 're(#s su'$ *s<

− -er+(-/ #*& 're(# 're(# "!r #*&es *( !- (-'!)e "r!) :$('$ (v(e- $*s 3ee-

e'*re. !r e&*)e (" ABC *+s '!r!r*#e (-'!)e #*& (- I-(* !- (#s 3us(-ess

(-'!)e. T$e 3**-'e r!"(#s !s# #*& *re e'*re *s (v(e-. S!)e DTA@s r!v(e#$*# #$e '!r!r*#e (-'!)e #*&es *( (- I-(* (s *v*(*3e *s * 're(# */*(-s# #$e #*&(*3((#+ !" #$e *re-# >!- #$e (v(e- (-'!)e e*r-e "r!) ABC?.

− T*& s*r(-/ "!r e&*)e ABC (s e(/(3e "!r * #*& $!(*+ !- s!)e !" (#s (-'!)e, eve-

(- #$(s '*se, s!)e DTA@s '!u r!v(e #$*# #$e #*&es #$*# ABC :!u $*ve *( >(" #$e#*& $!(*+ :*s -!# *v*(*3e? :!u 3e *v*(*3e *s 're(# #! #$e *re-# '!)*-+.

− Cre(# "!r DDT T+('*+, *-+ #*& :(#$$!(-/ !- (v(e- (-'!)e (s 're(#*3e */*(-s#

#$e #*& !- #$e (v(e- (-'!)e (- #$e $!)e '!u-#r+ !" #$e *re-#, *''!r(-/+, su'$(v(e- :(#$$!(-/ (s !-+ * "!: #$r!u/$ '!s#.

H!:ever, e*se -!#e #$*# "!: !" *ss(ve (-'!)es '!u 3e (-ee-e-# !" #$e !:-ers$( s#ru'#ure ee-(-/!- #$e '!-#r*'#u* re*#(!-s es#*3(s$e


16/25

H!:ever, #$ere (s *)3(/u(#+ !- #$e *v*(*3((#+ !" DDT *s * 're(# */*(-s# #$e #*&(*3((#+ !" #$e *re-# '!)*-+ (- (#s $!)e '!u-#r+ u-er #$e #er)s !" )!s# DTA@s 4 #$*#I-(* $*s s(/-e. A''!r(-/+, !#e-#(*+, DDT )*+ 3e * e* '!s# >u-ess #$e

!)es#(' *:s !" #$e $!)e '!u-#r+ !" #$e *re-# r!v(e "!r 're(# "!r DDT?.

He-'e, $u/e !#e-#(* #*& s*v(-/s '*- 3e *'$(eve 3+ s#ru'#ur(-/ (-ves#)e-#s (-#! I-(* v(* * "*v!ur*3er!u#e. !r e&*)e<

• ees "!r #e'$-('* serv('es *( 3+ ABC #! * Du#'$ '!)*-+ (s #*&*3e *# 10 (- I-(* u-er

#$e I-(* e#$er*-s DTA= $!:ever TS *( #! * M*ur(#(*- '!)*-+ )*+ -!# 3e #*&*3e (-I-(* u-er #$e I-(* M*ur(#(us DTA.

• I- '*se #$e *re-# (s * Du#'$ '!)*-+, *-+ '*(#* /*(-s !- 3u+ 3*'7 !" s$*res 3+ ABC :( 3e

#*&*3e (- I-(* :$ere*s (" #$e *re-# (s * M*ur(#(*- '!)*-+, * 3u+3*'7 !" s$*res 3+ ABC)*+ 3e s$e#ere "r!) '*(#* /*(-s #*& u-er #$e I-(* e#$er*-s DTA.

• I- '*se (v(e- (s *( #! * e#$er*-s *re-#, #$e '!r!r*#e #*&es *( 3+ ABC *- #$e DDT

*( !- #$e (v(e- (s#r(3u#(!- )*+ -!# 3e *v*(*3e *s * 're(# u-er #$e I-(* e#$er*-sDTA= $!:ever, su'$ 're(# )*+ 3e *v*(*3e u-er *-!#$er DTA.

H!:ever, e*se -!#e #$*# #$e I-(* M*ur(#(us DTA r!v(es * 're(# "!r DDT !- (v(e-s e'*re #! *M*ur(#(*- *re-#, */*(-s# #$e M*ur(#(*- #*& (*3((#+ !" #$e *re-#. Pe*se -!#e #$*# * 're(# "!r #$ese #*&es )*+ 3e *v*(*3e u-er #$e !)es#(' *:s !" e#$er*-s, $!:ever, :e$*ve -!# e&*)(-e #$(s *se'#.


17/25

&. Cash ' proft repatriation

A#er-*#(ves #$*# )*+ 3e *v*(*3e "!r '*s$ r!"(# re*#r(*#(!- *- #$e #*& *- re/u*#!r+ ()('*#(!-s

*re (s'usse 3e!:. T$e *#er-*#(ves '!u 3e (v(e (-#! #:! *r#s, "(-*-'(* (-s#ru)e-#s #r*-s*'#(!-s #$*# '*- 3e use "!r re*#r(*#(!- *- re'$*r/es su'$ *s '$*r/es "!r use !" 3r*- -*)e e#'.

Financial instruments / transactions

+#! )uy'bac, of shares

+#!#! Procedure under company la-

Se'#(!- 55A !" C! A'# r!v(es #$e r!'eure *- re/u*#(!-s :(#$ rese'# #! 3u+3*'7 !" s$*res.

• Sources of buy'bac,

Bu+3*'7 '*- 3e "u-e !u# !" "ree reserves !r se'ur(#(es re)(u) *''!u-# !r #$e r!'ees !"*-+ !#$er s$*res !r se'ur(#(es >!" * se'ur(#+ !#$er #$*- #$e se'ur(#+ 3e(-/ 3!u/$# 3*'7?.

ree reserves (-'ue #$!se reserves :$('$, *s er *#es# *u(#e 3**-'e s$ee# !" #$e '!)*-+,*re "ree "!r (s#r(3u#(!- !" (v(e- (-'u(-/ se'ur(#(es re)(u) *''!u-# 3u# -!# s$*re*('*#(!- )!-e+.

• Conditions / procedure

Bu+3*'7 $*s #! 3e *u#$!r(Fe 3+ #$e *r#('es !" *ss!'(*#(!- !" #$e '!)*-+. I- #$e*3se-'e !" su'$ * r!v(s(!-, #$e *r#('es -ee #! 3e *)e-e.

A se'(* res!u#(!- -ees #! 3e *sse (- #$e /e-er* )ee#(-/ !" #$e '!)*-+*u#$!r(s(-/ #$e 3u+3*'7. A se'(* res!u#(!- re8u(res #$*# v!#es '*s# (- "*v!ur !" #$eres!u#(!- *re -!# ess #$*- #$ree #()es #$e -u)3er !" v!#es '*s# */*(-s# #$e res!u#(!-

3+ )e)3ers e-#(#e #! *- v!#(-/.

H!:ever, :$ere #$e 3u+3*'7 !es -!# e&'ee 10 !" #$e #!#* *( u e8u(#+ '*(#**- "ree reserves !" #$e '!)*-+ *- su'$ 3u+3*'7 $*s 3ee- *u#$!r(se 3+ *res!u#(!- !" #$e B!*r !" D(re'#!rs, #$e se'(* res!u#(!- !" #$e '!)*-+ (- * /e-er*)ee#(-/ :!u -!# 3e re8u(re.

Bu+3*'7 '*--!# e&'ee 2 !" #$e *( u s$*re '*(#* *- "ree reserves !" #$e

'!)*-+. As!, #$e 3u+ 3*'7 !" e8u(#+ s$*res (- *-+ "(-*-'(* +e*r '*--!# e&'ee 2!" #$e #!#* *( u e8u(#+ '*(#*.

T$e r*#(! !" e3# >(-'ues u-se'ure *- se'ure e3#s? #! '*(#* *- "ree reserves !"#$e '!)*-+ *"#er #$e 3u+3*'7 s$!u -!# 3e )!re #$*- 2


18/25

T$e C!)*-+ '*--!# )*7e *- (ssue !" #$e s*)e 7(- !" se'ur(#+ >:$('$ (s 3!u/$# 3*'7? "!r 6 )!-#$s.

T$e /* 3e#:ee- #:! !""ers !" 3u+3*'7 $*s #! 3e *# e*s# %6 *+s.

T$e 3u+3*'7 $*s #! 3e '!)e#e :(#$(- 12 )!-#$s "r!) #$e *#e !" #$e se'(*res!u#(!- 3+ #$e )e)3ers !r 3!*r >:$ere #$e 3u+3*'7 !es -!# e&'ee 10 !" #$e#!#* *( u e8u(#+ '*(#* *- "ree reserves?.

6.1.2 Significant implications under income tax

• -er se'#(!- 2>22? !" #$e A'#, (s#r(3u#(!-s #! s$*re$!ers #! #$e ee-# !" *''u)u*#e r!"(#s

*re ee)e *s (v(e-. Dee)e (v(e-s, (7e !r(-*r+ (v(e- *re su3;e'# #! DDT *# #$er*#e !" 12. >us sur'$*r/e?.

H!:ever, #$ere (s * se'("(' e&e)#(!- "!r 3u+3*'7 !" s$*res. T$e 3u+3*'7 !" e8u(#+

re"ere-'e s$*res :!u not 3e '!-s(ere #! 3e ee)e (v(e- se'#(!- 2>22?J.

• -er se'#(!- 46A !" #$e A'#, :$ere * s$*re$!er re'e(ves *-+ '!-s(er*#(!- "r!) *-+

'!)*-+ "!r ur'$*se !" (#s !:- s$*res, #$e- #$e (""ere-'e 3e#:ee- #$e '!s# !" *'8u(s(#(!- *-#$e v*ue !" #$e '!-s(er*#(!- re'e(ve 3+ #$e s$*re$!er s$* 3e ee)e #! 3e '*(#* /*(-s.

T$e '*(#* /*(-s :!u 3e '$*r/e*3e *# #$e -!r)* #*& r*#es >40 us sur'$*r/e :$ere #$es$*re$!er (s * "!re(/- '!)*-+? :$ere #$e er(! !" $!(-/ !" #$e s$*res !es -!# e&'ee 12)!-#$s. !r s$*res >3e(-/ u-(s#e se'ur(#(es? :$ere er(! !" $!(-/ e&'ees #:eve )!-#$s,#$e /*(-s *re '$*r/e*3e *# #$e r*#e !" 20 >us sur'$*r/e?.

As (s'usse (- #$e rev(!us se'#(!-, #$(s '*(#* /*(-s '!u 3e s$e#ere (" #$e /*(-s *r(se #! *

res(e-# !" * '!u-#r+ :(#$ :$('$ I-(* $*s * "*v!ur*3e DTA >su'$ *s M*ur(#(us e#'?.

6.1.3 Exchange control implications

• Re"u- !" s$*re '*(#* #! * -!-res(e-#, #$r!u/$ 3u+3*'7 !" s$*res :!u re8u(re *r!v* !"

#$e RBI.

• A#$!u/$ -! se'("(' /u(e(-es $*ve 3ee- res'r(3e "!r 3u+3*'7 s$*re '*(#*, RBI v*u*#(!-

-!r)s )*+ 3e *##r*'#e >s(-'e (# )*+ 3e v(e:e *s #r*-s"er !" s$*res "r!) * -!-res(e-# #! *res(e-#?.


19/25

T$e RBI >v(e !#("('*#(!- ! EMA 20 2000RB *#e M*+ %, 2000? $*s se'("(e #$*#:$ere #$e s$*res *re -!# (s#e !- *-+ re'!/-(se s#!'7 e&'$*-/e, #$e RBI s$* :$(e /r*-#(-/

er)(ss(!-, #*7e (-#! *''!u-# #$e r('e :$('$ (s !:er !" #$e #:! (-ee-e-# v*u*#(!-s !"s$*re, !-e 3+ s#*#u#!r+ *u(#!rs !" #$e '!)*-+ *- #$e !#$er 3+ * C$*r#ere A''!u-#*-# !r 3+C*#e/!r+ I )er'$*-# 3*-7er :$! (s re/(s#ere :(#$ Se'ur(#(es *- E&'$*-/e B!*r !" I-(*.

• A- (-#()*#(!- )*+ *s! 3e re8u(re #! 3e "(e :(#$ IPB.

+#$ Capital reduction

C*(#* reu'#(!- 3r!*+ )e*-s '*-'e(-/ #$e s$*re '*(#* */*(-s# '*s$ *+!u#s #! #$e s$*re$!ers!r */*(-s# *''u)u*#e !sses !" #$e '!)*-+.

6.2.1 Procedure under company law

•

Se'(* res!u#(!- (s re8u(re "!r reu'#(!-.

• T$e '!)*-+ )*+ reu'e (#s s$*re '*(#* (- *-+ :*+ (-'u(-/<

E(-/u(s$ !r reu'e #$e (*3((#+ !- *-+ !" (#s s$*res (- rese'# !" s$*re '*(#* -!# *( u

E(#$er :(#$ !r :(#$!u# e(-/u(s$(-/ !r reu'(-/ (*3((#+ !- *-+ !" (#s s$*res, '*-'e*-+ *( u s$*re '*(#* :$('$ (s !s#, !r (s u-rerese-#e 3+ *v*(*3e *sse#s

E(#$er :(#$ !r :(#$!u# e(-/u(s$(-/ !r reu'(-/ (*3((#+ !- *-+ !" (#s s$*res, *+ !""*-+ *( u s$*re '*(#* :$('$ (s (- e&'ess !" :*-#s !" #$e '!)*-+.

• C!-"(r)*#(!- !" reu'#(!- !" s$*re '*(#* 3+ #$e '!ur#s >#$!u/$ #$e G!ver-)e-# $*s (-('*#e

* '$*-/e (- *: *- * *#(!-* C!)*-+ L*: Tr(3u-* * 8u*s(;u('(* *u#$!r(#+J (s e&e'#e#! 3e se#u #! *;u('*#e !- #$ese )*##ers? re8u(re.

• I- '*ses !" reu'#(!- !" s$*re '*(#* (-v!v(-/ e(#$er ()(-u#(!- !" (*3((#+ (- rese'# !" u-*(

s$*re '*(#* !r #$e *+)e-# #! *-+ s$*re$!er !" *-+ *( u s$*re '*(#*, 're(#!rs :!u 3ee-#(#e #! !3;e'# #! #$e reu'#(!-. T$ere *re v*r(!us r!v(s(!-s #! s*"e/u*r #$e (-#eres#s !" #$e're(#!rs (- '*se !" reu'#(!- *- #$e !:er "!r e-sur(-/ #$e (-#eres# !" #$e s$*re$!ers (sves#e :(#$ #$e '!ur#s.

• ! s!ur'es $*ve 3ee- se'("(e "!r reu'#(!- !" s$*re '*(#*. T$ere"!re, reu'#(!- !" s$*re

'*(#* '*- 3e u-er#*7e- eve- (- '*ses :$ere #$ere *re -! r!"(#s !r reserves.


• P*+!u# #! #$e ee-# !" *''u)u*#e r!"(#s !" #$e '!)*-+ :!u 3e '!-s(ere #! 3e ee)e

(v(e- u-er se'#(!- 2>22?>? !" #$e A'# >$!:ever -!# #*&*3e (- #$e $*-s !" #$e s$*re$!er?.DDT :!u 3e ev(e !- #$e '!)*-+ *# #$e r*#e !" 12. >us sur'$*r/e? !- #$e *)!u-#ee)e *s (v(e-.

• B**-'e *+!u# >(e *+!u# ess ee)e (v(e-? :!u 3e '!-s(ere *s '!-s(er*#(!- re'e(ve

"!r #r*-s"er !" * '*(#* *sse# *- #*&*3e *s '*(#* /*(-s >!- (""ere-'e 3e#:ee- '!s# !"*'8u(s(#(!- *- 3**-'e *+!u#?.

• As (s'usse (- #$e rev(!us se'#(!-, '*(#* /*(-s '!u 3e s$e#ere (" #$e /*(-s *r(se #! *

res(e-# !" * '!u-#r+ :(#$ :$('$ I-(* $*s * "*v!ur*3e DTA >su'$ *s M*ur(#(us e#'?.


20/25


• Re"u- !" s$*re '*(#* #! * -!-res(e-#, #$r!u/$ * reu'#(!- !" s$*re '*(#* :!u re8u(re

*r!v* !" #$e RBI.

• A#$!u/$ -! se'("(' /u(e(-es $*ve 3ee- res'r(3e "!r re"u- !" s$*re '*(#* #$r!u/$ *

'*(#* reu'#(!-, RBI v*u*#(!- -!r)s )*+ 3e *##r*'#e >s(-'e (# )*+ 3e v(e:e *s #r*-s"er !"s$*res "r!) * -!-res(e-# #! * res(e-#?.

Re"er *r* 5.1.% "!r #$e v*u*#(!- -!r)s.

• A- (-#()*#(!- )*+ -ee #! 3e "(e :(#$ IPB

+#. Payment of dividend


• D(v(e- (s *+*3e "r!) 'urre-# +e*rs r!"(#s *"#er r!v((-/ "!r *-+ r(!r +e*rs ere'(*#(!-

>se'#(!- 20?.

• D(v(e- e'*r*#(!- re8u(res * '!)us!r+ #r*-s"er !" * se'("(e er'e-#*/e !" 'urre-# r!"(#s

#! reserve se'#(!- 20>2A?J. T$(s #r*-s"er (s )*e !- *- *s'e-(-/ s'*e, *- ee-s !- #$e er'e-#*/e !" (v(e- s!u/$# #! 3e e'*re >#$e )*&()u) #r*-s"er '*e *# 10 !" r!"(#s?.Re"er se'#(!- .2 "!r e#*(s.

• D(v(e- '*- *s! 3e *( !u# !" *''u)u*#e r!"(#s !" rev(!us +e*rs (- '*se !" (-*e8u*'+ !r

*3se-'e !" r!"(#s (- *-+ +e*r. H!:ever, su'$ *+)e-# (s su3;e'# #! #$e C!)*-(es >De'*r*#(!-

!" D(v(e- !u# !" Reserves? Rues, 15. A''!r(-/ #! #$e rues<

T$e r*#e !" (v(e- e'*re '*--!# e&'ee #$e *ver*/e !" #$e r*#es !" (v(e- (- #$e"(ve re'e(-/ +e*rs !r #e- er'e-# :$('$ever (s !:er. T$us, #$e r*#e !" (v(e- '*--!#e&'ee 10=

T$e #!#* *)!u-# #$*# '*- 3e :(#$r*:- "r!) reserves '*--!# e&'ee 10 !" *( us$*re '*(#* *- "ree reserves= *-

T$e 3**-'e !" reserves *"#er su'$ :(#$r*:* '*--!# e&'ee 1 !" *( u s$*re'*(#*


21/25


• D(v(e- (s -!# * eu'#(3e e&e-se :$(e '!)u#(-/ #*&*3e r!"(#s !" #$e '!)*-+.

• D(v(e- e'*re 3+ I-(*- '!)*-(es (s -!# #*&*3e (- #$e $*-s !" #$e s$*re$!er u-er

se'#(!- 10>%%? !" #$e A'#.

• DDT (s ev(e !- #$e '!)*-+ *+(-/ (v(e-s *# #$e r*#e !" 12. er 'e-# >us sur'$*r/e? !"

#$e (v(e-s (s#r(3u#e.


• D(v(e-s *re "ree+ re*#r(*3e, u-ess se'("('*+ '!-s#r*(-e >(- rese'# !" *r#('u*r se'#!rs?

3+ #$e "!re(/- (-ves#)e-# !('+ !r r!v(e (- #$e "!re(/- (-ves#)e-# *r!v*.

+#" Payment of interest on debt


• I-#eres# '*- 3e "ree+ *( eve- :$e- #$ere *re -! r!"(#s.


• I-#eres# (s * eu'#(3e e&e-se :$(e '!)u#(-/ #*&*3e r!"(#s !" #$e '!)*-+.

• I-#eres# *( 3+ #$e '!)*-+ :!u 3e #*&*3e (- #$e $*-s !" #$e s$*re$!er.

• T$e r*#e !" #*& :!u 3e e(#$er 20 >*s er #$e !)es#(' I-(*- *:s? !r !:er r*#e (" #$ereev*-# DTA r!v(es "!r * !:er r*#e.


• I-#eres# (s "ree+ re*#r(*3e. H!:ever, #$e r*#e !" (-#eres# $*s #! 3e :(#$(- #$e ()(#s *( !:-

u-er #$e rev(se ECB /u(e(-es.

ur#$er, (# )*+ *s! 3e reev*-# #! -!#e #$*# re*+)e-# !" #$e e3# >(e #$e r(-'(*? (s *s! *- e""e'#(ve#!! #! )(#(/*#e #r*e '*s$ >:(#$!u# *-+ s(/-("('*-# #*& ()('*#(!-s?. T$(s #!! '*- 3e use :(#$ * !#!" "e&(3((#+ s(-'e u-er #$e e&(s#(-/ ECB /u(e(-es= re*+)e-# !" !verse*s e3# (s *s! er)(##e.

+#0 Issue of redeemable preference shares and redemption in cash


• Ree)#(!- '*- 3e "(-*-'e !u# !" r!"(#s !" #$e '!)*-+ :$('$ :!u !#$er:(se 3e *v*(*3e

"!r (v(e- !r !u# !" r!'ees !" * "res$ (ssue.

• A #r*-s"er (s re8u(re #! CRR !- ree)#(!- !" re"ere-'e s$*res >!#$er:(se #$*- 3+ * "res$

(ssue !" s$*res? #! #$e ee-# !" #$e -!)(-* *)!u-# !" #$e s$*res reee)e !u# !" #$e r!"(#s:$('$ :!u !#$er:(se $*ve 3ee- *v*(*3e "!r (v(e-. T$e '*(#* ree)#(!- reserve*''!u-# '*- 3e *(e (- *+(-/ u u-(ssue s$*res !" #$e '!)*-+ #! 3e (ssue #! )e)3ers !" #$e '!)*-+ *s "u+ *( 3!-us s$*res.

( Pe*se -!#e #$*# (" #$e e3# (s (- #$e "!r) !" e3e-#ures, *(#(!-* '!)*-+ *: re8u(re)e-# )*+ -ee #! 3e'!)(e :(#$


22/25

• A-+ re)(u) *+*3e !- ree)#(!- !" re"ere-'e s$*res s$* 3e r!v(e "!r !u# !" r!"(#s !r

se'ur(#(es re)(u) *''!u-#.

• T$e C! A'# !es -!# r!$(3(# (ssu*-'e !" re"ere-'e s$*res :(#$ * u# !r '* !#(!-.

A''!r(-/+, #$e #er)s !" (ssue !" re"ere-'e s$*res )*+ r!v(e "!r * u# !r '* !#(!- #! r!v(e "e&(3((#+ #! #$e *r#(es (- reee)(-/ #$e '*(#*.


• Ree)#(!- !" re"ere-'e s$*res :!u *##r*'# '*(#* /*(-s !- #$e (""ere-'e 3e#:ee- #$e '!s#

!" *'8u(s(#(!- *- #$e v*ue !" #$e '!-s(er*#(!- re'e(ve 3+ #$e s$*re$!er.

• T$e '*(#* /*(-s '!u *s! 3e '*()e *s e&e)# u-er #$e #er)s !" * "*v!ur*3e #*& #re*#+

(7e M*ur(#(us. I- !#$er :!rs, (" #$e (-ves#)e-# (- s$*res (- I-(*- '!)*-+ (s )*e #$r!u/$ *M*ur(#(us res(e-# '!)*-+, '*(#* /*(-s !- #r*-s"er !" s$*res :!u -!# 3e #*&*3e !- #$e

3*s(s !" #$e I-(* M*ur(#(us D!u3e T*&*#(!- Av!(*-'e A/ree)e-#.

6.5.3 Implications under exchange control

• T$e e&'$*-/e '!-#r! re/u*#(!-s ! -!# res'r(3e *-+ /u(e(-es (- '!--e'#(!- :(#$ ree)#(!-

!" re"ere-'e s$*res *# * re)(u). H!:ever, 3*se !- !ur e&er(e-'e, :e u-ers#*- #$*# #$eRBI !es -!# er)(# ree)#(!- !" re"ere-'e s$*res *# * re)(u), (e re"ere-'e s$*res '*- 3ereee)e *# *r !-+.

%echarges

Re'$*r/es "!r v*r(!us '!s#s '*- *s! 3e ev*u*#e *s * )e*-s #! re*#r(*#e '*s$ r!"(#s. T+('*+,ABC :!u use #$e serv('es "*'((#(es e#' !" v*r(!us /r!u '!)*-(es, #$e X 3r*- -*)e e#'. Re

'$*r/e !" '!s#s !" #$ese '!u 3e '!-s(ere *s * )e*-s #! re*#r(*#e r!"(#s '*s$. T$ese re'$*r/es!""er #$e "!!:(-/ *v*-#*/es<

• T$ese '!s#s *re #+('*+ #*&eu'#(3e e&e-ses=

• T$ese '!s#s *re *+*3e eve- (" #$e '!)*-+ (s !er*#(-/ *# * !ss *- $e-'e :( $e (-

)(#(/*#(-/ '*s$ #r*s 're*#e 3+ -!-'*s$ '$*r/es su'$ *s ere'(*#(!-= *-

• S!)e DTA@s #$*# I-(* $*s e-#ere r!v(e "!r 3e-e"('(* #*&*#(!- "!r su'$ '$*r/es.

Br!*+, #$e "!!:(-/ *#er-*#es '!u 3e ev*u*#e<

• Deu#*#(!- !" ers!--e=

• Pr!v(s(!- !" *sse#s >su'$ *s "(&e *sse#s, /!!s, r!'ess 7-!:$!:, '*#*!/ues, 3!!7s?=

• Tr*-s"er !" #e'$-!!/+, r!'ess, es(/-, *+!u# *-, "!r)u*, *#e-#=

• R(/$# #! use #r*e)*r7, 3r*- -*)e *- '!r!r*#e -*)e. I- #$(s re/*r, (# )*+ 3e er#(-e-# #!

-!#e #$*# #$e IPB *r!v* !3#*(-e, r!v(e "!r *+)e-# !" * r!+*#+ !" !" s*es *sr!+*#+ #!:*rs use !" #e'$-!!/+ *- #r*e)*r7s=

• Pr!v(s(!- !" serv('es >su'$ *s u-er:r(#(-/ serv('es, */e-'+ se(-/ serv('es, )*r7e# rese*r'$

serv('es?=


23/25

• Pr!v(s(!- !" s$*re serv('es >su'$ *s IT su!r#, *#* r!'ess(-/ "*'((#(es, s!"#:*re ('e-se "ee,

rese*r'$ *- eve!)e-#?= *-

• Re()3urse)e-# !" e&e-ses >su'$ *s re()(-*r+ e&e-ses, r!"ess(!-* serv('es, 3*-:(#$

'$*r/es, :e3s(#e eve!)e-#, *ver#(s(-/, '!-#e-# s!ur'(-/?.

A# #$(s s#*/e, :e $*ve -!# e#*(e #$e #*& *- re/u*#!r+ ()('*#(!-s, *s #$ese :( ee- !- #$e #er)s!" #$e */ree)e-# "!r #$e *3!ve.


24/25

(.$uita)i*ity o a*ternatives

I- #$(s se'#(!-, :e $*ve (e-#("(e #$e v*r(!us s'e-*r(!s #$*# )*+ #+('*+ 3e :(#-esse (- #$e !er*#(!-s!" * $(/$ '*(#* !u#*+ r!;e'# 3*se !- #+('* '$*r*'#er(s#('s, :$('$ *re (s*+e. e $*ve*##e)#e #! )* #$ese s'e-*r(!s */*(-s# #$e #+('* '*s$ r!"(# *''u)u*#(!- u-er e*'$ s'e-*r(! *-$*ve (e-#("(e #$e #+('* re*#r(*#(!- #!!s #$*# '!u 3e use #! re*#r(*#e #$e '*s$ r!"(#s*''u)u*#(!-.

#! Set'up scenario

T$(s s'e-*r(! :!u $*ve #$e "!!:(-/ '$*r*'#er(s#('s<

• C*s$ "!:s "r!) s*e !" r!u'#s=

•C*(#* !u#*+s !- 're*#(!- !" #$e !u#e#s= *''!r(-/+, )!s# !" #$e '*s$ /e-er*#e :!u 3euse "!r "(-*-'(-/ #$e '*(#* !u#*+s=

• H(/$ -!-'*s$ ere'(*#(!- '$*r/es=

• Pre 3re*7eve- *- $e-'e !ss(3e !ss )*7(-/ s'e-*r(!= *-

• D(ves#)e-# )*+ 3e re8u(re.

I- #$e se#u s'e-*r(!, #$ere :( 3e ()(#e r!"(# *''u)u*#(!- *- ()(#e '*s$ *''u)u*#(!-=*''!r(-/+, #$ere :( 3e ()(#e *+ "!r #$e re*#r(*#(!- s#r*#e/(es= $!:ever, #$e "!!:(-/ -ee #! 3e'!-s(ere<

• T$e es(/-(-/ *- ()e)e-#*#(!- !" #$e "(-*-'(-/ s#ru'#ure :( 3e e""e'#e (- #$(s s#*/e=

• I- '*se, #$e '*s$ "!:s (s -!# use "!r (-#er-* *''ru*s, #$e s*)e )*+ 3e re*#r(*#e #$r!u/$ #$e

'*s$ '$*r/es su'$ *s (-#eres#= re'$*r/es e#'=

• Re*#r(*#(!- v(* (v(e- )*+ -!# 3e *- !#(!- (- v(e: !" !ss(3e !ss)*7(-/ s'e-*r(!.

• ABC $*s #! 3e *- *##r*'#(ve ve-#ure #! (-ves# >:$e- #$e (ves#)e-# '*use )*+ -ee #! 3e

'!)(e :(#$?= *''!r(-/+, #$ere )*+ 3e r*#(!-*e "!r !: (-#eres# '!s#s *- $e-'e !: eves!" '$*r/es "!r e3# serv('(-/. T$(s /e*r(-/ )*+ su3se8ue-#+ 3e (-'re*se #! /e# #$e *v*-#*/es

*r(s(-/ "r!) $(/$ (-#eres# '$*r/es.


25/25

#$ Subsequent scenario

T$(s s'e-*r(! :!u $*ve #$e "!!:(-/ '$*r*'#er(s#('s<

• C*s$ "!:s "r!) s*e !" r!u'#s=

• L!:er -!-'*s$ ere'(*#(!- '$*r/es=

• A3s!r3(-/ r(!r #*& !sses >(e "r!) #$e se#u $*se?=

• P!#e-#(* #*& (*3((#+ u-er MAT= *-

• Bre*7 eve- *- r!"(# e*r-(-/.

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e&!re<

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su'$ *s (v(e- *- s$*re3u+3*'7 >:$('$ re8u(re r!"(#s reserves? )*+ -!# 3e"e*s(3e.

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!sses? )*+ 3e e&!re.

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#$#$ Post brea,'even

• A# #$(s s#*/e, ABC )*+ $*ve r!"(#s *- surus '*s$, *''!r(-/+ * *#er-*#e

re*#r(*#(!- !#(!-s '!u 3e ev*u*#e.

• Pre*+)e-# !" e3#, :$('$ #+('*+ s$!u -!# #r(//er *-+ #*& ()('*#(!-s (- I-(* (s

* s(/-("('*-# !#(!-.

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