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Sebi empowered to approve overseas funds

BS Markets Bureau

The Securities and Exchange Board of India (Sebi) has been empowered to grant approval to overseas funds promoted by financial institutions, mutual funds and banks. Earlier, the finance ministry was the nodal agency.

A proposal to amend the necessary clauses has been moved in the Finance Bill 2001-2002. Under the existing provision in Section 115AB, the central government has the powers to approve overseas fund promoted by domestic financial institutions, mutual funds or state-run banks. In order to simplify the procedure, Sebi has now been given the mandate.

"The change will not affect existing ventures, only new ventures will now have to get the approval," Sebi senior executive director Pradeep Kar said.

At present, the Unit Trust of India (UTI) and Canbank Mutual Fund have overseas funds.

The bill has also sought to extend tax exemption to UTI-promoted venture funds, with retrospective effect from April 1 2001.

Under the existing provision, venture funds set up by the trust are not eligible for I-T exemption as they do not come under the definition of venture funds.

As per the regulation, venture capital has been defined as a fund operating under a trust deed registered under the provisions of The Registration Act 1908.

However, such schemes promoted by the UTI did not come under this definition as the trust was set up under the Unit Trust of India Act, 1963.

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