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Implement buyback fast, new FICCI chief tells government

Newly-elected president of the Federation of Indian Chambers of Commerce and Industry Sudhir Jalan today called for the speedy enactment of guidelines on buyback of shares by corporates, while expressing full support for the Union government's decision.

Jalan, who is in Bombay to attend the 17th Confederation of Asia-Pacific Chambers of Commerce and Industry conference said that any dilly-dallying by the government and the regulatory authorities to put an act governing buybacks in force would dilute the purpose of the scheme.

''The ordinance on buyback and inter-corporate investments will be issued today. It remains to be seen how long the government takes to implement it,'' Jalan said and added that, ideally, the committee formed by the Securities and Exchange Board of India should take about a month to prepare prudential guidelines on buyback.

The FICCI president welcomed the government's move of allowing buyback to only extinguish existing equity and not as a treasury operation.

According to Jalan, the introduction of buyback scheme would facilitate in bringing the retail investor to the capital market. He further said that the scheme of lending against securities should be made more effective by removing impediments on individuals to borrow against shares and debentures.

''The ceiling of Rs 5 lakh (Rs 500,000) placed on individuals should go,'' the FICCI president opined. He called for removing any distinctions between individuals and companies, while lending against securities.

He felt that banks should be given the freedom to decide the amount they would like to lend on the collateral of securities to individuals and corporates.

Jalan welcomed the economic strategy unveiled by the government last week to boost economic and corporate growth. ''The doubts in the minds of people that the government was doing nothing has been cleared,'' he said adding that stable political situation would help in the fast implementation of the Centre's economic decisions.

UNI