The Reserve Bank of India and the Securities and Exchange Board of India are considering a proposal for allowing Indian mutual funds to invest up to $1 billion in world's biggest companies through equity indices like Dow Jones Global Titans Index.
The matter is being discussed by the high level committee on capital markets (HLC) comprising heads of RBI, SEBI, IRDA and senior officials in ministries of finance and company affairs, informed sources told PTI in Mumbai on Monday.
At present, Indian mutual funds can invest in shares of MNCs which have a joint venture in India with at least 10 per cent. There are about 48 such companies. Many of the global corporations like Microsoft, Intel, Vodafone, Bank of America, Barclays, UBS and Wal-Mart do not have joint ventures in India but are part of the DJ Global Titans Index.
The country's leading mutual funds like UTI AMC, Principal PNB, Templeton, DSP Merrill Lynch, ICICI Prudential and HDFC Standard Life have sought changes in investment pattern and have asked to be allowed to launch off-shore funds that invest in such global indices.
"Since the investment would be in foreign exchange, the matter is being examined by RBI," a source said.
Apart from the DJ Global Titan Index, sources said, Indian mutual funds are thinking of investing in 'sustainability index' which could offer not only long term profits but also take care of changs in environment, human resource and regulatory aspects.Dow Jones has initiated a benchmarking for long term prospects based on these parameters, considering the short term approach taken by most companies nowadays following the mandatory quarterly reporting norm of the United States.