Investment norms for private equity and venture capital funds should be suitably relaxed, the Confederation of Indian Industry (CII) says for improving and nurturing the management and operations of the company.
With the current ceiling of 15 per cent and the restriction barring purchase from secondary market, the private equity and venture capital funds are finding no takers.
'Further, such investments should be construed as complying with prevailing capital market regulations including open offer requirements,' said a statement from CII.
The CII report also suggested that private equity and venture capital funds should be allowed to invest 25 percent of the capital of target companies without resorting to an open offer.
The industry body also called for removal of restrictions of investments by such entities in non-banking finance companies (NBFCs) given the role played by the NBFCs, especially in meeting the micro funding needs of the economy.
CII also said that the minimum investment requirements for a SEBI registered private equity or venture capital fund should be raised to Rs.50 lakh from the current Rs.5 lakh to ensure enhanced investor protection.
The report further suggested that the Insurance Regulatory and Development Authority of India (IRDA) should allow insurance companies to invest in private equity funds as an asset class in general, thus removing the restriction of allocation to infrastructure investments only.