The government bodies of various countries have set up a structured approach to maintain the financial system's competence, efficiency, and integrity. In India, the Reserve Bank of India (RBI) takes up this responsibility. It is one of the oldest banks nationalized in 1935. RBI holds responsibility for various businesses, markets, and other financial ventures in India. It is essential to process the RBI valuation in India for successfully standing out in India. This article guides you through the entire process and whereabouts of RBI Valuation.
Why RBI Valuation?
Any business in India has a direct link up with the stock market. According to the RBI Law, obtaining FDI and ODI valuations is essential and other documents to complete the share transactions. The law also states FDI as the minimum price and ODI as the maximum price for any exchange control perspective. It is essential to properly plan for FDI and ODI value assessments to prevent any disparity in contractual understanding and fair value.
RBI Valuation and Foreign Direct Investment (FDI):
Foreign Direct Investment(FDI) is required whenever a transfer of Equity Shares or Compulsory Convertible Instruments of an Indian Company occurs between an Indian Resident and a Non-Resident. RBI Valuation comes into play to estimate the FDI and complete the transfer successfully.
RBI Valuation and Overseas Direct Investment (ODI):
Whenever an Indian company obtains or transfers Equity Shares in an Overseas Company, Overseas Direct Investment (ODI) is activated.
How to obtain RBI Valuation?
RBI has prescribed several methodologies to determine the OFI valuation. Picking up anyone among them will help you evaluate your ODI valuates. For FDI valuation, it is highly recommended to use a globally accepted pricing methodology. It has to be certified by a SEBI registered Chartered Accountant or a Merchant Banker. It is important to remember that the company's shares are not to be listed on any recognized stock exchange of India. Consulting a recognized RBI Valuation Firm or RBI Valuation Service will help determine a better figure of RBI Valuation.
Who can carry out RBI Valuations?
According to the RBI guidelines, only a SEBI registered Merchant Banker (Cat-I) can carry out the responsibilities of RBI Valuations ranging from a transaction responsibility of more than 5Million $ USD. Even other RBI Valuation Firms, Services, and RBI Valuation Consultants are available to estimate the RBI valuations.
Questions on RBI Valuation:
It is not yet legalized which methodology is to be used to carry out the FDI or ODI valuations. Among the available methodologies, many are globally recognized. Choosing the best among them is left to your SEBI registered banker or accountant.
RBI Valuation practices:
There are various platforms available in the market, owning a specialized team to oversee the valuation process. RBI Valuation is a crucial step in any national or international stock exchange practice. The validation of RBI Valuation firms can be seen when they provide an RBI Valuation Report. There is no correct format for the RBI Valuation Report registered, but the one with detailed and layered information is considered the most accurate one.
RBI Valuation is essential to survive in the Stock Market business. The guidelines offered to RBI Valuation can be handled effectively by SEBI registered chartered accountants, who will carry out the RBI valuations effortlessly. Consulting the right RBI Valuation firm is the key to get the valuation done right.