RBI refuse Citi Investment in Ansal Infra

India's central bank, RBI and Department of Industrial Policy and Promotion - DIPP have probably not approved the Preferential allotment of equity shares of Ansal Properties and Infrastructure Ltd to Citigroup entities approved in October 2006. The issue was of Rs 175 crore. Ansal said,

In view of the required approvals of RBI/DIPP in terms of applicable FEMA Regulations for issue & allotment of Equity Shares to Citicorp Banking Corporation not forthcoming, the parties have mutually concluded that the understanding entered amongst the parties is no longer operative and enforceable. The requisite applications have been moved to RBI & FIPB for withdrawing our applications of seeking approval in the matter.

If you are a regular reader of our blog, then you probably know RBI's stand on Real Estate investment. Also in the recent budget Finance Minister has withdrawn all the benefits for VC and Private Equity funds in Real Estate sector.

On Feb-25th, RBI issued a notification to NBFCs which bars them from speculating in property and they have to file monthly report with the RBI regarding their exposure portfolio. The new norm states that no NBFC can invest more than 10% of its capital in Land or Property except for its own use.

Since Mid Feburary, Real Estate Stocks have fallen between 30% to 50%. Ansal Infra is down 45% since its yearly high in Jan-07.

Tags: India Real Estate, Real Estate Bubble, Citi, Real Estate