Now, People’s Bank of China eyes another Indian bank

Edited By: Palki Sharma WION
New Delhi, India Updated: Aug 19, 2020, 07:12 AM(IST)

A China yuan note is seen in this illustration photo. Photograph:( Reuters )

Story highlights

After the border provocation, investment opportunities for China in India have become very limited

China wants to invest further in the Indian market but in the aftermath of the border skirmish, Chinese products have been boycotted all over India.

After the border provocation, investment opportunities for China in India have become very limited. As part of new restrictions, all investments coming in from China will be watched, reported and scrutinised. A report from August 18 claimed that one of India’s most prominent banks ICICI has a new investor.

Who is the investor?

The investor is the People’s Bank of China, which is the central bank of the Chinese state. The same institution had invested in India’s HDFC limited in March. 

Recently, ICICI Bank raised Rs 15,000 crore from the market (over $2 billion). It is referred to as a Qualified Institutional Placement Exercise(QIP), which is a way for listed companies to raise capital without submitting legal paperwork or undergoing regulatory approvals.

Also read: China's central bank buys 1.75 crore shares in HDFC, raises stake to over 1%

The People’s Bank of China (PBC), then invested Rs 15 crore (over $2 million) and over 300 investors participated in the exercise. According to one claim, the PBC’s stake in ICICI is 0.0006, which is rather minuscule and owing to the fresh curbs for Chinese companies in India, it may not go up at all.

In March, HDFC limited reported that the PBC owns a little more than one per cent of its shares. The PBC had bought these shares from the open market, which is why the Indian government introduced new rules. Any investor from India’s border nations now needs government approval for investment.

Simply put, China can no longer just buy shares from the market. All Chinese companies will need to go through a government approval process first.

Long underway

Even before the border standoff in Ladakh, the Indian government had taken a stand against Chinese investments. In May, India’s finance minister Nirmala Sitharaman in a chat with WION promised more safeguards against hostile takeovers.

Now, India is taking specific and targeted measures to curb the flow of Chinese cash in the Indian economy. Chinese companies have now been restricted from participating in public procurement bids. In June, India made it mandatory for sellers on the government e-marketplace portals to clarify the country of origin of their goods. Following that, restrictions were placed on colour TV imports from China.

India is now considering measures to prevent trade partners in Southeast Asia from re-rerouting Chinese goods to India.

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