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RBI rejects Tata Sons’ plea to buy TTSL stake from Docomo

Tata Sons had applied to buy back shares of Tata Tele at a price above fair value. The RBI is learnt to have told Tata Sons that the conveyed price was not in conformity with extant FEMA regulations and that TTSL shares should be bought back at fair value.

The Reserve Bank of India (RBI) has rejected Tata Sons’ application to buy Tata Teleservices  stake from Docomo at a price higher than current fair value of the stake, reports CNBC-TV18’s Sajeet Manghat.

Tata Sons had applied to buy back shares of Tata Teleservices at a price above fair value. The RBI is learnt to have told Tata Sons that the conveyed price was not in conformity with extant FEMA regulations and that TTSL shares should be bought back at fair value.

However, this is contrary to RBI’s stance. On call-put options, the central bank had written to the Finance Minister, saying that it is willing to re-look at FDI regulations, thereby being open to allowing downside protection for FDI. Even Governor Raghuram Rajan had said the central bank was open to re-looking at assured returns and willing to allow put options where the price is below the invested price. Moreover, the proposed new guidelines on Call-Put Options have not been released by the RBI yet.

Tata Sons said the company will resolve the issue in arbitration with Docomo, but refused to comment further as the matter is sub-judice.

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