The Finance Ministry has sought SEBI's views on whether FDI in real estate through private placement should be treated as FII inflows. Besides SEBI, the ministry is consulting the department of industrial policy and promotion (DIPP), which had earlier forwarded RBI's views to it.
A real estate company can seek FDI in real estate provided it meets the minimum criteria on project size and the built-up area.
Concerned over high valuations of the real estate stocks the RBI has taken a tough stand that the pre-issue private placement through FDI could not be treated at par with portfolio investment and should not be provided the exemptions enjoyed by FIIs.
The ministry says the criteria of a lock-in period should be applied according to the end-use purpose and not based on the route through which the money is coming. While FDI involves a lock-in period of three years, the restriction is for one year for FIIs.
The government would like to build a consensus within different ministries and regulators as well as stakeholders.