##ogenous to the firms that increased their probability of failure – essentially the risk it took on its books. these instruments were found insufficient in doing so. further, in the new systemically oriented regulatory philosophy, it was believed that apart from being a risk to themselves, many large institutions posed risk to the system at large through significant negative externalities. it therefore became a sort of public good cause to contain the riskiness of these large institutions. the exact mechanism for doing this would be contingent on multiple factors, including size, interconnectedness, complexity, business model and industry structure etc. 31. alternate resolution mechanism : in spite of the above regime, if an institution fails on account of systemic stresses, the objective must be to minimise the cost for the taxpayers. different models have been proposed with the objective to allow the orderly resolution of a systemically important nonbank financial firm, including a mechanism to cover the costs of the resolution. various approaches that have gained traction in policy deliberations for improving resolution capacity include limits to complexity of internal structures – preference for standalone subsidiaries, recovery and resolution planning, use of contingent capital and other instrument to absorb losses as a going concern, a special resolution regime for sifis which makes the shareholders and creditors share losses ; and a bailout fund, contributed by the same entities expected to be bailed out. in the us, the dodd - frank wall street reform and consumer protection act envisages a resolution regime which allows the government to impose losses on shareholders and creditors, unlike the normal bankruptcy provisions for other firms where the aim is to reorganise or liquidate a failing firm “ for the benefit of its creditors ”. 32. strengthening markets and market infrastructure : the singular area of attention in this regard has been to move much of the otc derivatives market to a central clearing model. there is broad agreement in this regard though few important concomitant issues arising out of risk concentration in ccps will need be addressed carefully, including cross margining across ccps or across different products. 33. there is also the issue of implicit or explicit liquidity support by the banking system to the ccps in the form of lines of credit or to intermediaries such as brokers and market participants in the form of margins for trades, payment commitments or other forms of guarantees. it is likely that the risk of transactions undertaken through ccp sit in banks / regulated financial entities books either directly or indirectly and if so it needs to be ensured that they

cent of the net worth, whichever is higher. for recurring expenses, remittance upto 10 per cent of the average annual sales / income or turnover during last two financial years is allowed. within these limits, ads can allow remittance by a company even to acquire immovable property outside india for its business and for residential purpose of its staff. • partnership firms registered under the indian partnership act, 1932 and having a good track record are permitted to make direct investments outside india in any bonafide activity 200 per cent of their net worth under the automatic route. i must mention that that the liberalization in the policy on overseas investments has been very much informed by the detailed framework set out by the government in 1995 when the work was transferred to reserve bank of india. for the first time the framework articulated a cohesive policy in regard to overseas investment policy, flexible enough to respond to likely future trends. to quote from the guidelines, they reflected the'need for transparency, recognition of global developments, capturing of indian realities and learning of lessons from the past '. the basic objectives of the policy, as laid out in the notification, were as follows : • recognising the link between trade and investment flows, to provide a framework for indian industry and business to access global networks. • to ensure that such flows, though determined by commercial interests, are consistent with the macroeconomic and balance of payment compulsions of the country, particularly in terms of the magnitude of the capital flows ; and • to give liberal access to indian business for technology - sourcing or resource - seeking or market - seeking as strategic responses to the emerging global opportunities for trade in goods or services. • to give a signal that there is a qualitative change in the approach of the government, from one of regulator or controller to one of facilitator. • to encourage the indian industry to adopt a spirit of self - regulation and collective effort for improving the image of indian industry abroad. experience and trends the overseas acquisitions, which started of on a small scale, have reached to globally visible levels with big ticket acquisitions being announced by large corporates regularly. a report of the boston consulting group ( bcg ) on the emerging multinationals in the world puts 21 indian companies among the top 100 such multinationals. only china with 44 companies is ahead of india. tata group, bharat forge, infosys, wipro, ongc, ranbaxy and such indian companies are venturing overseas and expanding