Regulations on Portfolio Investments by Foreign Institutional Investors
Abstract:This article widely elaborates on the Regulations on Portfolio Investments by Foreign Institutional Investors. Portfolio Investment Scheme, as defined by The Foreign Exchange Management Act 2000 is the 'buying and selling of shares, convertible debentures of Indian companies, and units of domestic mutual funds at any of the Indian stock exchanges.'
Portfolio Investments by Foreign Institutional Investors-The buying of shares of any Indian company from the subsidiary market is entitled to a cap of 5 percent of the paid-up share assets and 5 percent of the paid-up value of each order of unsecured bonds. As per the portfolio investment policies, the Foreign Institutional Investors can buy and sell Government securities and Treasury Bills with the entire debt ceilings. The authorized dealers have been granted permission to bestow forward cover to the Foreign Institutional Investors in terms of their fresh equity investments in the Indian market. The transactions of Indian stocks among the Foreign Institutional Investors are exempted from the confirmation by the Reserve Bank of India. Furthermore, the unlisted debt assets are entitled to 100 percent FII debt funds for investment matters.
Investment Scenario by Foreign Institutional Investors in Portfolio Management-The Foreign Institutional Investors SEBI (FII), 1995, controls the portfolio investment. The investments carried out by Foreign Institutional Investors include, a wide spectrum of programs as listed below:
- Pension Funds
- University Funds
- Mutual Funds
- Endowment Foundations,
- Charitable Trusts and Charitable Societies
- Incorporated or Institutional Portfolio Managers or their Power of Attorney holders
- Investment Trusts as Nominee Companies
- Asset Management Companies
Last Updated on 05/07/2011