Advantages of Fiis in Indian Markets
FIIs are contributing to the foreign exchange inflow as the funds from multilateral finance institutions and FDI are insufficient, says Abhijit Roy
THE RECENT spat over the tax authorities issuing notices to foreign institutional investors (FIIs) which take advantage under the Indo-Mauritius Bouble Taxation Avoidance Agreement, has once again drawn attention to the role that FII investment is playing in the capital markets in India. This article endeavours to place the overall picture in perspective.
The Union Government allowed the entry of FIIs in order to encourage the capital market and attract foreign funds to India. Today, FIIs are permitted to invest in all securities traded on the primary and secondary markets, including equity shares and other securities listed or to be listed on the stock exchanges. The original guidelines were issued in September 1992. Subsequently, the Securities and Exchange Board of India (SEBI) notified the SEBI (Foreign Institutional Investors) Regulations, 1995 in November 1995.
Over the years, different types of FIIs have been allowed to operate in Indian stock markets. They now include institutions such as pension funds, mutual funds, investment trusts, asset management companies, nominee companies, incorporated/institutional portfolio managers, university funds, endowments, foundations and charitable trusts/societies with a track record. Proprietary funds have also been permitted to make investments through the FII route subject to certain conditions.
The SEBI is the nodal agency for dealing with FIIs, and they have to obtain initial registration with SEBI. The registration fee is $10,000. For granting registration to an FII, the SEBI takes into account the track record of the FII, its professional competence, financial soundness, experience and such other criteria as may be considered relevant by SEBI. Besides, FIIs seeking initial registration with SEBI will be required to hold a registration from an appropriate foreign
THE RECENT spat over the tax authorities issuing notices to foreign institutional investors (FIIs) which take advantage under the Indo-Mauritius Bouble Taxation Avoidance Agreement, has once again drawn attention to the role that FII investment is playing in the capital markets in India. This article endeavours to place the overall picture in perspective.
The Union Government allowed the entry of FIIs in order to encourage the capital market and attract foreign funds to India. Today, FIIs are permitted to invest in all securities traded on the primary and secondary markets, including equity shares and other securities listed or to be listed on the stock exchanges. The original guidelines were issued in September 1992. Subsequently, the Securities and Exchange Board of India (SEBI) notified the SEBI (Foreign Institutional Investors) Regulations, 1995 in November 1995.
Over the years, different types of FIIs have been allowed to operate in Indian stock markets. They now include institutions such as pension funds, mutual funds, investment trusts, asset management companies, nominee companies, incorporated/institutional portfolio managers, university funds, endowments, foundations and charitable trusts/societies with a track record. Proprietary funds have also been permitted to make investments through the FII route subject to certain conditions.
The SEBI is the nodal agency for dealing with FIIs, and they have to obtain initial registration with SEBI. The registration fee is $10,000. For granting registration to an FII, the SEBI takes into account the track record of the FII, its professional competence, financial soundness, experience and such other criteria as may be considered relevant by SEBI. Besides, FIIs seeking initial registration with SEBI will be required to hold a registration from an appropriate foreign