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  • Foreign Institutional Investor

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    Daniel Raj Richard
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    Foreign institutional investors (FIIs) began investing in India's stock market in 1992. FIIs are foreign corporations that register with SEBI to trade stocks on Indian exchanges. Eligible FIIs include pension funds, mutual funds, and asset management companies. To register, applicants submit documentation to SEBI and RBI. Registered FIIs can invest in primary and secondary markets, government securities, derivatives, and commercial paper. In contrast, foreign direct investment involves direct capital investment in Indian companies by foreign multinational corporations and has a more permanent nature.

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    Foreign institutional investors (FIIs) began investing in India's stock market in 1992. FIIs are foreign corporations that register with SEBI to trade stocks on Indian exchanges. Eligible FIIs include pension funds, mutual funds, and asset management companies. To register, applicants submit documentation to SEBI and RBI. Registered FIIs can invest in primary and secondary markets, government securities, derivatives, and commercial paper. In contrast, foreign direct investment involves direct capital investment in Indian companies by foreign multinational corporations and has a more permanent nature.

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    290 views14 pages

    Foreign Institutional Investor

    Uploaded by

    Daniel Raj Richard
    Foreign institutional investors (FIIs) began investing in India's stock market in 1992. FIIs are foreign corporations that register with SEBI to trade stocks on Indian exchanges. Eligible FIIs include pension funds, mutual funds, and asset management companies. To register, applicants submit documentation to SEBI and RBI. Registered FIIs can invest in primary and secondary markets, government securities, derivatives, and commercial paper. In contrast, foreign direct investment involves direct capital investment in Indian companies by foreign multinational corporations and has a more permanent nature.

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    FOREIGN INSTITUTIONAL INVESTOR

    How FII started in India? What does it mean? Who can be registered? How to apply? Registration process where FII can invest? FII v/s FDI

    How FII started in India?


    India opened its stock market to foreign investors in

    September 1992 Since 1993, received portfolio investment from foreigners in the form of foreign institutional investment in equities. This has become one of the main channels of FII in India for foreigners. In order to trade in Indian equity market foreign corporations need to register with SEBI as Foreign Institutional Investor (FII).

    WHAT IS FII?
    Foreign institutional investor means an institution

    established or incorporated outside India which proposes to make investment in India in securities It is used most commonly in India to refer to outside companies investing in the financial markets of India.

    WHO CAN BE REGISTERED AS AN FII?


    One who propose to invest their proprietary funds or on behalf of "broad based" funds or of foreign corporate and individuals and belong to any of the under given categories can be registered for FII.

    Pension Funds Mutual Funds Investment Trust Insurance or reinsurance companies Endowment Funds University Funds Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf, and Asset Management Companies Nominee Companies Institutional Portfolio Managers Trustees Power of Attorney Holders Bank

    HOW TO APPLY
    An application for registration has to be made in Form A,

    the format of which is provided in the SEBI(FII) Regulations, 1995 and submitted with under mentioned documents in duplicate addressed to SEBI as well as to Reserve Bank of India (RBI) and sent to the following address within 10 to 12 days of receipt of application. Address for application The Division Chief FII Division Securities and Exchange Board of India, 224, Mittal Court, 'B' Wing, 1st Floor, Nariman Point, Mumbai - 400 021. INDIA

    Registration process

    Where FII can invest?


    Current financial instruments are available for FII investments Securities in primary and secondary markets including shares, debentures and warrants of companies, unlisted, listed or to be listed on a recognized stock exchange in India; Units of mutual funds; Dated Government Securities; Derivatives traded on a recognized stock exchange ; Commercial papers

    WHAT IS FDI?
    FDI is Foreign Direct Investment: It is the investment made by Foreign Multinational companies in capital of Indian companies.

    FDI Investment Sectors


    Prohibited activities Atomic energy Arms and ammunition Lottery business Betting and Gambling Aircraft and warships Coal lignite Fully permitted Activities Cigar and cigarettes of tobacco Coal, Roads & Highways Diamond, Gold, Silver , Minerals Atomic minerals Electricity Hotel, hospitals Etc

    FII Vs FDI
    FII : It is investment made by foreign Mutual Funds in the Indian Market. FDI : It is the investment made by Foreign Multinational companies in India. Foreign investment banks are not permitted to directly invest in shares on the Indian stock exchange Makes investments on behalf of foreign investors, referred to as sub-accounts

    Contnd.
    Where FDI is a bit of a permanent nature, FII flies

    away at the shortest political or economical disturbance Entry and Exit is relatively very easy for an FII as compared to FDI. Entry difficult for FDI because of infrastructure problems. Exit more difficult because of restricted labor laws.

    Contnd
    FDI is more desirable than portfolio investment

    because the investments there under are made directly in the capital of the company and not in the secondary market FDI helps in increasing production and employment , FII does not affect production and employment . FII investment is frequently referred to as hot money for the reason that it can leave the country at the same speed at which it comes in, in case of FDI it doesnt

    Limits on the type and amount of investments apply

    to FIIs
    no more than 10% of the equity in any one company no more than 10% in the equity in any one company on

    behalf of a fund sub-account no more than 5% in the equity in any one company on behalf of a corporate/individual sub-account no more than 24% in the aggregate of the total issued capital of a company to be held by FIIs

    Thank You

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