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Invest in Indian Companies

Q1). Are foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) allowed to invest in Indian companies?

Ans: Yes, they are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India.

Q2). What are the maximum overall investments one FII, NRI or PIO?

Ans: The upper limit for overall investment for FIIs is 24%, of the paid up capital of the Indian company, and 10% for NRIs and PIOs. The limit is 20% of the paid up capital in case of public sector banks, including the State Bank of India.

Q3). Can the upper limit of the investments be raised under any special cases for FII, NRI or PIO?

Ans: Yes, the upper limit of 24% for FII investment can be raised up to sectoral cap/statutory ceiling, subject to the approval of the board and the general body of the company passing a special resolution to that effect. And the maximum limit of 10 % can be raised to 24% subject to the approval of the general body of the company passing a resolution, to that effect.

Q4). For Non-convertible debentures of Indian companies, can NRIs investments still be made?

Ans: Yes, an NRI can make investment in non-convertible debentures but they need to require necessary permission (submit application) from Reserve Bank (Central Office) by the concerned Indian Company in form ISD.

Q5). Can OCBs (Overseas Corporate Bodies) make similar investments in mutual funds on non-repatriation basis?

Ans: Overseas Corporate Bodies can make such investments only in domestic public/ private sector Mutual Funds. They can also make investments in Money Market Mutual Funds.

Q6). Is the ceiling for FIIs dependent of the ceiling of 10/24 per cent for NRIs/PIOs?

Ans: No.

Q7). Who monitors the maximum limits on FII, NRI or PIO investment in Indian companies on a daily basis?

Ans: The Reserve Bank of India (RBI).

Q8). Does it require permission from the Reserve Bank required by NRIs for sale/transfer of shares/debentures of Indian companies to other NRIs?

Ans. No. Transfer of shares/debentures of Indian companies by NRIs to other non-residents does not require permission of Reserve Bank. However, the transferee NRI would need permission for purchase of such shares for which an application is required to be made to Reserve Bank in form FNC.

Q9). Is permission of RBI required if an NRI intends to invest in new issues of Indian companies on non-repatriable basis?

Ans. No. Indian companies have been granted general permission to accept investments on non-repatriation basis, in shares/convertible debentures by way of new/rights/bonus issue provided the investee company has not undertaken agricultural/plantation activity and/or real estate business excluding real estate development i.e. development of property and construction of houses.

 

 

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