Procedures for Foreign Portfolio Investors Simplified-Several
Measures Announced to Strengthen Capital Markets
Terming the Indian markets as amongst the best regulated the
Finance Minister announced several measures to strengthen the capital market
regulator SEBI on the eve of its Silver Jubilee. The Depository Participants
authorized by SEBI will now register different classes of portfolio investors
subject to compliance with KYC guidelines doing away with different procedures
and avenues for many categories. SEBI will simplify the procedure for the
Foreign Portfolio Investors and prescribe uniform registration and other norms
by converging the different KYC norms. In order to remove the ambiguity between
FDI and FII in accordance with international practices, an investor with a
stake of 10% or less will be treated as FII whereas the one with more than 10%
stake will be treated as FDI. The FIIs will also be permitted to participate in
exchange traded Currency Derivatives segments to the extent of their Indian rupee
exposure in India. FIIs will also be permitted to use their investments in
Corporate Bonds and Government Securities as collateral to meet their margin
requirements.
Angel investors provide both experience and capital to new ventures. SEBI will prescribe requirements for angel investor pools by which they can be recognized as category I venture funds.
With the objective of developing the debt market, stock exchanges will be allowed to introduce a debt segment on the exchange wherein banks and primary dealers will be trading members along with insurance companies, provident funds and pension funds. The list of eligible securities in which Pension Funds and Provident Funds may invest will be enlarged to include exchange traded funds, debt mutual funds and asset backed securities.
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