Dear Viewers,

A Foreign Institutional Investor (FII) who is registered with SEBI is now allowed to buy dated Government securities/treasury bills, non-convertible debentures/bonds issued by an Indian company. He is also allowed to buy units of Indian Mutual Funds directly from the issuer. This means Reserve Bank of India (RBI) has allowed a registered FII to participate in primary securities market of Government securities and mutual fund units.

A registered FII may also buy the aforementioned securities from the secondary securities market i.e. Stock exchanges through a registered stock broker.

The above securities are now allowed to be bought on repatriation basis. This means that any income earned on these securities can be returned back to home country of the registered FII without any restrictions.

However, in order to achieve these there are following conditions stipulated by RBI:-

  1. Total investment of registered FII must be allocated between equity instruments and debt instruments in the ratio of 70:30. This includes dated Government securities/treasury bills, non-convertible debentures/bonds issued by an Indian company;
  2. If the registered FII desires to investment 100% in dated Government securities/treasury bills, non-convertible debentures/bonds issued by an Indian company; then it will have to incorporate a debt-fund and register the same with SEBI.

This Amendment is notified by RBI on 28th August 2014 vide no. RBI/2014-15/197 A.P. (DIR Series) Circular No. 22

CS Riddhi Patel

Reach me at csriddhipatel@gmail.com for any further queries.

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