Reserve Bank eases foreign portfolio investment norms

Puts in place a new framework for investments

The Reserve Bank of India, on Tuesday, simplified foreign portfolio investment norms by putting in place an easier registration process and operating framework with an aim to attract inflows.

“The portfolio investor registered in accordance with the Securities and Exchange Board of India (SEBI) guidelines shall be called Registered Foreign Portfolio Investor (RFPI),” the RBI said in a notification.

The existing portfolio investor class, namely, Foreign Institutional Investor (FII) and Qualified Foreign Investor (QFI) registered with SEBI shall be subsumed under RFPI, it said.

New scheme The guidelines for Portfolio Investment Scheme for FII and QFI have since been reviewed, and it has been decided to put in place a framework for investments under a new scheme called Foreign Portfolio Investment Scheme, it said.

RFPI may purchase and sell shares and convertible debentures of Indian companies through a registered broker on recognised stock exchanges in India as well as purchase shares and convertible debentures, which are offered to public in terms of relevant SEBI guidelines, it said. Such investors “may also acquire shares or convertible debentures in any bid for, or acquisition of, securities in response to an offer for disinvestment of shares made by the Central Government or any State government, it said.

These entities would be eligible to invest in government securities and corporate debt, subject to limits specified by the RBI and SEBI from time to time, it added.

However, it said, all investments made by that FII/QFI in accordance with the regulations prior to registration as RFPI shall continue to be valid and taken into account for computation of aggregate limit.

The RBI said such investors would be permitted to trade in all exchange-traded derivative contracts on the stock exchanges, subject to the position limits as specified by SEBI from time to time.

“RFPI may offer cash or foreign sovereign securities with AAA rating or corporate bonds or domestic government securities, as collateral to the recognised stock exchanges for their transactions in cash as well as derivative segment of the market,” it said.

The RBI notification is effective from March 19, it added.