Uniform foreign investor norms on the anvil

The Securities and Exchange Board of India (Sebi) on Saturday proposed uniform guidelines for all classes of foreign investors, a step aimed at simplifying the investment process for overseas entities and strengthen surveillance over them.

In a release issued after its board meeting held here this evening, Sebi said the regulator has decided to prepare draft guidelines in this regard with an aim to make uniform rules for different classes of foreign investors such as FIIs, NRIs, Foreign Venture Capital Investors (FVCIs) and QFIs (Qualified Financial Investors). “With a view to rationalise/harmonise different routes for foreign portfolio investments, Sebi will prepare draft guidelines based on the guidance of the Working Group on Foreign Investment in India (WGFII), for consideration of the Government so that uniform guidelines are made for various categories of investors such as FII, FVCI, NRI, QFI etc,” it said.

On prudential limits for sectoral exposure in debt oriented mutual fund schemes, Sebi said it has been decided that an additional exposure to financial services sector (over and above 30 percent) not exceeding 10 percent of the net assets of the scheme in debt-oriented mutual fund schemes will be allowed by way of an increase in exposure to HFCs (housing finance companies) only, subject to condition that securities issued by HFCs are rated AA and those HFCs are registered with National Housing Bank (NHB).

Further, Sebi relaxed its rules regarding the debt limit allocation mechanism for FIIs (Foreign Institutional Investors), which have emerged as a significant force to the Indian capital market over the years.

The regulator said that “with effect from January 1, 2014, FIIs shall be allowed to re-invest during the calendar year to the extent of 50 per cent of their debt holdings at the end of the previous calendar year.”