A committee set up by the Securities and Exchange Board of India (SEBI) has recommended merging foreign investment in India's stock markets into a single investor class as well easing registration norms for foreign buyers, in a move aimed at appeasing foreign investors.
The Government has also hiked the investment limit for foreign portfolio investors in government bonds by $5 billion to $30 billion in an attempt to attract more foreign capital in to the country. However, the enhanced limit of $5 billion will be available for investments only to foreign central banks, sovereign wealth funds, multilateral agencies, endowment funds, insurance funds and pension funds.
For foreign institutional investors that have exhausted their reinvestment limits, as a one-time measure, a special window of up to $250 million per foreign institutional investors would be available. However, such investments made by FIIs using the special window would have a 90-day lock-in
A panel set up by the SEBI has recommended that the regulator simplify the Know Your Client (KYC) norms according to the risk profile of the investor.
The SEBI committee also recommended merging the existing categories of Foreign Institutional Investors (FIIs), their sub accounts and Qualified Foreign Investors into the Foreign Portfolio Investor (FPI) class.
"With the simplification of procedures in KYC/ Account opening and onboarding etc., the Committee believes it will make the experience for FPI of entering into India more pleasuresome and smooth, resulting in increasing inflows into India," SEBI said in a statement.
The panel also recommended opening up more sectors in India to receive venture capital funding from investors abroad.
With inputs from Reuters