Investment in Indian Companies by FIIs/NRIs/PIOs

Regulations

Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India.

The ceiling for overall investment for FIIs is 24 per cent of the paid up capital of the Indian company and 10 per centfor NRIs/PIOs. The limit is 20 per cent of the paid up capital in the case of public sector banks, including the State Bank of India.

The ceiling of 24 per cent for FII investment can be raised up to sectoral cap/statutory ceiling, subject to the approval of the board and the general body of the company passing a special resolution to that effect. And the ceiling of 10 per cent for NRIs/PIOs can be raised to 24 per cent subject to the approval of the general body of the company passing a resolution to that effect.

The ceiling for FIIs is independent of the ceiling of 10/24 per cent for NRIs/PIOs.

The equity shares and convertible debentures of the companies within the prescribed ceilings are available for purchase under PIS subject to:

- the total purchase of all NRIs/PIOs both, on repatriation and non-repatriation basis, being within an overall ceiling limit of (a) 24 per cent of the company's total paid up equity capital and (b) 24 per cent of the total paid up value of each series of convertible debenture; and

- the investment made on repatriation basis by any single NRI/PIO in the equity shares and convertible debentures not exceeding five per cent of the paid up equity capital of the company or five per cent of the total paid up value of each series of convertible debentures issued by the company.

Monitoring Foreign Investments

The Reserve Bank of India monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis. For effective monitoring of foreign investment ceiling limits, the Reserve Bank has fixed cut-off points that are two percentage points lower than the actual ceilings. The cut-off point, for instance, is fixed at 8 per cent for companies in which NRIs/ PIOs can invest up to 10 per cent of the company's paid up capital. The cut-off limit for companies with 24 per cent ceiling is 22 per cent and for companies with 30 per cent ceiling, is 28 per cent and so on. Similarly, the cut-off limit for public sector banks (including State Bank of India) is 18 per cent.

Once the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reach the cut-off point, which is 2% below the overall limit, the Reserve Bank cautions all designated bank branches so as not to purchase any more equity shares of the respective company on behalf of FIIs/NRIs/PIOs without prior approval of the Reserve Bank. The link offices are then required to intimate the Reserve Bank about the total number and value of equity shares/convertible debentures of the company they propose to buy on behalf of FIIs/NRIs/PIOs. On receipt of such proposals, the Reserve Bank gives clearances on a first-come-first served basis till such investments in companies reach 10 / 24 / 30 / 40/ 49 per cent limit or the sectoral caps/statutory ceilings as applicable. On reaching the aggregate ceiling limit, the Reserve Bank advises all designated bank branches to stop purchases on behalf of their FIIs/NRIs/PIOs clients. The Reserve Bank also informs the general public about the `caution’ and the `stop purchase’ in these companies through a press release.

The current list of companies allowed to attract investments from FIIs/NRIs/PIOs with their respective ceilings is:

List of companies

List of companies which have raised the ceiling from 10% in respect of NRIs investments under PIS (w.e.f. November 29, 2010)

Upto 24%

Upto 17%

LIST OF COMPANIES IN WHICH NRI INVESTMENT IS ALLOWED UPTO LIMITS FIXED BY COMPANIES AS INDICATED AGAINST THEIR NAMES

LIST OF COMPANIES IN WHICH FII INVESTMENT IS ALLOWED UPTO 30% OF THEIR PAID UP CAPITAL UNDER PIS

LIST OF COMPANIES IN WHICH FII INVESTMENT IS ALLOWED UPTO 40% OF THEIR Paid Up Capital

LIST OF COMPANIES IN WHICH FII INVESTMENT IS ALLOWED UPTO 49% OF THEIR Paid Up Capital

LIST OF COMPANIES IN WHICH FII INVESTMENT IS ALLOWED UPTO LIMITS FIXED BY COMPANIES AS INDICATED AGAINST THEIR NAMES

LIST OF COMPANIES IN WHICH FII INVESTMENT IS ALLOWED UPTO SECTORAL CAP/STATUTORY CEILING OF THEIR PAID UP CAPITAL

LIST OF PRINT MEDIA COMPANIES IN WHICH FDI / FII INVESTMENT IS ALLOWED

Companies in which overall FII ceiling has reached and no further purchases are allowed Companies falling under 24 %

Companies falling under 30 %

None

Companies falling under 49% limit

Companies where 38% FII limit has been reached and further purchases are allowed with prior approval of RBI.

None

Companies where 28% FII limit has been reached and further purchases are allowed with prior approval of RBI.

None

Companies where 22% FII limit has been reached and further purchases will be allowed with prior approval of RBI

Companies where intermediate FII limit has been reached and further purchases will be allowed with prior approval of RBI

Companies in which overall FII ceiling has reached and no further purchases are allowed Companies falling under intermediate ceiling as indicated against their names

Companies in which the Ban limit in respect of maximum permissible foreign holding by FII Investment as stipulated by Government has been reached

Companies where NRI/PIO Investment has already reached 10 % and no further purchases can be allowed

Companies where the NRI investment has reached the trigger point of 8% and further purchases are allowed only with prior permission of RBI

Companies in which the Ban limit in respect of maximum permissible foreign holding including GDR/ADR/FDI/NRI/PIO/FII Investment as stipulated by Government has been reached.

Companies in which the Caution limit in respect of maximum permissible foreign holding including GDR/ADR/FDI/NRI/PIO/FII Investments as stipulated by Government has reached.

Print Media Companies in which the Caution limit in respect of maximum permissible foreign holding including FDI/NRI/PIO/FII Investments as stipulated by Government has reached.

Print Media Companies in which the Ban limit in respect of maximum permissible foreign holding including FDI/NRI/PIO/FII Investments as stipulated by Government has reached.

Public Sector banks in which 20% limit has been reached and no further investments are permitted

Public Sector banks in which 18% caution limit has been reached and further purchases by FIIs/NRIs/PIOs are allowed only with prior permission of RBI

Private Sector Banks in which the Caution limit in respect of maximum permissible foreign holding including GDR/ADR/FDI/NRI/PIO/FII Investments as stipulated by Government has reached

Private Sector Banks in which the Ban limit in respect of maximum permissible foreign holding including GDR/ADR/FDI/NRI/PIO/FII/FPI Investments as stipulated by Government has reached

Private Sector Banks in which the Ban limit in respect of FIIs Investment has reached 49%.

	Further purchases are allowed only with prior permission of RBI.
	No further purchases are allowed.