BY SHUBHAM BATRA
NEW DELHI- India’s central bank is set to double to 10 percent a cap on investment by individual foreign investors in listed companies, as it aims to boost capital inflows, according to two senior government officials and documents reviewed by Reuters.
Foreign portfolio investors (FPIs), pressured by poor earnings, high valuations and prospects of US tariffs, have pulled more than $28 billion out of Indian stocks since September’s record high in the benchmark NSE Nifty 50
To boost foreign investment, India is widening to all foreign investors benefits it had until now restricted to overseas Indians, while also raising applicable investment limits, the officials said.
“It is felt that these proposals may be implemented as early as possible,” the central bank told the government in a letter last week, pointing to disruption in capital inflows among recent developments in the external sector.
Emails seeking comment from the finance ministry, the central bank, and the market regulator, the Securities and Exchange Board of India (SEBI), did not get any response.
The plans envisage allowing all foreign individual investors to invest a maximum of 10 percent in a listed company, the document showed.
That is up from the 5 percent holding in an Indian company allowed to overseas Indian citizens by special rules under the Foreign Exchange Management Act (FEMA).
“Current foreign exchange management rules only mention non-resident Indians (NRIs) and overseas citizens of India (OCIs) under Schedule III,” the second government official said, speaking on condition of anonymity.
“We are broadening this to include all individual foreign investors.”
The central bank, the Reserve Bank of India (RBI), will also raise to 24 percent the combined holding limit for all overseas individual investors in an Indian listed company, from 10 percent now, the officials added.
The plan to hike foreign investor limits in Indian listed firms is in the final stages of discussion between the government, the RBI, and SEBI, the officials said. – Reuters
