INTRODUCTION Investments made by residents of a country in financial assets and production processes of another country Foreign Investments
Foreign Entity wants to enter in the Indian Market Foreign Direct Investment (FDI) Portfolio Investment Scheme ( PIS)->FII But HOW?
Ref: Handbook of Statistics of Indian Economy 2006, RBI: www.rbi.org.in
FIIs Who are they ? Institutions like pension funds ,mutual funds, investment trusts, asset management companies, nominees companies and incorporated portfolio managers
FIIs Where they can invest? Under securities such as shares, debentures and warrants issued by Indian companies which are listed /to be listed on the Stock exchange in India The schemes floated by domestic mutual funds, traded on the primary and secondary markets. In government securities including treasury bills and debt securities of Indian companies.
FIIs as professional bodies of asset managers and financial analysts enhance competition and efficiency of financial markets
Equity market development aids economic development. By increasing the availability of riskier long term capital for projects, and increasing firms’ incentives to provide more information about their operations, FIIs can help in the process of economic development.