Foreign Institutional Investment

1. FOREIGN INSTITUTIONAL
INVESTMENT IN INDIA
R. Muthu krishnaveni M.Com., M.Phil., P.G.D.C.A.,
Assistant Professor
Saiva Bhanu Kshatriya college, Aruppukottai.

2. introduction
India has attracted the highest foreign investment
among emerging economies in 2014. At US$ 4.18
billion, the country's foreign institutional investor (FII)
inflows are higher than that of other emerging
economies such as Taiwan (US$ 3.6 billion), Indonesia
(US$ 2.4 billion), Brazil (US$ 1.2 billion) and South
Africa (US$ 0.7 billion).Further, foreign investors
invested about Rs 371,342 crores (US$ 61.69 billion)
in Indian stocks in the four years ended December
2013. These figures highlight the impact of foreign
investment in India’s growth as an economic power.

3. RBI - 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.

4. Investment ceiling
The ceiling for overall investment
24% for FII and
 10% for NRIs/PIOs
of the paid up capital of the Indian company
 24% for FII of convertible debenture of the
Indian company
20% of the paid up capital in the case of public
sector banks(including the State Bank of India).

5. Investment ceiling
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.

6. Foreign Investments Monitoring
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.
cut off - 8% for NRI/PIO
- 24% for FII

7. Foreign Investments Monitoring
Once the aggregate net purchases of
equity shares of the company by FII/NRI/PIO
reach the cut-off point, which is 2% below the
overall limit, the RBI 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 RBI.
Approval is given by RBI first come first
serve

8. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
1. Companies in which FIIs/NRIs/PIOs
investment is allowed up to 24% of their
Paid-up Capital – 89 companies
2. Companies in which NRIs/PIOs
investment is allowed up to 17% of their
Paid-up Capital - Garware Shipping
Corporation Ltd

9. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
3. Companies where NRI investment has
reached 8% and further purchases are
allowed only with prior approval RBI – 5
companies.
4. Companies where NRI investment has
already reached 10% and no further
purchases can be allowed – 7 companies

10. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
5. Companies where NRI investment has
already reached 22% and no further
purchases can be allowed – None
6. Companies in which FII Investment is
allowed up to 30% of their paid up capital
– 19 cmpanies

11. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
7. Companies in which FII Investment is
allowed up to 40% of their paid up capital
– 14 companies
8. Companies in which FII Investment is
allowed up to 49% of their paid up capital
– 16 companies

12. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
9. Companies in which FII Investment is
allowed up to sectoral cap/statutory ceiling
of their paid up capital –
1. GTL Ltd. - (74%)
2. Housing Development
Finance Corporation
Ltd. - (74%)
3. Infosys Technologies
Ltd. - (100%)
4. Pentamedia Graphics
Ltd. - (100%)
5. Pentasoft Technologies
Ltd. - (100%)
6. Mascon Global Ltd. -
(100%)
7. Punjab Tractors Ltd. -
(64%)
8. Satyam Computer
Services Ltd - (60%)

13. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
10. Companies where 22% FII investment
limit has been reached and further
purchases are allowed with prior
approval of RBI – 2 companies
11. Companies where 28% FII investment
limit has reached and further purchases
are allowed with prior approval of RBI -
None

14. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
13. Companies where 38% FII investment limit
has reached and further purchases are
allowed with prior approval of RBI - None
14. Companies in which the Caution limit
(47%) in respect of maximum permissible
foreign holding including NRI/PIO/FII
Investment as stipulated by Government
has been reached - None

15. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
15. Companies where 49% limit has been
reached and no further purchases will be
allowed – None
16. Public Sector banks including SBI in
which 18% limit has been reached. –
None
17. Public Sector banks including SBI in
which 20% limit has been reached. - State
Bank of India

16. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
18. Companies falling under 24% - None
19. Companies falling under 30% - None
20. 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 - ICICI Ltd.

17. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
18. Companies falling under 24% - None
19. Companies falling under 30% - None
20. 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 - ICICI Ltd.

18. list of companies allowed to attract
investments from FIIs/NRIs/PIOs
20. Companies in which the Caution limit
(47%) in respect of maximum permissible
foreign holding including
GDR/ADR/FDI/NRI/PIO/FII Investments
as stipulated by Government has reached –
None

19. FPI/FII Investments in India
Financial
Year
Equity Rs
in crores
Debt Rs in
crores
Total
Rs in
crores
1992-93 13 0 13
1993-94 5,127 0 5,127
1994-95 4,796 0 4,796
1995-96 6,942 0 6,942
1996-97 8,546 29 8,575
1997-98 5,267 691 5,958

20. FPI/FII Investments in India
Financial
Year
Equity Rs
in crores
Debt Rs in
crores
Total
Rs in
crores
1998-99 -717 -867 -1,584
1999-00 9,670 453 10,122
2000-01 10,207 -273 9,933
2001-02 8,072 690 8,763
2002-03 2,527 162 2,689
2003-04 39,960 5,805 45,765

21. FPI/FII Investments in India
Financial
Year
Equity Rs
in crores
Debt Rs in
crores
Total
Rs in
crores
2004-05 44,123 1,759 45,881
2005-06 48,801 -7,334 41,467
2006-07 25,236 5,605 30,840
2007-08 53,404 12,775 66,179
2008-09 -47,706 1,895 -45,811
2009-10 110,221 32,438 142,658

22. FPI/FII Investments in India
Financial
Year
Equity Rs
in crores
Debt Rs in
crores
Total
Rs in
crores
2010-11 110,121 36,317 146,438
2011-12 43,738 49,988 93,726
2012-13 140,033 28,334 168,367
2013-14 79,709 -28,060 51,649
2014-15 9,602 -9,185 418
Total 717,688 131,222 848,911

23. FPI/FII Investments in India

24. Conclusion
While strong inflow of funds
from foreign institutional investors (FIIs)
has been a reason to cheer, it could turn
into a nightmare and if the global investors
make a sudden exit can send the bourses
crashing.