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Publication: The Economic Times Delhi;Date: Aug 25, 2008;Section: Political Theatre;Page: 3
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attorney holders, university funds, endowment foundations, charitable trusts and charitable societies. FIIs are
required to allocate their investment between equity and debt instruments in the ratio of 70:30. However, it is also
possible for an FII to declare itself a 100% debt FII in which case it can make its entire investment in debt
instruments. The government allows greater freedom to FDI in various sectors as compared to FII investments.
However, there are peculiar cases like airlines where foreign investment, including FII investment, is allowed to the
extent of 49%, but FDI from foreign airlines is not allowed.
What are the restrictions that FIIs face in India?
FIIs can buy/sell securities on Indian stock exchanges, but they have to get registered with stock market
regulator Sebi. They can also invest in listed and unlisted securities outside stock exchanges if the price at which
stake is sold has been approved by RBI. No individual FII/sub-account can acquire more than 10% of the paid up
capital of an Indian company. All FIIs and their sub-accounts taken together cannot acquire more than 24% of the
paid up capital of an Indian Company, unless the Indian Company raises the 24% ceiling to the sectoral cap or
statutory ceiling as applicable by passing a board resolution and a special resolution to that effect by its general
body in terms of RBI press release of September 20, 2001 and FEMA Notification No.45 of the same date. In
addition, the government also introduces new regulations from time to time to ensure that FII investments are in
order. For example, investment through participatory notes (PNs) was curbed by Sebi recently.
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