By IANS
New Delhi : Indian stock market regulator Securities and Exchange Board of India (SEBI) has imposed limits on participation of unregistered overseas investors in Indian equities.
SEBI chairman M. Damodaran Thursday said: “We welcome foreign capital inflows in our country, provided they are registered in India.”
SEBI has directed foreign institutional investors (FIIs), who have issued participatory notes to overseas investors on underlying assets, to unwind their positions within 18 months starting Friday.
“We want transparency in the capital markets and want to know from where the money is coming,” Damodaran added.
India’s Finance Minister P. Chidambaram said earlier that India wants to moderate the surge in foreign money coming into the country and avoid a stock market bubble.
“The instrument (participatory notes) will stay until they are registered as FIIs. Participatory notes can only be issued to regulated entities,” the SEBI chief affirmed.
SEBI will review participatory notes positions from time to time.
“Institutional investors that have applied to register sub-accounts can continue trading while their application is being processed,” he added.
The markets regulator has also allowed overseas pension, endowment, university and charitable funds to register themselves as FIIs.
SEBI said there was no change or dilution on `know your customers’ (KYC) norms for registration as FIIs.
It also allowed hedge funds to invest in Indian equities but on the condition that they have to be regulated in the originating country.
Damodaran said single individual investors could not hold more than 49 percent on broad-based funds. Broad-based funds have to consist of at least 20 investors and the fund managers should have a one-year track record.
SEBI will again meet on Sep 30 to discuss various issues that include discussions on calculations on and rollover period of derivative instruments.