RBI opens the field wider for foreign investments

MUMBAI (TIP): To attract more investments into the equity and debt markets, the Reserve Bank of India has decided to put in place a framework for investments which allows foreign portfolio investors to participate in open offers, buyback of securities and disinvestment of shares by Central or State Governments.

The framework has been unveiled at a time when the Indian equity market is experiencing a bull run, with the BSE S&P Sensex racing past the 22,000-point mark to a lifetime high on expectations of a stable government emerging at the Centre post elections. Under a new scheme called ‘Foreign Portfolio Investment’, the RBI said portfolio investors — foreign institutional investors (FIIs) and qualified foreign investors (QFIs) registered in accordance with SEBI guidelines — will now be called Registered Foreign Portfolio Investors (RFPIs).

According to the scheme, RFPIs can sell shares or convertible debentures in an open offer or through buyback of shares by a listed Indian company. RFPIs can also acquire shares or convertible debentures in any bid for, or acquisition of, securities in response to an offer for divestment of shares made by the Central or any State Governments. Further, they can acquire shares or convertible debentures in any transaction in securities pursuant to an agreement entered into with a merchant banker in the process of market making or subscribing to unsubscribed portion of the issue.

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