FII

FOREIGN INSTITUTIONAL INVESTORS

COMPILED BY :ABHISHEK BHASIN
 AGENDA
THEORITICAL PRACTICAL IMPICATIONS
 How FII started in India? Impact on economy
 What does it mean? Impact on capital markets
 Who can be registered? Impact on exchange rates
 How to apply?
Names of some FII’s
 Eligibility criteria
Recent developments
 Registration process
 where FII can invest?
 Advantages
&Disadvantages
How FII started in India?

India opened its stock market to foreign investors in

September 1992
Since 1993, received portfolio investment from
foreigners in the form of foreign institutional
investment in equities.
This has become one of the main channels of FII in
India for foreigners.
In order to trade in Indian equity market foreign
corporations need to register with SEBI as Foreign
Institutional Investor (FII).
FOREIGN INSTITUTIONAL INVESTORS (FII’s)

“ An institution that is a legal entity established or

incorporated outside India proposing to make
investments in India only in securities . ”
- SEBI
WHO CAN BE REGISTERED AS AN FII?
Corporate and individuals who belong to any of the
under given categories can be registered for FII :
 Pension Funds
 Mutual Funds
 Investment Trust
 Insurance or reinsurance companies
 Endowment Funds
 University Funds
Contd..
Foundations or Charitable Trusts or Charitable Societies
who propose to invest on their own behalf, and
Asset Management Companies
Nominee Companies
Institutional Portfolio Managers
Trustees
Power of Attorney Holders
Bank
HOW TO APPLY
An application for registration has to be made in Form A, the
format of which is provided in the SEBI(FII) Regulations, 1995
Submitted with the required documents *in duplicate addressed
to SEBI as well as to Reserve Bank of India (RBI) and sent to the
following address within 10 to 12 days of receipt of application.
 Address for application The Division Chief FII Division
Securities and Exchange Board of India, 224, Mittal Court, B
Wing, 1st Floor, Nariman Point, Mumbai - 400 021. INDIA.

*Certified copy of relevant clauses (clauses permitting the stated activities) of Memorandum of Association,
Article of Association or Article of Incorporation.
*Audited financial statement and annual report for the last one year (period covered should not be less than
twelve months
Eligibility
The applicant is required to have the permission under
the provisions of the Foreign Exchange Management Act,
1999 from the Reserve Bank of India.
Applicant must be legally permitted to invest in securities
outside the country or its in-corporation / establishment.
The applicant has to appoint a local custodian and enter
into an agreement with the custodian. Besides it also has
to appoint a designated bank to route its transactions.
Payment of registration fee of US $ 5,000.00
The FII registration is valid for 5 years. After expiry of 5
years, the registration needs to be renewed.
Registration process
Where FII can invest?
Securities in primary and secondary markets including
shares, debentures and warrants of companies, unlisted,
listed or to be listed on a recognized stock exchange in
India;
Units of mutual funds;
Dated Government Securities;
Derivatives traded on a recognized stock exchange ;
Commercial papers
REASONS INDIA ATTRACTS FII’S
ROBUST DOMESTIC GROWTH STORY
SECOND FASTEST GROWING ECONOMY
INCREASING NO OF SKILLED LABOUR
COST COMPETATIVENESS
DISADVANTAGES OF FII’s
CREATION OF ASSET BUBBLES
IMPACT ON SMALL INVESTORS
IMPACT ON EXPORTS
SHORT TERM INVESTMENT TENDENCY
PRACTICAL IMPLICATIONS
 HIGH FII
INFLOW
HIGHER
ECONOMIC
GROWTH
HIGHER
MONEY
SUPPLY

RISING

ECONOMY
DEMAND

LOWER
INTEREST
RATES

HIGHER
CONSUMPTI
ON
HIGHER
CREDIT
OFF-TAKE
 FII (Rs. Crore) DII (Rs. Crore)

Date
Net Purchase Net Purchase
/Sales /Sales
DATE %CHANGE

21-Oct-2010 851.80 -230.39

21-Oct-10 1.55
20-Oct-2010 16.35 -27.50
20-Oct-10 -0.34593
19-Oct-2010 107.12 240.70
19-Oct-10 -1.43434
18-Oct-2010 335.79 -1,218.42
18-Oct-10 -0.607
15-Oct-2010 -112.75 -1,053.45
15-Oct-10 -1.83331
14-Oct-2010 1,019.87 -694.27
14-Oct-10 -0.91355
13-Oct-2010 2,102.95 -1,354.81
13-Oct-10 2.338735
12-Oct-2010 455.73 -454.52
12-Oct-10 -0.73421
11-Oct-2010 810.30 -574.81 11-Oct-10 0.489887
08-Oct-2010 586.22 -1,002.01 08-Oct-10 -0.29329
07-Oct-2010 1,182.91 -1,193.53 07-Oct-10 -1.07574
06-Oct-2010 1,842.44 -976.46 06-Oct-10 0.57763
05-Oct-2010 671.12 -802.95 05-Oct-10 -0.22161
04-Oct-2010 1,264.11 -797.83 04-Oct-10 0.240095
01-Oct-2010 1,825.20 -671.08 01-Oct-10 1.875529
TOTAL 12,959.16 -10,811.33
FII PORTFOLIO
TELECOM UTILITIES
5%
8%
CONSUMER GOODS
10%
MATERIALS
10%

IT ENERGY
10% 13%

INDUSTRIALS
14%

FINANCIALS
28%

HEALTHCARE
4%
POPULAR PLAYERS
RECENT DEVELOPMENTS
FIIs can invest $10 billion more in debt
FIIs can now invest up to $ 30 billion in the debt market.
The limit for FII investments in government securities has
now been raised to $10 billion, a finance ministry release
said adding that the additional $5 billion should be
invested in securities with a residual maturity of over five
years.
Similarly, the current ceiling of FII in corporate bonds has
also increased by $5 billion raising the cap to $20 billion.
The additional investment of up to $5 billion will have to be
invested in corporate bonds with residual maturity of over
five years issued by company in the infrastructure sector.
Recent Alerts
Foreign institutional investor (FII) inflows into the domestic stock market
stood at US$ 3.6 billion in June 2010, taking their total investment to over
US$ 10.4 billion till date. Significantly, India's foreign exchange reserves
rose sharply by US$ 1,037 million during the week ended July 23, 2010.
As per data released by the Securities and Exchange board of India (SEBI),
FIIs invested US$ 2055.74 million in equities between July 1 and July 21,
2010, and US$ 1566.98 million in debt between the same period.
During January to June 2010, FIIs invested US$ 6878.50 million in equity
and US$ 6083.90 million in debt.
Data sourced from SEBI shows that the number of registered FIIs stood at
1713 and number of registered sub-accounts rose to 5,426 as of June 30,
2010.
Q&A
THANK YOU