India opened its stock market to foreign investors in September 1992. since 1993,received portfolio investment from foreigners in the form FII In order to trade in Indian equity market foreign corporation need to registered with SEBI as FII.

‡ A foreign Institutional Investor (an "FII") as an institution established or incorporated outside India which proposes to make investment in India in securities of companies incorporated in India (³Indian Companies´)

 Insurance companies.FOREIGN INSTITUTIONAL INVESTOR ‡ An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing.  Pension funds and mutual funds. . Institutional investors include  hedge funds.

ENTITIES /FUNDS ELIGIBLE TO GET REGISTERED AS FII:         Pension Funds Mutual Funds Insurance Companies Investment Trusts Banks Endowments Foundations Charitable Trusts/Charitable Societies .

 Applicant must be legally permitted to invest insecurities outside the country or its in-corporation /establishment. 1999from the Reserve Bank of India. .REGISTRATION PROCEDURE OF FOREIGN INSTITUTIONAL INVESTOR As per Regulation 6 of SEBI (FII) Regulations.1995  The applicant should be regulated by an appropriate foreign regulatory authority  The applicant is required to have the permission under the provisions of the Foreign Exchange Management Act.

 Valid for 5 years. .  The applicant has to appoint a local custodian and enter into an agreement with the custodian. The fees for registration:  US$ 5.000 for an FII account  US$ 1.CONTu..  SEBI targets a timeline of 10 to 12 days for processing of FII applications.  The applicant must be a "fit and proper" person.000 for each sub account.

WHO CAN BE REGISTERED AS AN FIIS ? Pension Funds Mutual Funds Insurance Companies Investment Trusts Banks Endowments Foundations Charitable Trusts/ Charitable Societies .


which drew out huge amounts of money from the market FIIs withdraw from the capital market with more than Rs 10000 crores. .FIIS AS MAJOR CAUSE OF MARKET CRASH (JAN 21 TO JAN 29 2008) The Indian capital markets have been left reeling under the impact of liquidity crunch caused by multiple factors It began with two mega issues of reliance power and future capital holdings.

DEFINITION OF FDI ‡ Foreign direct investment is that investment . Exp. ‡ The parent enterprise through its foreign direct investment effort seeks to exercise substatial µControl¶ over the foreign affiliate company. ± An American company taking a majority stake in a company in India. which is used to made the business interests of the investor in a company. . which is in a different nation distinct from the investor¶s country of origin.

trust or other societal organisation. or ‡ any combination of the above. .FOREIGN DIRECT INVESTMENT ‡ A foreign direct investor may be classified in any sector of the economy and could be any one of the following ‡ an individual. ‡ a group of related individuals. ‡ an incorporated or unincorporated entity ‡ a public company or private company ‡ a group of related enterprises ‡ a government body ‡ an estate (law).

WHY IS FDI IMPORTANT ? ‡ Firms want a presence in foreign markets ‡ Firms want control over growth of these foreign markets To gain first mover advantages To ward off competitors To determine locations. . advertising and other related strategic decisions in the firm¶s interest.

WHY INDIA? ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Liberal. Second largest emerging market (US$ 2. largest democracy. Political stability.4 trillion) Skilled and competitive labors force Highest rates of return on investment Second largest group of software developers after the U.500 companies on Bombay Stock Low costs & Tax exemptions in SEZ Has a middle class estimated at 300 million out of a total population of 1 billion Growth over the past few years averaging 8% .S. Lists 6.

508 5.379 8.233 % of total of all countries 44 9 7 6 4 3 1 1. 4.) Rank Country Total 2000 to 2009 39. 5.K Netherlands Germany France .071 6.S.SHARE OF TOP INVESTING COUNTRIES ­FDI INFLOWS (US$ MN.A U. 3.379 1. Mauritius Singapore U. 7. 2.289 3.701 2. 6.

DIFFERENCESu. FII does not give any control in operation of foreign company. FDI and FII  FDI is when a foreign company brings capital into a company or economy to set up a production or some other facility FII is when a foreign company buys equity in any company through stock market. .  FDI gives some CONTROL in operation of foreign company to the foreign company.  FDI brings long term capital. FII brings short term capital.

FII is mostly the short term investment mostly in financial market. FDI involves in direct production activity and is long term in nature.  FDI enables a degree of control in the company. . FII does not involve in degree of control in the company.


Euro-issues include Euro-convertible bonds and GDRs.. credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions ‡ External Commercial Borrowings (ECBs) include bank loans.EXTERNAL COMMERCIAL BORROWING ‡ ECB (External Commercial Borrowings) is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (Public Sector Undertakings). . fixed and floating rate bonds (without convertibility) and borrowings from private sector windows of multilateral Financial Institutions such as International Finance Corporation. buyers' credit. securitised instruments such as Floating Rate Notes and Fixed Rate Bonds etc. suppliers' credit. suppliers' and buyers' credits. ECBs include commercial bank loans.

FOREIGN PORTFOLIO INVESTMENT‡ Foreign portfolio investment is the entry of funds into a country where foreigners make purchases in the country¶s stock and bond markets. subsidies. grants. . and the removal of restrictions and limitations. sometimes for speculation. These include interest loans. ‡ Different economic factors encourage inward FDIs.FOREIGN DIRECT INVESTMENT‡ An outward-bound FDI is backed by the government against all types of associated risks. tax breaks. This form of FDI is subject to tax incentives as well as disincentives of various forms.

involving transfer of technology and "know-how". FVCI investment in equity of Indian venture capital ‡ undertakings is also allowed. as opposed to the longer term Foreign Direct Investment partnership (possibly through joint venture). FOREIGN VENTURE CAPITAL INVESTOR:‡ FVCIs (Foreign Venture Capital Investors) registered with SEBI are allowed to invest in units of venture capital funds any limit.‡ It is a usually short term investment (sometimes less than a year. The limit for such investments would be based on the sectoral limits under the FDI policy . or with involvement in the management of the company).

the repatriation is restricted to principal amount for two residential properties. plantations and farmhouses). . There is no such restriction in respect of commercial property.INVESTMENT BY NRIs IN IMMOVABLE PROPERTIES: The NRIs are permitted to freely acquire immoveable property (other than agricultural land. NRIs are also permitted to avail of housing loans for acquiring property in India and repayment of such loans by close relatives is also permitted. There are no restrictions regarding the number of such properties to be acquired. The only restriction is that where the property is acquired out of inward remittances.



WORKING GROUPS OF WORLD BANK  International Bank for Reconstruction and Development (IBRD)  International Development Association (IDA)  International Finance Corporation (IFC)  Multilateral Investment Guarantee Agency (MIGA)  International Centre for Settlement of Investment Disputes (ICSID) .

FUNCTIONS ‡ World Bank provides technical and financial assistance to underdeveloped nations for development schemes like building roads. schools. hospitals. to realize the most far-reaching results possible. etc. . including the World Health Organization (WHO) and the Food and Agriculture Organization (FAO). ‡ The World Bank collaborates with numerous other partners and multilateral organizations. The main aim is to eliminate poverty from the world.

With over 1. the institution has a formidable challenge. .9 billion people living on less than $2 a day in Asia.2. ASIAN DEVELOPMENT BANK:The Asian Development Bank (ADB) is a multilateral development finance institution whose mission is to reduce poverty in the Asia Pacific region. The ADB was founded in 1966 with the goal of eradicating poverty in the region.

FUNCTIONS ‡ It plays the following functions for countries in the Asia Pacific region: ‡ Provides loans and equity investments to its developing member countries (DMCs) ‡ Provides technical assistance for the planning and execution of development projects and programs and for advisory services ‡ Promotes and facilitates investment of public and private capital for development .


secure financial stability. working to foster global monetary cooperation.‡ The International Monetary Fund was conceived in July 1944. . and reduce poverty around the world. The International Monetary Fund (IMF) is an organization of 187 countries. facilitate international trade. promote high employment and sustainable economic growth.

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