PRESS RELEASE
PR No.264/2007
SEBI enhances limit for Overseas Investments by Mutual Funds
In order to facilitate overseas investments by mutual funds in line with the announcement in the Union budget 2007-08, SEBI vide circular dated September 26, 2007 has increased the limit for overseas investment by each mutual fund from US $ 200 million to US $ 300 million. Further the sub-ceiling linked to the net assets of a mutual fund as on March 31 of each year has been dispensed with. This shall be subject to the overall limit for the overseas investments by mutual funds would be US $ 5 billion already announced by the Reserve Bank of India.
Further, the requirement of existence for 10 years or experience of investing in foreign securities for being eligible to invest in overseas Exchange Traded Funds (ETFs) has been dispensed with.
Mutual Funds can now also invest in following new categories of overseas instruments
· ADRs/GDRs issued by foreign companies
· Initial and follow on public offerings for listing at recognized stock exchanges overseas
· Foreign debt securities in the countries with fully convertible currencies, with rating not below investment grade
· Money market instruments rated not below investment grade
· Repos- only as pure investment avenues where the counterparty is rated not below investment grade; repos should not however, involve any borrowing of funds by mutual funds
· Government securities where the countries are rated not below investment grade
· Derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities
· Short term deposits with banks overseas where the issuer is rated not below investment grade
· Units/securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities or Real Estate Investment Trusts (REITs) listed in recognized stock exchanges overseas or unlisted overseas securities (not exceeding 10% of their net assets)
The full text of the above circular is available on the website: www.sebi.gov.in
Mumbai
September 26, 2007