v. Foreign Institutional Investment

 
Changes to the SEBI (Foreign Institutional Investors) Regulations, 1995

In 1996-97, the SEBI (Foreign Institutional Investors) Regulations, 1995 were amended to permit FIIs who obtain specific approval from the SEBI to invest 100 per cent of their portfolios in debt securities. Such investment may be in listed or to be listed corporate debt securities or in dated government securities, and is treated as a part of the overall limit on external commercial borrowing for the economy. These measures were taken to encourage investment in rupee denominated debt instruments by FIIs and to further develop the domestic debt markets.

In 1997-98, measures were taken to further facilitate debt investments by FIIs. The SEBI (Foreign Institutional Investors) Regulations, 1995 were amended in the following ways:

•  FIIs making investment through the 100 per cent debt route, were permitted to deal directly with Subsidiary General Ledger (SGL) counterparties, as prescribed by the Reserve Bank of India, without dealing through brokers.
  
  
•  The regulations were also amended to permit all FIIs (not just those investing through the 100 per cent debt route) to invest in dated Government securities.

FIIs investing through the 100 per cent debt route were also permitted by the Reserve Bank of India to hedge their foreign exchange exposure by taking forward cover.