FOREIGN

INSTITUTIONAL
INVESTMENT
 INTRODUCTION
 The term foreign institutional
investment denotes all those investors
or investment companies that are not
located within the territory of the country
in which they are investing.
These are actually the outsiders in the
financial markets of the particular
company. Foreign institutional investment
is a common term in the financial sector
of India.
The type of institutions that are involved
in the foreign institutional investment
are as follows:

1. Mutual Funds
2. Hedge Funds
3. Pension Funds
4. Insurance Companies
 FACTS
Some important facts about the foreign
institutional investment:
• The number of registered foreign
institutional investors on June 2006
813 has reached to 1042 in 2007.
• The total amount of these investments
in the Indian financial market till June
2007 has been estimated at US $53.06
billion.
 CONTD….
• The foreign institutional investors are
preferring the construction sector,
banking sector and the IT companies
for the investments.
• Most active foreign institutional
investors in India are HSBC, Citigroup.
• US $6 billion has been invested in
equities by these investors.
 WHY INVESTORS GO FOR
FII’S?
The foreign investment market was not so developed in the
past. But once the globalization took the whole world in its grip,
the diversified global market became united. Because of this the
investment sector became very strong and at the same time
allowed the foreigners to enter the national financial market.
• The economies like India, which are growing very rapidly, are
becoming hot favourite investment destinations for the foreign
institutional investors
• These markets have the potential to grow in the near future .
• The promise of rapid growth of the investable fund is
tempting the investors and so they are coming in huge
numbers to these countries.
These are the prime reasons behind the growing interest of the
foreign investors towards India. The money, which is coming
through the foreign institutional investment is referred as 'hot
money' because the money can be taken out from the market
at anytime by these investors.
SEBI (FII’S) REGULATION,
1995
The regulation stipulated that foreign
institutional investors have to be registered
with the SEBI and obtain a certificate from the
SEBI.
• the applicant’s track record, professional
competence, financial soundness, experience,
general reputation of fairness etc,
• whether the applicant is regulated by
appropriate Foreign Regulatory Authority;
• Whether the applicant has been granted
permission by the RBI under the Foreign
Exchange Regulation Act, for making
investment in India as a foreign
institutional investor; and
• an institution of applicant established or
incorporated outside India as a pension
fund, mutual fund, or investment trust;
• a trustee or power of attorney holder
established or incorporated outside India
or proposing to make investments In India
on behave of board-based funds