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The Reserve Bank of India (RBI) in consultation with the Government of India and the Securities & Exchange Board of India (SEBI), on Monday (November 11, 2024) finalised rules for Foreign Portfolio Investors (FPIs) whose investments would be reclassified as Foreign Direct Investment (FDI) the moment it breaches the 10% stake threshold in an Indian company, under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
“Investment made by foreign portfolio investor along with its investor group (hereinafter referred to as ‘FPI’) shall be less than 10% of the total paid-up equity capital on a fully diluted basis. Further, FPI investing in breach of the prescribed limit shall have the option of divesting their holdings or reclassifying such holdings as FDI,” the RBI said in a circular.
These directions have become operative with immediate effect.
“This is to further enhance the ease of doing business in India,” the RBI said.
The SEBI has also issued a circular to this effect.
Published – November 12, 2024 01:53 am IST
