RBI's Strategic Move to Attract Foreign Investors

The Reserve Bank of India (RBI) is set to increase the investment limit for individual foreign investors in listed companies from 5% to 10%. This initiative is designed to counteract the recent outflows of Foreign Portfolio Investments (FPI), which have seen over $28 billion withdrawn from Indian equities since September.

Expanding Privileges Beyond Overseas Indians

India plans to extend investment privileges previously reserved for overseas Indians to all foreign investors. This expansion is part of a broader strategy to enhance capital inflows and stabilize the market amidst external sector challenges.

Regulatory Adjustments and Concerns

The RBI and the Indian government are finalizing discussions to raise the aggregate investment ceiling for overseas individual investors to 24% from the current 10%. However, SEBI has raised concerns about the potential for these changes to complicate the monitoring of investment limits and trigger takeover regulations unintentionally.

Looking Ahead

Authorities are working to address these regulatory challenges to ensure a smooth implementation of the new investment limits, aiming to prevent arbitrage opportunities and maintain market stability.