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More than 80 foreign funds are currently operating in Gifty City. These funds have invested more than $2.90 billion in the last three years and have committed to invest a total of $30 billion.
Market regulator Securities and Exchange Board of India (SEBI) has allowed non-resident Indians (NRIs) to hold up to 100 per cent stake in foreign funds operating in GIFT City. This decision was taken in the SEBI board meeting on Tuesday. Currently NRIs and Overseas Citizens of India (OCIs) cannot hold more than 50 per cent stake in foreign portfolio investors (FPIs). Now that 100 percent share ownership has been allowed by SEBI, Indians living abroad will be able to invest more in the country's equities, which will increase the inflow of foreign investment into the stock market. According to market experts, giving this exemption by SEBI will have two benefits. Due to this, foreign funds are working in GIFT City.
The ecosystem will become stronger as well as attract more investment inflows from Indians living abroad.
Passive funds are now allowed to invest up to 35 per cent in sponsor group companies
SEBI has also allowed passive funds to invest more in group companies. At present, mutual funds cannot invest more than 25 per cent of their funds in the group companies that sponsor them. Now SEBI has increased this limit to 35 percent. The earlier 25 percent limit had made it difficult for mutual funds, and especially index-linked ETFs, to increase or decrease their holdings by tracking index movements. However, now they will get a little more flexibility in this.
FPI will have to provide PAN card details of NRI
SEBI said in a filing that 100 per cent contribution by NRIs in FPIs has been allowed but for this the FPI will have to submit PAN card details of all NRIs or OCIs making such investments. Apart from this, they will also have to give details of how much financial interest they have in the fund. The list also states that if PAN card is not available then GIFT City will have to follow the rules of the International Financial Services Regulatory Authority which is regulated by the authority.
If there is more than 33 per cent investment in any one group of companies, details have to be disclosed
Where an FPI in which 100 per cent investment is made by NRIs has invested more than 33 per cent of its total funds in any one group of companies in India, such FPI will be required to furnish details of the same to SEBI.