FOREIGN INSTITUTIONAL

INVESTORS
MADE BY :
DIVYA SHARMA
(133)
GURSIMRAN KAUR
( 126)
JAGRITI CHHABRA
(132)
SHIVANI GHALOT
(124)

MEANING OF FII
Foreign Institutional Investor means an
institution established or incorporated
outside India, which proposes to make
investment in India in securities.
Regulation 2(f) of the FII Regulations

NEED OF FII IN INDIA

Optimum utilization of resources
FII flows supplements and augmented domestic
savings and domestic investment without
increasing the foreign debt of our country.
Balancing the balance of payment
Diversification of the Market

REGISTRATION OF FII IN INDIA

PERMISSIONS AND
REGULATIONS FOR FIIS
THE RULES AND REGULATIONS SET OF
FII IS GIVEN BY
Securities and Exchange Board of India
(Foreign Institutional Investors) Regulations,
1995 (hereinafter referred to as
FII Regulations

ELIGIBILITY CRITERIA FOR

APPLICANTS
Applicants track record, professional competence, financial soundness,
experience, general reputation of fairness and integrity (the applicant
should have been in operation for at least one year)
Whether the applicant is registered with, and regulated by, an appropriate
Foreign Regulatory Authority, in the same capacity in which the
application is filed with SEBI.
Whether the applicant has been granted permission under the provisions
of the Foreign Exchange Management Act, 1999 by the Reserve Bank of
India for making investments in India as a Foreign Institutional Investor.

Whether the applicant is a fit & proper person; Criteria specified in

Schedule II of the Securities and Exchange Board of India (Intermediaries)
Regulations, 2008.

INSTITUTIONS ELIGIBLE TO
SEEK REGISTRATION AS FII:
One who propose to invest their proprietary funds or on behalf of "broad
based" funds or of foreign corporate and individuals and belong to any of
the under given categories can be registered for FII
Pension Funds
Mutual Funds
Investment Trust
Insurance or reinsurance companies
Endowment Funds
University Funds
Foundations or Charitable Trusts or Charitable Societies who propose to
invest on their own behalf, and
Asset Management Companies
Nominee Companies
Institutional Portfolio Managers
Trustees
Power of Attorney Holders
Bank

INVESTMENT OPPORTUNITIES OF FIIS

VARIOUS FINANCIAL INSTRUMENTS ARE AS FOLLOWSSecurities in primary and secondary markets including
shares, debentures and warrants of companies,
unlisted, listed or to be listed on a recognized stock
exchange in India;
Units of mutual funds;
Dated Government Securities, other debt instruments;
Derivatives traded on a recognized stock exchange;
Commercial papers.
Security Receipts

VARIOUS PROHIBITIONS TO AN FII

FIIs are not permitted to invest in equity shares issued by

an Asset Reconstruction Company.
FIIs are also not allowed to invest in any company which
is engaged or proposes to engage in the following activities:
Business of chit fund;
Nidhi company;
Agricultural or plantation activities;
Real estate business
Trading in Transferable Development

INVESTMENT LIMITATIONS TO
AN FII
Total shareholding of each FII under this Scheme
shall not exceed 10 per cent of the total paid up
capital or 10 per cent of the paid up value of each
series of convertible debentures issued by the
Indian company.
Total holdings of all FIIs put together shall not
exceed 24 percent of the paid-up capital or
paidup value of each series of convertible
debentures.

FDI VS FII
BASIS

FOREIGN DIRECT
INVESTMENT

FOREIGN INSTITUTIONAL
INVESTMENT

1. NATURE OF INVESTMENT

PERMANENT ,LONG TERM,

DIRECT.

FLUCTUTING, SHORT TERM,

INDIRECT

2. IMPACT ON THE
COUNTRY

INCREASE IN
INFRASTRUCTURE,
PRODUCTIVITY AND
EMPLOYMENT.

IMPACTS THE SECONDARY

MARKET i.e. CAPITAL
MARKET.

3. ENTRY AND EXIT FROM

THE COUNTRY

DIFFICULT

EASY

4.DESIRABILITY

MORE DESIRABLE

LESS DESIRABLE

ADVANTAGES OF FII
o Enhanced flow of equity capital
o Managing uncertainty and controlling risks.
o Improving capital markets.
o Equity market development aids economic
development.
o Enhances Competition in financial markets.
o Improved corporate governance

DISADVANTAGES OF FII
Problem of inflation.
Problems for small investor.
Adverse impact on Imports.
FII is referred to as Hot money as funds that
are controlled by investors who actively seek
short-term returns.

VOLATILITY IN THE INDIAN MARKET

BY FII
The increase in investment by FIIs increases
stock indices the stock prices and encourages
further investment . In this event when any
correction takes place the stock prices decline
and there will be pull out by the FIIs in a large
numbers as earning per share declines .
The FIIs manipulate the situation of boom in
such a manner that they wait till the index
rises up to a certain height and exit at an
appropriate time. This tendency increases the
volatility further.

HOW CAN VOLATILITY BE

STABLISE ?
STABLISATION IN THE RUPEE SO INVESTOR
HAVE POSITIVE APPROACH TOWARDS THE
COUNTRY.
PROVIDING WITH THE HIGHER INTEREST
RATES.
GOVT. SHOULD NOT PUT IN ANY SOUGHT OF
RESTRICTION ON INVESTORS.
AND LASTLY THEY SHOULD POTRAIT INDIA AS
THE BEST INVESTMENT DESTINATION.