Lok Sabha Question No. 1215 (UNSTARRED), answered on 2020-02-10
Subject: Permission to FPIs
Ministry: FINANCE
Asked by: K. Shanmuga Sundaram

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS FINANCIAL MARKETS DIVISION

## LOK SABHA UNSTARRED QUESTION NO. 1215

TO BE ANSWERED ON MONDAY , FEBRUARY 10, 2020/MAGHA 21, 1941(SAKA)

Permission to FPIs

## 1215: SHRI SHANMUGA SUNDARAM K

Will the Minister of FINANCE be pleased to state:

- a) whether the Government has received any   request   from the Securities Exchange Board of India (SEBI) for granting permission to Foreign Portfolio Investors (FPIs) directly to trade in capital markets
2. whether the FPIs will be allowed to access equity markets also;
3. the details of estimated amount of foreign investment for direct participation of FPIs in capital as well as equity markets; and
4. if So, the details thereof and if not; the reasons therefor;
5. the details of protections to be taken to safeguard the domestic investors?

## ANSWER

## MINISTER OF STATE FOR FINANCE (SHRI ANURAG SINGH THAKUR)

- a) & b) No, Sir: The Government of India has not received any request from the Securities and Exchange Board of India (SEBI) for granting permission to Foreign Portfolio Investors directly to trade in capital markets.
2. & d) Regulation 20(1) of SEBI (Foreign Portfolio Investors) Regulations, 2019 (FPI Regulations') states, that a Foreign Portfolio Investor (FPI) can invest in shares listed or to be listed on a recognized stock exchange in India.

Regulation  20(4) (c) of FPI Regulations requires that the  transactions   involving dealing in securities by a foreign portfolio investor shall be only through stock brokers registered with the Board.

However; Regulation 20(4)(d) of FPI Regulations provides exemption from dealing through stock brokers for certain transactions including the following:

- (a) Transactions in Government securities and such other securities falling under the
- c) sale of securities in response to an offer made by any promoter or acquirer in accordance with the SEBI (Delisting of Equity shares) Regulations, 2009;
- (b) Sale of securities   in response to a letter of offer sent  by an acquirer  in accordance with SEBI   (Substantial   Acquisition of  Shares and Takeovers) Regulations, 2011.
- (d) sale of   securities in accordance with the SEBI (Buy-back of  Securities) Regulations, 2018;
- transactions for transfer of right entitlements, etc.
- transactions in corporate bonds by foreign portfolio investors;
- e) Data on estimated amount of foreign investment for direct participation of FPI's in capital as well as equity markets is not maintained separately by the Government o SEBI.
- f) SEBI carries out various financial education investor awareness activities for the purpose of protection of the interests of investors in  securities as well as the regulation and  development of  securities markets. The   financial education and investor awareness activities by SEBI seeks to equip and build investorscompetencies on following areas and
- a) Basic investing principles and financial concepts
- b) Key features of products  structure and fees and potential risk of investment products and suitability of investment products based on individual risk appetite
- process etc.
- Complaint handling and grievance redressal procedures
- Investors' rights and responsibilities
- f) Common   features  of investment scams including Ponzi schemes and caution against such un-solicited investment schemes