RBI Sets New Guidelines For FPI-To-FDI Reclassification

11/12/2024 2:12:53 PM

(MENAFN- KNN India) New Delhi, Nov 12 (KNN) The Reserve bank of India announced comprehensive guidelines on Monday for foreign portfolio investments that exceed ownership thresholds in Indian companies.

The new rules, developed in coordination with the government of India and the Securities & Exchange Board of India, establish clear protocols for reclassifying Foreign Portfolio investment (FPI) as Foreign Direct Investment (FDI) when holdings surpass 10 per cent of a company's fully diluted equity capital.

Under the revised Foreign Exchange Management Rules, foreign portfolio investors and their associated investor groups must maintain holdings below the 10 per cent threshold.

Should this limit be breached, investors will have the option to either reduce their position or convert their investment classification to FDI, according to the central bank's circular.

The regulatory update, which took immediate effect on November 11, 2024, aims to streamline business operations in India, the RBI stated. SEBI has concurrently issued complementary guidelines to ensure regulatory alignment.

(KNN Bureau)

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