What is FII?
You might have heard in news channels about FII’s investing millions of dollars in Indian Financial markets. But What is FII?
FII stands for Foreign Institutional investor. It refers to a company or an institution established outside India who makes an investment in the financial markets of India in the form of securities.
The Birth Of FII In India
The Indian stock market was open to the foreign investors on September 1992. Indian Market is growing very rapidly which makes India as one of the most important destination for the foreign investors. In general, the investors prefers to invest in sectors like the banking, construction and IT companies. One attractive point of this investment is that the sum deposited by these foreign investors can be withdrawn from the market at any time by the investor.
How To Trade In India?
To trade in the Indian equity market, the International investor must register with SEBI (Securities And Exchange Board Of India).
Active FII’s in India
Some of the most active foreign investors in India are CLSA, HSBC, Citigroup and Merrill Lynch. The other prominent foreign institutional investors are Morgan Stanley, Goldman Sachs, Aberdeen, Copthall etc.
Eligibility for applying for FII?
An applicant belonging to any of the below mentioned category are eligible to apply for FII.
- Pension Funds.
- Mutual Funds.
- Investment Trust
- Insurance 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.
How to Apply?
An application for registration has to be made in Form A, the format of which is provided in the SEBI(FII) Regulations, 1995 and submitted with under mentioned documents in duplicate addressed to SEBI as well as to Reserve Bank of India (RBI) and sent to the following address within 10 to 12 days of receipt of application.
Address for application
The Division Chief
FII Division Securities and Exchange Board of India, 224,
Mittal Court, ‘B’ Wing, 1st Floor,
Nariman Point, Mumbai - 400 021.
INDIA.
Who are eligible to become an FII?
As per Regulation 6 of SEBI (FII) Regulations, 1995, Foreign Institutional Investors are required to fulfill the following conditions to qualify for grant of registration:
The applicant must have a record of financial soundness, experience, professional competence.
The applicant should be regulated by an appropriate foreign regulatory authority in the same category where registration is sought from SEBI. Registration with authorities, which are responsible for incorporation, is not adequate to qualify as Foreign Institutional Investor.
The applicant is required to have the permission under the provisions of the Foreign Exchange Management Act, 1999 from the Reserve Bank of India.
Applicant must be legally permitted to invest in securities outside the country or its in-corporation / establishment.
The applicant has to appoint a local custodian and enter into an agreement with the custodian. Besides it also has to appoint a designated bank to route its transactions.
The applicant should be “proper and fit” person.
Payment of registration fee of US $ 5,000.00.
After submitting the application for FII, it generally takes about 10-12 days to obtain the registration from SEBI.
Disclaimer : Before applying please check with the appropriate authorities about the changes in the rules and regulations.
FIIs basically are those institutions which invest in other foreign countries besides their own country, their activities are spread across the globe. FIIs can be good for a country as it helps to bring economic stability in that country. It also leads to business expansion, increase in goodwill and other benefits. However, they also have a dark side, FDIs usually affect small investors and businesses as their income is not sufficient enough for FIIs to invest. Besides, too much of FDI can lead to inflation.
FIIs are helpful for economy expansion of a nation. They are basically institutions investing in other countries. I am really glad to read this article as it gives every minor detail regarding the same. even the address, the documents required and all the eligibilities have also been described well. An excellent effort!!
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