Investment by Mutual Funds in Overseas Securities

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Investment by Mutual Funds in Overseas Securities - Liberalisation

Presently, Mutual Funds, registered with SEBI, are permitted to invest in ADRs/GDRs of Indian companies, rated debt instruments and also in the equity of overseas companies listed on a recognised stock exchange overseas. To enable the Mutual Funds to tap a larger investible stock overseas, Reserve bank of India has decided on 8th June 2007, that they may also invest in

i) Overseas mutual funds that make nominal investments (say to the extent of 10% of net asset value) in unlisted overseas securities;

ii) Overseas exchange traded funds that invest in securities; and

iii) ADRs/GDRs of foreign companies.

RBI GUIDELINES Dated- July 26, 2006 Overseas investments by Mutual Funds registered with Securities and Exchange Board of India (SEBI) have been liberalised by enhancing the existing aggregate ceiling and expanding the avenues for investment. Presently, Mutual Funds, registered with SEBI, are permitted to invest in ADRs/GDRs of Indian companies, rated debt instruments and also in the equity of overseas companies listed on a recognised stock exchange overseas and having a shareholding of at least ten percent in a listed Indian company. To enable the Mutual Funds to tap a larger investible stock overseas, the requirement of 10 percent reciprocal share holding in the listed Indian companies by such overseas companies has been dispensed with.

The aggregate ceiling for overseas investment by Mutual Funds, registered with SEBI, is increased from USD 1 billion to USD 2 billion with immediate effect. It has also been decided to allow a limited number of qualified Indian Mutual Funds to invest cumulatively up to USD 1 billion in overseas Exchange Traded Funds as may be permitted by the SEBI.

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