Agar aap stock market par trading aur investing me ruchi rakhte hain, toh aapke liye FIIs yaani ki Foreign Institutional Investors ke baare me janna bahut zaroori hai. Aisa kyun? Because FIIs make up a major part of the investment in Indian equities. Toh jab FIIs investment karte hain, market ka rukh hi badal jaata hai. They are responsible for driving India’s financial markets and greatly influencing its market movements.
Solid figures ki baat karein toh estimates ke according pichle saal february aur June ke beech hi Foreign institutional investors ne US$ 11.4 billion ki investment kar li thi. THAT is how huge their contribution is!
Ab humne ye jaan hi liya hai ke FIIs ko janna important hai, toh ab gaur se unhe samajhte hain. FIIs are basically institutions or entities that are established in a particular country and invest in the assets of another country. Toh agar kisi aur country ka koi institution ya entity Indian stock market me aake invest karti hai, toh woh FIIs maane jaate hain.
FIIs usually bade institutions hote hain, toh zaahir si baat hai that these include banks, foreign corporations, hedge funds and mutual funds. In India, FIIs have been allowed to invest since the milestone liberalisation reforms of 1991. Aaj ki taarikh me 1450 se zyada Foreign institutional investors market regulator SEBI ka saath registered hain!
India jaisi developing economy ke liye FIIs ki investment bahut crucial hoti hain. As is clear, they bring in massive capital. But investing in other countries - especially developing economies is also beneficial to these FIIs. Why? Because FIIs will prefer to make investments of huge volumes in economies with massive growth potential. Ek already mature economy utna growth potential nahi rakhti jitna ek developing economy rakhti hai. It is a promising prospect to invest as such.
Ab aap shayad soch rahe honge: aakhir ye FIIs ki investment hoti kaise hai? Kya woh bas Indian me opportunity dhundte hain aur stock market par trading shuru kar dete hain? Well, not really. Proper procedures toh inke liye bhi laid out hain.
Humne abhi baat ki thi ke FIIs market regulator SEBI ke saath registered hote hain. With this registration, they can invest in Indian companies but this comes with a number of important regulations. Let us discuss some of these regulations.
For starters, there’s the obvious: registration. For a foreign entity to be registered with Securities and Exchange board of India - SEBI, it is important that it meets the eligibility requirement. Manin eligibility condition yahi hi ke FIIs ek “institution” ho. They can be banks, investment trusts, or mutual funds, or pension funds - even university funds and charitable funds are eligible, among other types of institutions.
In fact, FIIs ki initial registration with SEBI is a prerequisite for them to be able to start any form of trading on the stock exchanges in India. Ye initial registration 5 saal ke liye hoti hai, uske baad har 5 saal me renew ki jaati hai.
The second regulation is simple. FIIs un sabhi indian companies ke invest kar sakte hain jo Indian stock exchanges par listed hain. So they can invest in securities traded in both primary and secondary markets - chahe ek company directly shares sell kar rahi ho, ya phir koi seller secondary market me re-sell kar raha ho - FIIs are allowed to trade in the equities and securities in both cases. Equity ke case me FII investment par 305 ki upper limit hoti hai.
This means that the FII investments in primary or secondary markets are subject to a maximum of 30% of issued shared capital for the entire holdings of all registered FIIs. Sabhi FIIs ki total investment 30% se zyada nahi ho sakti aur ek FII ki akele ki investment total issued capital 10% se zyada nahi ho sakti.
Isi tarah debt ke case me bhi FIIs ke liye upper limit 30% hai. Lekin SEBI se approval lekar kuch FIIs apna 100% portfolio debt securities me invest kar sakte hain.
SEBI registration ke samay ye bhi dekha jaata hai ke FII ke track record kaisa hai - jab baat massive investments ki hai, toh FIIs ki khudki professional competence, financial soundness, experience - ye sabhi criteria bhi matter karte hai
Ye saari baat toh rahi FIIs ke registration se related. We also understand now that FIIs bring in much-needed capital for the companies in India. Now, in the next bit let us discuss the benefits of FIIs that come as a result of their financial contribution to the economy.
One, Foreign Institutional Investors ki investment usually kaafi badi scale par hoti hai. Toh jab bhi FIIs Indian financial markets me invest karte hain, it gives a positive push to the markets. As a result, market sentiment is improved and Market liquidity increases.
FIIs zyadatar Equity me invest karna prefer karte hain over debt instruments. FIIs ki iss preference ki wajah se equity ka flow badhta hai, jo in turn Indian companies ka capital structure improve karta hai and overall, country ki economy me investment gaps fill karta hai!
Because FIIs keenly study the growth potential of all companies, they breed a sense of competition in Indian markets. Due to this competition, the level of financial innovation and the development of hedging instruments is greater! FIIs sabhi companies ke operations ko bhi keenly study karte hain - as a result companies ki efficiency aur operational management behtar hoti hai.
So as we can see, FIIs Indian jaisi developing economy ke liye lifeline hai! They serve as a major source of capital and liquidity that can make space for growth of companies in India!