The Government of India in its endeavour to encourage Foreign Direct Investments has opened the stock market to the Foreign Institutional Investors with some conditions and restrictions. This facility is meant for professional foreign investors including OCBs (Overseas commercial bodies, NRIs, PIOs and FIIs recognised as Investment Companies in their own countries. The statutory bodies regulating and managing the FIIs are Reserve Bank of India and SEBI (Securities Exchange Board of India).

Eligibility to become a registered Foreign Institutional Investor

1) An institution established or incorporated outside India as a pension fund, mutual fund, investment trust, insurance company or reinsurance company;

2) An International or Multilateral Organization or an agency thereof or a Foreign Governmental Agency, Sovereign Wealth Fund or a Foreign Central Bank;

3) An asset management company, investment manager or advisor, bank or institutional portfolio manager, established or incorporated outside India and proposing to make investments in India on behalf of broad based funds and its proprietary funds, if any;

4) A Trustee of a trust established outside India, and proposing to make investments in India on behalf of broad based funds and its proprietary funds, if any

5) university fund, endowments, foundations or charitable trusts or charitable societies ‘broad based fund” means a fund established or incorporated outside India, which has at least twenty investor with no single individual investor holding more than forty nine percent of the shares or units of the fund.