RBI allows FIIs to buy up to 49% in Idea Cellular

Foreign institutional investors (FIIs) can now purchase up to 49 per cent stake in telecom operator Idea Cellular Ltd, with the Reserve Bank of India approving the company's proposal to raise foreign holding of its equity.

The RBI today notified that foreign institutional investors, through primary market and stock exchanges, can now purchase up to 49 per cent of the paid-up capital of Idea Cellular Limited under the portfolio investment scheme (PIS).

The FII limit in the company was 24 per cent earlier.

Idea Cellular Limited has passed resolutions at the board of directors' level and a special resolution by the shareholders, agreeing for enhancing the limit from 24 per cent to 49 per cent for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs), RBI noted.

As per stock market data, FIIs held 19.51 per cent share in the company as of the quarter ended March 2014.

Having agreed to increase the FIIs shareholding limit to 49 per cent, the downstream investment in the company would continue to remain on Idea Cellular, in compliance with FDI (foreign direct investment) policy and FEMA (Foreign Exchange Management Act) regulations.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through Portfolio Investment Scheme (PIS).

RBI said the approval has been given subject to the condition that the onus of compliance with FDI policy and FEMA regulations, including downstream investment would continue to remain on the Indian company, Idea Cellular Limited.

RBI monitors the ceilings on FII / NRI / PIO investments in Indian companies under FEMA 1999 regulations on a daily basis.

Shares of Idea slumped 4.32 per cent and closed at Rs135.10 apiece on the Bombay Stock Exchange (BSE) today.