SEBI removes debt/equity investment limit for FIIs

Mumbai: The Securities and Exchange Board of India (SEBI) has removed the conditions limiting fund allocation by foreign institutional institutions (FIIs) between debt and equity, in an effort to give greater flexibility and investment options to overseas investors.

The SEBI move is aimed at discouraging FIIs from pulling out of the stock markets by providing more flexibility in investments.

The relaxation is intended to offer ''greater flexibility to the FIIs to allocate investments across equity and debt'', a SEBI circular said.

''It has been decided to do away with the FII regulations pertaining to restrictions of 70:30 ratio of investment in equity and debt respectively, with immediate effect,'' the circular said.

The move comes a day after government doubled the limit of FII investment in corporate debts to $6 billion.

SEBI also said it will permit foreign entities, including AIG Global Funds and Morgan Stanley debt funds, to invest in corporate debt and government securities.

SEBI has agreed to allocate about $568 million of corporate debt and government securities to entities like AIG Global funds, Morgan Stanley Emerging Markets Domestic Debt Fund Market and others in case the amount remains unutilised till 31 October.

SEBI, meanwhile, has also asked FIIs and their agents to provide information on the quantity of participatory notes they have issued to overseas entities which could be used like short sale.