Respite for foreign investors; norms simplified, uniform KYC

Looking to attract more foreign investment into the stock market, Finance Minister P Chidambaram today said procedures for overseas investors would be simplified besides having uniform KYC norms for them.

"Sebi will simplify the procedure for the Foreign Portfolio Investors and prescribe uniform registration and other norms by converging the different Know Your Customer (KYC) norms," Chidambaram said while presenting the Union Budget for 2013-14.

According to the Finance Minister, depository participants would now register different classes of portfolio investors provided they comply with the KYC guidelines.

Market regulator Securities and Exchange Board of India (Sebi) would be doing away with different procedures and avenues for many categories.

Further, Foreign Institutional Investors (FIIs) would be permitted to participate in exchange traded currency derivatives segments. Their limit would be to the extent of their Indian rupee exposure in the country.

"FIIs will also be permitted to use their investments in corporate bonds and government securities as collateral to meet their margin requirements," the Minister said.

Last year, Indian market was among the top few performers in the world, mainly helped by foreign institutional investors. FIIs pumped in $31.01 billion into the domestic market in 2012.

As part of efforts to attract more investments into the capital market, Sebi would prescribe requirements for angel investor pools by which they can be recognised as category I venture funds.

"With the objective of developing the debt market, stock exchanges will be allowed to introduce a debt segment on the exchange wherein banks and primary dealers will be trading members along with insurance companies, provident funds and pension funds.

"The list of eligible securities in which pension funds and provident funds may invest will be enlarged to include exchange traded funds, debt mutual funds and asset backed securities," Chidambaram said.