Further FII investment in REC needs RBI nod

The Reserve Bank of India (RBI) today said FII investment in Rural Electrification Corporation (REC) have reached close to the permissible limit and further equity purchases will require its permission.

"The aggregate net purchases of equity share holdings in REC by FII under portfolio investment scheme (PIS) have reached the trigger limit. Therefore, further purchases of equity shares in the primary/secondary market of this company would be allowed only after obtaining prior approval of the Reserve Bank," RBI said.

According to the RBI, FII investment in REC has reached 22 per cent, which is 2 per cent below the permitted limit.

RBI monitors the ceilings on investments by FIIs, NRIs, PIOs (persons of India origin) in domestic companies on a daily basis. For effective monitoring of FII ceiling limits, it has fixed cut-off points that are two percentage points lower than the actual ceilings. Once the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reach the cut-off point, which is 2 per cent below the overall limit, the Reserve Bank cautions all designated bank branches not to purchase any more equity shares of the company concerned on behalf of FIIs/NRIs/PIOs without its prior approval.