Sebi to mull FII route overhaul on June 25

FM says the Finance Ministry is in favour of the recommendations

Finance Minister P Chidambaram today said market regulator Securities and Exchange Board of India (Sebi) will take a decision on the Chandrasekhar committee report at its board meeting on June 25.

A committee headed by former cabinet secretary K M Chandrasekhar has given its recommendations to Sebi on rationalising various routes meant for portfolio investments in the country.

The panel has recommended doing away with prior direct registration of foreign institutional investors (FIIs) and sub accounts with Sebi. It also recommended merging FIIs, sub accounts and qualified foreign investors (QFIs) into a new investor class to be called the foreign portfolio investor.

Terming the recommendations positive, Chidambaram said these deserve to be accepted after further deliberation by the Sebi board.

“Broadly, we are in favour of the recommendations and our representatives on the Sebi board will express their views. The other board members will also present their views and Sebi will take a decision,” the minister said.

He also said the enhancement of FII debt limits in government securities will encourage sovereign wealth funds, pension funds and foreign central banks to invest in the Indian debt market.

Sebi had also increased FII investment limits in government securities by $5 billion to $30 billion yesterday. The enhanced limit, however, was only made available for sovereign wealth funds, pension funds and foreign central banks.

These foreign investor-friendly measures come at a time when the rupee has weakened against the dollar. Also, FIIs have been pulling out money from the Indian debt market, which has resulted in the hardening of yields on government bonds.