Foreign investment in bourses may get nod soon

The government will soon open up stock exchanges to foreign direct investment and foreign institutional investment, with the finance ministry finalising an outline of the policy for this purpose.

"Broad contours of the policy are ready. A decision has now to be taken on whether it has to go to Cabinet for approval or through a notification under the provisions of FEMA," a senior finance ministry official told reporters.

The ministry was awaiting response from market regulator SEBI and banking watchdog RBI in this regard, the official said, indicating there could be a decision in the near future.

It is understood that foreign investment may be capped at 49 per cent. This would be split between foreign direct investors and FIIs.

Sources said two possibilities were being considered "" FDI cap of 25 per cent and FII of 24 per cent or FDI at 26 per cent and FII at 23 per cent.

Foreign bourses such as NYSE, NASDAQ, Australian Stock Exchange and FIIs such as Goldman Sachs, Nomura and Fidelity and Singapore-based private equity investor Temasek are eagerly looking to pick up stake in Bombay Stock Exchange.

The stock exchanges have to bring down brokers stake below 51 per cent as part of demutualisation process. Recently, SEBI had decided that no single entity would be allowed to pick up more than five per cent stake in bourses.