Overseas participation in Indian stock markets to increase, says Sebi chief

Norms to be eased for pension funds, individuals to be registered as FIIs.

The Securities and Exchange Board of India (Sebi) will increase overseas participation in the Indian stock markets and is planning two specific measures in this regard, Sebi Chairman M Damodaran told Business Standard today in an exclusive interview.

First, he said Sebi may waive the requirement that entities need to be regulated in their home country to be registered as a foreign institutional investor (FII) in India. This will be allowed provided there is regulatory comfort about the nature of funds and the kind of investments they make in India.

Damodaran said this waiver could help entities like pension funds, which otherwise are not regulated in their own country, to be registered as FIIs.

Second, Sebi is also thinking of allowing foreign individuals with an investment kitty of over $50 million to operate as sub-accounts to invest in the Indian equity market.

These are some of proposals that are expected to be put up for approval at the Sebi board meeting on Thursday.

Among other things under review is the one-year track record of the foreign entity to become eligible for registering as an FII. Damodaran said this is a problem for new funds. "In that case, what we need to look at is the track record of the manager of the fund," he said.

"At the end of the day, accessing the Indian market need not be made costlier for the foreign investor," he added.