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Foreign Institutional Investor – FII

  • A foreign institutional investor (FII) is an investor or investment fund registered in a country outside of the one in which it is investing.
  • Institutional investors most notably include hedge funds, insurance companies, pension funds and mutual funds.
  • The term is used most commonly in India and refers to outside companies investing in the financial markets of India.
  • Foreign Institutional Investor (FII) means an institution established or incorporated outside India which proposes to make investment in securities in India.
  • They are registered as FIIs in accordance with Section 2 (f) of the SEBI (FII) Regulations 1995.
  • FIIs are allowed to subscribe to new securities or trade in already issued securities.
  • However, FII as a category does not exist now.
  • It was decided to create a new investor class called “Foreign Portfolio Investor” (FPI) by merging the existing three investor classes viz. FIIs, Sub Accounts and Qualified Foreign Investors.
  • Accordingly, SEBI (Foreign Portfolio Investors) Regulations, 2014 were notified on January 07, 2014 followed by certain other enabling notifications by Ministry of Finance and RBI.
  • In order to ensure the seamless transition from FII regime to FPI regime, it was decided to commence the FPI regime with effect from June 1, 2014 so that the requisites systems and procedures are in place before migration to the new FPI regime.

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