No FII cap hike for private banks
Centre has simplified the rules for foreign investment in companies by clubbing together various categories like FDI, FII and NRI routes
By : DC Correspondent
Update: 2015-07-21 03:50 GMT
New Delhi: Commerce and industry minister Nirmala Sitharaman said on Monday that FII investment limit in the banking and defence sector has been retained at the existing level to prevent “fly by night operators” from disrupting the sensitive sectors.
The minister’s statement clears the confusion among bankers who believed overseas portfolio investments can now go up to 74 per cent as against the current ceiling of 49 per cent in private banks after the Cabinet recently clubbed together various types of foreign investments for all other sectors.
“As regards the cap which prevailed in the defence sector for FIIs and in banking particularly the private sector banking ... In those two specific areas, those specific sub-caps (will) prevail,” said the minister, adding that the government does not want fly by night operators or quick money coming in or going out in sensitive sectors.
Portfolio investments (FIIs, FPIs, QFIs), which are in the nature of hot money, cannot go beyond the current limit of 49 per cent in the private sector banks and defence companies, both of which are strategic in nature.
Last week, the Centre has simplified the rules for foreign investment in companies by clubbing together various categories like FDI, FII and NRI routes.