SEBI raises limit for overseas investments by MFs
SEBI raises limit for overseas investments by MFs In order to facilitate overseas investments by mutual funds the Securities and Exchange Board of India (SEBI) vide circular dated Sep. 26, 2007, increased the limit for overseas investment by each mutual fund from USD 200 million to USD 300 million. The sub-ceiling linked to the net assets of a mutual fund as on March 31 of each year has also been done away with. This shall be subject to the overall limit for the overseas investments by mutual funds of USD 5 billion already announced by the Reserve Bank of India. SEBI has also done away with the requirement of 10 years experience of investing in foreign securities for being eligible to invest in foreign exchange trade d funds.
Further, mutual funds can now invest in American depositary receipts and global depositary receipts, initial and follow on public offerings at recognized overseas stock exchanges, investment grade foreign debt securities in countries with fully convertible currencies and money market instruments, government securities.
SEBI has also allowed investment in derivatives traded on recognized stock exchanges overseas only for hedging, and portfolio balancing with underlying as securities and investment grade short term deposits with banks overseas, repos as pure investment avenues without involving borrowing of funds.
SEBI , in a press release, permitted mutual funds to invest in securities issued by overseas mutual funds registered with overseas regulators and investing in a pproved securities or REITs listed in recognised stock exchanges overseas or unlisted overseas securities (not exceeding 10% of their net assets).
