UPSCpedia: Economedia - Foreign Institutional Investor

• FII is used to denote an investor- mostly of the form of an institutional entity, which invests money in the financial markets of a country different from the one where in the institution or entity was originally incorporated
• FII investment is frequently referred to as hot money for the reason that it can leave the country at the same speed at which it comes in.
• Foreign institutional investors have gained a significant role in Indian capital markets. Availability of foreign capital depends on many firm specific factors other than economic development of the country.
• It is observed that foreign investors invested more in companies with a higher volume of shares owned by the general public. The promoters’ holdings and the foreign investments are inversely related.
• One who propose to invest their proprietary funds or on behalf of "broad based" funds or of foreign corporates and individuals and belong to any of the undergiven categories can be registered for FII. These catagories are as:

  • Pension Funds 

  • Mutual Funds 

  • Investment Trust 

  • Insurance or reinsurance companies 

  • Endowment Funds University Funds 

  • Foundations or Charitable Trusts or Societies who propose to invest on their own behalf

  • Asset Management Companies 

  • Nominee Companies 

  • Institutional Portfolio Managers 

  • Trustees 

  • Power of Attorney Holders 

  • Bank