Press Information Bureau

Government of India

Ministry of Finance

02-September-2011 18:11 IST

Mechanisms to Monitor and Assess Foreign Institutional Investments

The Government and the Securities and Exchange Board of India (SEBI) have put in place mechanisms to monitor and assess foreign institutional investments. These mechanisms help to promote safe, transparent and efficient markets and protect market integrity. The systems established include advanced risk management mechanisms comprising of on-line monitoring and surveillance, circuit filters, prescription of limits on positions etc. The possible effects of investments made by Foreign Institutional Investors (FIIs) on the Indian economy are also assessed on a continuous basis. The endeavour is to build systems and practices and deepen and broaden markets which can withstand the impact of flight of capital.

In the financial years 2009-10, 2010-11 and 2011-12 (till 29th August 2011), a total of eighteen companies have delisted from the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Of these companies, only six companies had more than 50 percent foreign promoter shareholding. This reveals that not many companies with substantial foreign holding have delisted from Indian stock exchanges.

This information was given by the Minister of State for Finance Shri Namo Narain Meena in a written reply to a question raised in Lok Sabha today.

DSM/SS/SL

Foreign institutional investment monitoring strengthened through online surveillance, circuit filters and position limits to protect market integrity. Mechanisms are established to monitor and assess foreign institutional investments through advanced risk management systems-on line monitoring and surveillance, circuit filters and prescribed position limits-and by continuously assessing the potential effects of FII activity, aiming to protect market integrity and build resilience against capital flight. Statistical disclosure notes eighteen delistings in 2009 10 to 2011 12, only six of which had foreign promoter holdings above fifty percent.