Foreign investments upto 49% allowed in stock exchanges

The Reserve Bank of India recently allowed foreign investment upto 49% in stock exchanges, depositories and clearing corporations. Foreign Direct Investment, with the prior approval of the Foreign Investment Promotion Board, has been capped at 26% while the limit on Foreign Institutional Investment (FII) is 23%.FII can pick up stakes only through secondary market purchases and shall not seek and will not get representation on the Board of Directors. SEBI has also stipulated that “no foreign investor, including persons acting in concert, will hold more than 5% of the equity in these companies”.