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Rise in FPI outflows
Why in the news ?
- Overseas investors have pulled out nearly Rs 48,000 crore from Indian capital markets in the first six months of 2018.
More on news
- It is the steepest outflow in a decade, following high crude oil prices and trade war worries.
- The investors withdrew a net sum of Rs.41,433 crore from the debt markets, besides, a net amount of Rs.6,430 crore from equities during the January-June period of the year, taking the total outflow to Rs.47,836 crore, latest update with depositories showed.
- This was the biggest outflow since January-June 2008, when foreign portfolio investors (FPIs) had pulled out Rs.24,758 crore from the capital markets — equity and debt
FPI
- Foreign Portfolio Investment (FPI) is investment by non-residents in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc.
- The class of investors who make investment in these securities are known as Foreign Portfolio Investors.
- Any equity investment by non-residents which is less than or equal to 10% of capital in a company is portfolio investment. While above this the investment will be counted as Foreign Direct Investment (FDI).
- NRIs doesn’t comes under FPI.
- Foreign Portfolio Investors includes investment groups of Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) and subaccounts etc.
- FII is an institution like a mutual fund, insurance company, pension fund etc.
- FII is an institution who is registered under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.
- QFI is an individual, group or association which is a resident in a foreign country.
- The QFI should compliant with the Financial Action Task Force standard and should be a signatory to the International Organisation of Securities Commission.
Source
The Hindu