​RBI’s Framework for Reclassification of FPI to FDI

On 11th November, 2024, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) issued new framework directing foreign portfolio investors (FPIs) to secure government approval and concurrence from investee companies if they acquire equity stakes that exceed prescribed limits.

Aim

  • To streamline foreign investments, offering FPIs a compliant route to maintain stakes in Indian firms above the 10% cap.

Major Highlights

Prohibited Sectors

  • Reclassification is not permitted in sectors where foreign direct investment (FDI) is prohibited under the Rules.

Mandatory Approvals

  • FPIs are required to obtain the concurrence of the Indian investee ....

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