Foreign stake in stock exchanges to be at 49 per cent
New Delhi: The finance ministry plans to allow foreign investment of 49 per cent in stock exchanges. Officials said the policy being worked out for stock exchanges was unlikely to disturb the present regime, where foreign institutional investors (FIIs) can hold up to 24 per cent, according to the Foreign Exchange Management Act (FEMA) norms.

The RBI had suggested restricting foreign investment in stock exchanges to 24 per cent, inclusive of FII investment.
According to the FEMA norms governing portfolio investment, an FII can invest up to 5 per cent in a company, while a consolidated number of three FIIs are allowed to pick up to 24 per cent. This is a uniform norm for FIIs covering sectors that are not in the negative list for FDI.

Once the proposal is finalised, the government is expected to suggest the creation of a new category for foreign investment in stock exchanges, which will include not just the Bombay Stock Exchange but all regional stock and commodity exchanges.

Of the two depositories in the country, National Securities Depository Ltd already has four foreign banks as shareholders.
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