Q. Consider the following statements:
- FIIs have been permitted to invest in all types of securities except the government securities
- The investments by FIIs enjoy full capital account convertibility
Which among the above statements is/ are correct ?
Answer:
Only 2 is correct
Notes: The correct answer is "Only 2 is correct." 1. FIIs and Government Securities: Foreign Institutional Investors (FIIs) are allowed to invest in various securities, including government securities, under certain conditions. Therefore, the first statement is incorrect. 2. Capital Account Convertibility: FIIs enjoy full capital account convertibility in India, allowing them to freely invest and repatriate funds. This aligns with the second statement, making it correct. Trivia: The concept of capital account convertibility allows for the unrestricted flow of capital in and out of a country, which is crucial for attracting foreign investment.