RBI permits foreign buyers to invest in South Indian Bank

The Reserve Bank of India (RBI) has given its permission to foreign investors to buy shares in South Indian Bank. The restrictions placed on the purchase of shares of the South India Bank are withdrawn with immediate effect. At this point, equity shares of South Indian Bank can be purchased through primary market and stock exchanges.

Why RBI permitted foreign investors to buy shares in South Indian Bank?

Under the existing FDI policy, the foreign share holding through Foreign Institutional Investors (FIIs), Non-Resident Indians ( NRIs), Persons of Indian Origin (PIOs), Foreign Direct Investment (FDI), American Depository Receipt(ADR), Global Depository Receipts (GDR) in the South Indian Bank have gone below the prescribed threshold caution limit. For this reason, RBI has allowed foreign buyers to invest in South Indian Bank.
Under the Portfolio Investment Scheme (PIS) – FIIs, NRIs and PIOs are allowed to invest in the primary and secondary capital markets in India. They can acquire shares/debentures of Indian companies through the stock exchanges.
Note: The ceilings on FIIs/ NRIs)/ PIOs) investments in Indian companies are monitored by RBI on a daily basis.  For effective monitoring of foreign investment ceiling limits, the RBI has fixed cut-off points that are 2% points lower than the actual ceilings.

Month: Current Affairs - January, 2014