SEBI lifts cap on corporate bonds for FPIs

Prelims level : Banking Mains level : GS - III
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Markets regulator SEBI withdrew the 20% limit on investments by Foreign Portfolio Investors (FPIs) in corporate bonds of an entity.

About SEBI:

  • SEBI is the statutory regulator for the securities market in India.
  • It was established in 1988 and given statutory powers through the SEBI Act, 1992.
  • HQ:
  • Purpose: Protect the interests of investors in securities, promote the development of securities market and to regulate the securities market.
  • SEBI is responsive to needs of three groups, which constitute the market i.e.
    • Issuers of securities,
    • Investors and
    • Market intermediaries.
  • It has three functions:
    • Quasi-legislative (drafts regulations in its legislative capacity),
    • Quasi-judicial (passes rulings and orders in its judicial capacity) and
    • Quasi-executive (conducts investigation and enforcement action in its executive function).

Foreign portfolio investment (FPI)

  • FPI consists of securities and other financial assets passively held by foreign investors.
  • It does not provide investor with direct ownership of financial assets.
  • It is relatively liquid depending on volatility of the market.
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