Foreign controlled AMCs have been untagged from the October 17 circular of the Finance Ministry that defined them as overseas investors. The ministry modified the October circular on December 5, 2019.
The October 17 circular had tagged fund houses with more than 50% foreign shareholding as foreign investors. This meant foreign-owned fund houses would have had to follow certain investment restrictions that are applicable to overseas investors.
For instance, if a sector’s stocks have a 74% overseas investment cap, then according to the circular, a foreign-owned AMC could buy bought these stocks only if the overseas investment in that particular company has not breached the 74% limit. Such restrictions do not apply to domestic investors.
CEO of a foreign-owned AMC said the October 17 circular was unfair for them as they are pooling money from domestic investors.
In November, Cafemutual had reported that foreign controlled AMCs are likely to be untagged from the October 17 circular. Foreign controlled AMCs had approached SEBI in the first week of November and the market regulator then discussed the matter with the government.
Back in November, SEBI had assured that the October 17 circular would be revised and foreign controlled AMCs would not be treated as overseas investors.
Nippon India, Franklin Templeton, Mirae Asset, Invesco and BNP Paribas were among the fund houses that could have been affected the most by the October 17 circular.
