The finance ministry has exempted mutual funds from being categorized as foreign investors, a status that would have subjected them to foreign direct investment (FDI) sectoral caps and various Foreign Exchange Management Act (Fema) rules. A finance ministry notification in this regard came in December 2019.
A 17 October ministry circular had classed mutual funds with more than 50% foreign shareholding as foreign investors, ignoring the fact that mutual funds are investment vehicles for unit holders, including retail investors. The ministry has now excluded mutual funds from the category, reverting them to their original status.
