Securities and Exchange Board of India has allowed mutual funds to invest up to 10 per cent of their net assets in equity of overseas listed entities, provided such foreign corporate hold at least 10 per cent stake in any Indian listed company.

This follows Centre's permission to MFs to invest in equity of overseas companies, Sebi said in a notification dated April 4.

The overall cap for the entire mutual funds industry to invest in American and Global Depository receipts issued by Indian companies and foreign equity and debt securities, would be $1billion, Sebi said.