Foreign institutional investors are likely to be debarred from taking part in initial public offerings of stock exchanges, while foreign direct investment may be permitted even in pre-IPO stage.
A notification, capping foreign direct investment at 26 per cent and FIIs at 23 per cent, is likely to be issued by the Reserve Bank of India under Foreign Exchange Management Act shortly, finance ministry sources told PTI.
FIIs are not likely to be allowed when bourses go for initial public offers, sources said. So technically, while foreign investment would be capped at 49 per cent in bourses, it would be virtually 26 per cent till the bourses become listed entities.
Asked about foreign investment in commodity exchanges, they said consumer affairs ministry would take a view on the matter.
Recently, the Securities and Exchange Board of India had decided that no single entity would be allowed to pick up more than five per cent stake in bourses and sources said the cap would be applicable to foreign investors as well, they added.
The issue got struck earlier since the finance ministry was not clear whether the policy would be sent to the Cabinet for clearance or announcement would be made through notification by the Reserve Bank of India.
It has now been decided that RBI would bring the notification under Fema, sources said.
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