Term Of The Day: Institutional Investors
Institutional investors are organizations that invest large amounts of money in securities, real estate and other assets on others' behalf.
PropTiger Explains Institutional Investors
Investment advisors, commercial banks, insurance companies and pension, hedge, endowment and mutual funds are examples of institutional investors. Institutional investors receive preferential treatment, but regulatory authorities are less keen on protecting them because they are experienced and understand financial markets better than typical investors. Much of the trading in securities markets are done through institutional investors.
In India, while buying shares, Foreign Institutional Investors (FIIs) should make the payment through debit to its Special Non-Resident Rupee Account. FIIs registered with SEBI are permitted to purchase government securities, treasury bills and corporate debt. The limit for FIIs registered with SEBI is now US $30 billion.
Foreign institutional investors (FII) are increasingly investing in India. As many global fund managers think that Indian bonds will outperform other emerging market bonds, there is greater investment in India's bond markets by foreign institutional investors.
Currently, the Indian government allows foreign direct investment (FDI) in real estate, but does not allow foreign institutional investment. According to the norms of the Reserve Bank of India (RBI), real estate companies can sell their initial or follow-on public stock offerings to FIIs only if the projects being developed satisfy the norms concerning foreign direct investment. The government is considering a proposal not to consider FDI and FII as distinct while specifying upper ceiling on investment.
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