| The
government is of the view that there is no need
to revise the ceiling of $1billion for investment
in overseas securities by Indian mutual funds. Although
a higher investment ceiling could theoretically
help boost capital outflows at a time when the RBI
is finding it tough to manage inflows, the fact
that the existing ceiling has not been utilised
has prompted the government to maintain status quo,
according to officials.
Within
the overall investment ceiling, there is a sub ceiling
of 10% of the net assets managed by individual mutual
funds and a maximum limit of $100 million for each
mutual fund. The overseas investment route was opened
up to Indian mutual funds to help them diversify
their risks. Mutual funds can now invest abroad
in stocks of foreign companies, which have a holding
of at least 10% in an Indian company which is listed
on a stock exchange here. This restricts the universe
of investment to a handful of companies including
Unilever, Nestle, Glaxo, Procter & Gamble and
Cadburys.
Officials
said the restriction, on the kind of stocks which
domestic mutual funds could buy into abroad, was
laid down by the RBI and SEBI. A better option could
be to allow them to invest in the top 50 or 100
stocks featuring in major indices abroad like the
FTSE and then gradually open up. Officials added
that in the near term, no change was being considered
on the investment pattern abroad. |
