Who is FII ?

Source : Sebi

Do you hear on everyday basis in the Market report that FII are the net sellers in the futures, FII are the net buyers and so on .. ?

So who is this FII ? lets understand them here , so that next time when someone says FII, you can better relate to them and more over understand the business news.

FII stands for Foreign Institutional Investor. Its a business entity established outside India who proposes to make investment in India.

To invest money in India by these FII's they need sub-account's which are corporates,institutions and funds incorporated outside India. Through these sub-account's , FII invest money in India.

FII needs a banker to conduct their day to day operations. The bank which is authorized by the RBI (Reserve Bank Of India) called Designated Bank .

Some of the eligible ones to get registered as FII's are
1. Pension Funds
2. Mutual Funds
3. Insurance Companies
4. Investment Trusts
5. Banks
6. Charitable trusts ..etc

The below entities proposing to invest on behalf of "Broad based funds" are also eligible to register as FII

1. Asset Management Companies
2. Investment Manager/Advisor
3. Institutional Portfolio Managers
4. Trustees

Broad Based Funds is a fund established or incorporated outside India, which
has at least twenty investors with no single individual investor holding more than
10% shares or units of the fund

Provided that if the fund has institutional investor(s) it shall not be necessary for
the fund to have twenty investors.

Provided further that if the fund has an institutional investor holding more than
10% of shares or units in the fund, then the institutional investor must itself be
broad based fund.

The following financial instruments are available for FII's

1.Securities in primary and secondary markets including shares, debentures and
warrants of companies, unlisted, listed or to be listed on a recognized stock
exchange in India;
2.Units of Mutual funds
3.Dated Government Securities, other debt instruments
4.Derivatives traded on a recognized stock exchange
5.Commercial papers
6.Security Receipts