SEBI eases foreign fund investment rules

India's stock market regulator removed some curbs on indirect investments in Indian shares by foreign portfolio investors to revive capital inflows after sharp losses in the benchmark index.

India's stock market regulator on Monday removed some curbs on indirect investments in Indian shares by foreign portfolio investors to revive capital inflows after sharp losses in the benchmark index.

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The Securities and Exchange Board of India will remove restrictions on issuing participatory notes (P-notes) where the underlying asset is a derivative, Chairman C B Bhave told reporters at a news conference after markets had closed.

It also scrapped a rule which said P-notes could only account for up to 40 percent of the value of assets held by a foreign fund.

"The entire framework for FII participation needs to be reviewed," Bhave said. "The curbs were no longer considered necessary."

P-notes are issued by foreign funds registered in India to unregistered overseas investors.