All foreign institutional investors may need to channel their funds through a special non-resident (NR) account as per a proposal made by the Reserve Bank of India. This will give the monetary regulator a stronger means to closely monitor the flow of FII investments to trace if undesirable funds are coming into India through any of them. The account could be a sort of Current Account, unlike the two types of savings deposit accounts currently available to non-resident Indians. The latter two are: the Non-Resident (External) Rupee Account, available in Indian rupees and the Foreign Currency Non-Resident (Bank) account, available in the prominent international currencies.
As of now, there are no restrictions on the type of accounts that an FII can open in the country. Transactions in such accounts would be more open to a regulatory glare, according to the proposal. This would also make it possible to keep a track on the movement of funds through sub accounts and the participatory notes issued by FIIs without disturbing the quantum of such flows, which has been rising sharply. Meanwhile, the Indian stock markets continue to lure foreign institutional investors (FIIs) in a big way. In the first eight months of the current fiscal, a total of 136 new FIIS registered themselves with the Securities and Exchange Board of India. In November alone, 17 new FIIs registered with SEBI, taking the total number of FIIs in the Indian market to 820.
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