Fpis

Foreign Portfolio Investors (FPIs) are non-resident investors who invest in a country's financial markets primarily through securities rather than through control of companies. In India, FPIs are registered entities that invest in listed equities, corporate bonds, government securities, and other market instruments through registered schemes. FPIs are distinguished from foreign direct investment (FDI), which implies long-term ownership and control, and from the older term foreign institutional investors (FIIs); SEBI’s framework treats FPIs as non-controlling, market-based investments in the Indian capital markets.

FPIs include a range of participants such as mutual funds, pension funds, corporate or government investment vehicles, banks, insurance companies, endowments, and certain hedge funds from approved jurisdictions. They are required to register with the Securities and Exchange Board of India (SEBI), complete due diligence, follow know-your-customer rules, and comply with issuer-specific and instrument-specific investment limits and reporting requirements. Their activities cover equity, debt, government securities, and money-market instruments, subject to sectoral caps and other regulatory constraints.

In capital markets, FPIs contribute to liquidity, price discovery, and the diversification of the investor base. They can influence equity valuations, traded volumes, and benchmark yields. However, rapid inflows or outflows can also heighten volatility, and regulators monitor and adjust limits or restrictions to manage risk and maintain market stability. Overall, FPIs play a key role in opening capital markets to international capital, while subject to regulatory oversight to balance openness with market integrity.