DIFFERENCE BETWEEN FDI and FPI #Stockmarket 💡 FDI is involved in setting up firms to produce goods and services. That is why it is called 'direct' institution. FPI on the other hand buys financial assets for profits. In order to remove the ambiguity that prevails on what is Foreign Direct Investment (FDI) and what is Foreign Institutional Investment (FII), it was decided to follow the international practice and lay down a broad principle that, where an investor has a stake of 10 percent or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 percent, it will be treated as FDI. 💡 Since the source of funds is not revealed, the PNs are potentially unsafe. Therefore, SEBI imposed certain conditions like limits on the PNs that a single FII can issue, etc. SEBI wants the PN holders to register with SEBI and invest directly as India is a long-term growth story. SEBI policy paid off with the number of FIIs registering with the regulator go...
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