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How are foreign portfolio investments regulated in India?a) Through the RBI onlyb) Through SEBI onlyc) Through a combination of SEBI and RBI regulationsd) Through Ministry of Finance

Question

How are foreign portfolio investments regulated in India?a) Through the RBI onlyb) Through SEBI onlyc) Through a combination of SEBI and RBI regulationsd) Through Ministry of Finance

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Solution

Foreign portfolio investments in India are regulated through a combination of SEBI (Securities and Exchange Board of India) and RBI (Reserve Bank of India) regulations.

Here's a step-by-step explanation:

  1. SEBI: The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It regulates the business in stock exchanges and any other securities markets and also protects the interests of investors in securities. Foreign Portfolio Investors (FPIs) are required to register with SEBI for participating in the Indian securities market.

  2. RBI: The Reserve Bank of India (RBI) is India's central banking institution, which controls the issuance and supply of the Indian Rupee. RBI regulates the financial system of the country and ensures its stability. It also manages foreign exchange under the Foreign Exchange Management Act, 1999 (FEMA).

So, the correct answer is c) Through a combination of SEBI and RBI regulations.

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