FPI refers to securities and financial assets passively held by foreign investors, without acquiring management control or long-term interest.
- FPI instruments are Stocks & Bonds, Mutual Funds, Exchange-Traded Funds (ETFs), American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs).
- It is part of the Capital Account under Balance of Payment (BoP).
- It is referred as ‘hot money’ because it is high liquidity and tendency to exit at early signs of economic instability
- Regulated by the Securities and Exchange Board of India (SEBI).
Source: The Hindu