Why in the news?

•  Foreign investors have pulled out 11,820 crore from Indian equities in the rst week of December, primarily driven by the sharp depreciation of the rupee.

Foreign Portfolio Investors (FPI)

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

Source: Business Standard