Indian Mutual Funds registered with SEBI are permitted to invest within the overall cap of USD 7 billion in:
a. ADRs / GDRs of the Indian and foreign companies;
b. equity of overseas companies listed on recognized overseas stock exchanges; initial and follow on public offerings for listing at recognized overseas stock exchanges;
c. foreign debt securities- short term as well as long term with rating not below investment grade - in the countries with fully convertible currencies;
d. money market investments not below investment grade; repos where the counter party is not below investment grade;
e. government securities where countries are not rated below investment grade;
f. derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities;
g. short term deposits with banks overseas where the issuer is rated not below investment grade; and
h. units / securities issued by overseas Mutual Funds or Unit Trusts registered with overseas regulators.
