Module: | MODULE A: INTERNATIONAL BANKING
Q59: Consider the following statements regarding Overseas Portfolio Investment (OPI) by resident individuals:
1. OPI includes investment in listed equity capital of a foreign entity.
2. OPI includes investment in unlisted debt instruments of a foreign entity.
3. Investment in unlisted equity capital of a foreign entity is treated as Overseas Direct Investment (ODI), not OPI.
Which of the statements given above is or are correct?
2. OPI includes investment in unlisted debt instruments of a foreign entity.
3. Investment in unlisted equity capital of a foreign entity is treated as Overseas Direct Investment (ODI), not OPI.
Which of the statements given above is or are correct?
✅ Correct Answer: B
🎯 Quick Answer:
Statements 1 and 3 are correct. Statement 2 is incorrect.
Concept Definition: OPI vs ODI.The Foreign Exchange Management (Overseas Investment) Rules, 2022, clearly distinguish between portfolio and direct investment.Structural Breakdown: OPI (Portfolio Investment): Strictly includes investment in Listed equity capital.It generally excludes unlisted instruments to prevent risky, unregulated lending.ODI (Direct Investment): Includes investment in Unlisted equity capital.A resident individual can make ODI (e.g., buying shares in a private startup abroad) under Schedule III of the rules.Prohibition: Remittance for unlisted debt is generally restricted under the portfolio route.The LRS facility for investment is primarily for equity, venture capital funds, or rated debt instruments. Statements 1 and 3 are correct. Statement 2 is incorrect.