New Delhi: Overseas investors of Indian origin are allowed to buy up to 5% in any security under current regulation, economic affairs secretary Subhash Chandra Garg said on Tuesday, in a bid to calm markets after recent regulatory changes.

Markets fell for the second straight day as fresh concerns emerged over a April circular issued by the Securities and Exchange Board of India (Sebi) that said foreign investment rules for companies of Indian origin had been tightened.

The guidelines state that a company majority owned by non-resident Indians (NRIs) or persons of Indian origin (PIOs) will not be allowed to invest as a foreign portfolio investor in the country, and Sebi has directed that such funds should either be closed or the ownership structure changed by the end of December.

Garg reiterated that companies majority-owned by non-residents Indians won’t be allowed to invest as well as manage foreign funds, indicating that the policymakers are unlikely to relax the Sebi guidelines.

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