(Image source from: NDTV.com)

Abroad investors of Indian origin are allowed to buy up to 5 percent in any security under current regulation, India's economic affairs secretary Subhash Chandra Garg said on Tuesday, in a bid to calm markets after recent regulatory changes.

Indian markets fell for the second consecutive day as fresh concerns emerged over an 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 Persons of Indian Origin (PIOs) or Non-resident Indians (NRIs) will not be permitted to invest as a foreign portfolio investor in the country, and SEBI has directed that such funds should either be out of use or the ownership structure changed by the end of December.

Garg repeated that companies majority-owned by Non-Residents Indians won't be allowed to put likewise as manage foreign funds, indicating that the policymakers are improbably to loosen up the SEBI guidelines.

By Sowmya Sangam