NSE IPO keeps 49% foreign ownership cap despite 24% NRI limit

National Stock Exchange of India Limited remains subject to a 49% ceiling on combined ownership by persons resident outside India, despite its 2026 decision to raise the aggregate non-resident Indian, or NRI, and OCI investment limit to 24%. The 24% category limit operates within, not above, the 49% ceiling applicable to a recognised stock exchange.

Why does NSE IPO have a 49% foreign ownership cap?

NSE IPO has a 49% foreign ownership cap because both India’s foreign direct investment policy and stock-exchange regulations set that limit for the Exchange. The Consolidated Foreign Direct Investment Policy Circular dated October 15, 2020 permits foreign direct investment, or FDI, of up to 49% of NSE’s paid-up share capital through the automatic route. The automatic route permits investment without prior government approval when the applicable conditions are fulfilled.

The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, or SECC Regulations, provide a separate exchange-specific restriction. The regulations state that combined holdings by all persons resident outside India in a recognised stock exchange cannot exceed 49% of its total paid-up equity share capital at any time, subject to limits prescribed by the Central Government. NSE is therefore subject to both a sectoral FDI limit and a rule governing recognised stock exchanges.

The two mechanisms use the same 49% figure but address different parts of the regulatory framework. The FDI Policy sets conditions for foreign investment in Indian companies, while the SECC Regulations regulate ownership in recognised exchanges. The 49% limit would require a change in the relevant government policy or regulatory limit to change; the April 2026 board resolution and May 2026 shareholder resolution did not alter it.

How does the 24% NRI and OCI limit work at NSE?

The 24% NRI and OCI limit is an aggregate category limit that remains inside NSE’s 49% foreign ownership cap. Under the Foreign Exchange Management Act, 1999, or FEMA, Non-Debt Instruments Rules, aggregate investment by individual persons resident outside India on a repatriation basis, including eligible NRIs and OCIs, cannot exceed 24% of an Indian listed company’s fully diluted paid-up equity share capital.

NSE said its Government Board approved an increase in the NRI and OCI investment limit on April 28, 2026, followed by shareholder approval on May 25, 2026. The resolutions increased the aggregate limit from 10% to up to 24% of NSE’s paid-up equity share capital. NSE also stated that each NRI’s holding cannot exceed 5% of its equity share capital, or another limit that the Reserve Bank of India, or RBI, may stipulate.

The move from 10% to 24% increased the aggregate NRI and OCI category capacity by 14 percentage points. It did not create another 24 percentage points above the 49% foreign ownership ceiling. Any holdings counted as ownership by persons resident outside India remain relevant to the exchange-level limit.

How are FPI holdings treated under the NSE IPO rules?

Foreign portfolio investor, or FPI, holdings are included in the aggregate foreign-investment calculation under the FEMA Rules. The rules require the holding of every registered FPI in a company to be counted when calculating aggregate FPI investment. NSE states that the aggregate FPI investment limit is the sectoral cap applicable to NSE, which is 49% for the recognised stock exchange.

The FPI rule differs from the 24% NRI and OCI limit because it refers to the applicable sectoral cap rather than NSE’s category-specific resolutions. FEMA Rules also state that an individual person resident outside India, including eligible NRIs and OCIs investing on a repatriation basis, must hold less than 10% on a fully diluted basis. NSE’s 5% cap for each NRI is lower than that general individual threshold.

A share transfer between an Indian resident and a non-resident does not require prior RBI approval if stated conditions are met. NSE identifies three of them: its activity must remain under the automatic route, the transfer must not affect the Securities and Exchange Board of India, or SEBI, Takeover Regulations, and non-resident ownership must remain within the sectoral limit. The pricing must also follow SEBI or RBI guidelines.

Which foreign investors need government approval or cannot bid?

Investors connected to a country sharing a land border with India may need prior Government of India approval under the FDI Policy and FEMA Rules. Press Note 3 of 2020, dated April 17, 2020, covered investments by entities from such countries and investments where the beneficial owner is situated in, or is a citizen of, such a country. NSE requires a bidder that needs and has obtained approval to notify NSE and the registrar in writing, with a copy, within the offer period.

Press Note No. 2 (2026 Series), dated March 15, 2026, further defined beneficial ownership for this approval test. NSE says approval is required where citizens or entities of a land-border country hold rights or entitlements exceeding 10% of the shares, capital or profits of an investor entity incorporated elsewhere, exercise control over that investor entity, or exercise ultimate effective control over the Indian investee entity. The prospectus states that this amendment was effective as of its date.

OCIs cannot participate in this offer under the Government of India’s existing policy, according to NSE. That offer-eligibility restriction applies even though the April 28, 2026 and May 25, 2026 resolutions refer to an aggregate NRI and OCI ownership limit of up to 24%. A multinational bank or fund of which India is a member is not treated as an entity of a particular country under the December 8, 2020 Fourth Amendment to the FEMA Non-Debt Instruments Rules.

What are the restrictions for United States investors?

NSE equity shares have not been and will not be registered under the United States Securities Act. Within the United States, NSE says the shares are offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A, which the prospectus calls U.S. QIBs. This U.S. QIB term is distinct from the qualified institutional buyer category used under Indian regulations.

Outside the United States, the shares are offered in offshore transactions defined by and compliant with Regulation S under the United States Securities Act, as well as applicable laws in the relevant jurisdictions. NSE also states that its shares have not been and will not be registered, listed or otherwise qualified in other jurisdictions outside India. Bids and sales in those jurisdictions must comply with local law.

Conclusion

NSE’s foreign ownership framework is layered: the 49% ceiling governs all persons resident outside India, while the 2026 resolutions raised the aggregate NRI and OCI limit from 10% to up to 24%. The 5% cap for each NRI, the FEMA individual threshold of less than 10%, and the treatment of FPI holdings add further limits within that structure.

The next issue to watch is whether the Central Government or relevant regulators change the 49% sectoral or recognised-stock-exchange limit. NSE also discloses that bidders must assess the March 15, 2026 beneficial-owner approval test, the continuing OCI restriction for this offer, and applicable FEMA, SEBI and RBI requirements.