Qualified foreign investors can now invest directly in Indian equities
India has liberalised foreign investment in stock markets. Qualified
foreign investors (QFIs) can now invest directly in Indian equities.
In an attempt to increase overseas capital inflows and reduce the current account deficit due to higher imports, India has liberalised foreign investment in stock markets. Qualified foreign investors (QFIs) can now invest directly in Indian equities.
A QFI is an individual, an association or a group from a foreign country complaint with standards mandated by the Financial Action Task Force, an inter-governmental body that formulates policies to combat money laundering and terrorist financing. Foreign institutional investors (FIIs) and foreign venture capital investments do not come under the QFI category.
An individual QFI can invest up to 5 per cent of the paid-up capital of a listed company. Total investment by QFIs in a listed company cannot exceed 10per cent of its paid-up capital. Foreign investors will also be allowed to acquire equity shares by way of rights issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate action.
The QFI investment limits will be over and above the ceilings set for FII and non-resident Indians under the Portfolio Investment Scheme for foreign investment in India.
When QFIs sell their stock holdings, the sale proceeds will also be repatriated to their designated banks within five working days. In addition, the depository participants will ensure compliance with the 'Know Your Customer' norms for QFIs. QFIs have already been allowed to invest in mutual funds.
The new scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows into the county.
A QFI is an individual, an association or a group from a foreign country complaint with standards mandated by the Financial Action Task Force, an inter-governmental body that formulates policies to combat money laundering and terrorist financing. Foreign institutional investors (FIIs) and foreign venture capital investments do not come under the QFI category.
An individual QFI can invest up to 5 per cent of the paid-up capital of a listed company. Total investment by QFIs in a listed company cannot exceed 10per cent of its paid-up capital. Foreign investors will also be allowed to acquire equity shares by way of rights issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate action.
The QFI investment limits will be over and above the ceilings set for FII and non-resident Indians under the Portfolio Investment Scheme for foreign investment in India.
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QFIs can invest only in listed Indian equities through depository participants (agents of depositories that provide accounts for holding securities in electronic format) registered with the Securities and Exchange Board of India. Each investor will be allowed to open one trading account and one demat account with a depository participant but will not be allowed to open a dedicated bank account in India.
Depository participants will purchase equity at the instruction of QFIs within five working days. If a depository participant fails to execute the order within five working days, the funds would be repatriated back to the QFI's designated overseas bank.
INVESTING TIP: Follow the markets pattern and then invest
QFIs can invest only in listed Indian equities through depository participants (agents of depositories that provide accounts for holding securities in electronic format) registered with the Securities and Exchange Board of India. Each investor will be allowed to open one trading account and one demat account with a depository participant but will not be allowed to open a dedicated bank account in India.
Depository participants will purchase equity at the instruction of QFIs within five working days. If a depository participant fails to execute the order within five working days, the funds would be repatriated back to the QFI's designated overseas bank.
INVESTING TIP: Follow the markets pattern and then invest
When QFIs sell their stock holdings, the sale proceeds will also be repatriated to their designated banks within five working days. In addition, the depository participants will ensure compliance with the 'Know Your Customer' norms for QFIs. QFIs have already been allowed to invest in mutual funds.
The new scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows into the county.
