Government allows QFIs to directly invest in Indian equities

“The central government has decided to allow QFIs to directly invest in the Indian equity market in order to widen the class of investors, attract more foreign funds and reduce market volatility and deepen the Indian capital market,” an official statement said on Sunday

New Delhi: Starting off the New Year on a liberalisation note, the government on Sunday announced its decision to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market, reports PTI.

The move comes against the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility.

“In a major policy decision, the central government has decided to allow QFIs to directly invest in the Indian equity market in order to widen the class of investors, attract more foreign funds and reduce market volatility and deepen the Indian capital market,” an official statement said on Sunday.

A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include foreign institutional investors (FIIs)/sub accounts.

In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

With regard to foreign portfolio investments, at present, only FIIs/sub-accounts and NRIs are allowed to directly invest in the Indian equity market.

Amid severe volatility in the capital market last year, FIIs outflows amounted to more than Rs2,700 crore. The situation had an impact on the rupee, which fell to an all-time low of to Rs54.30 on 15th December and fluctuation in the domestic currency has put pressure on policymakers.

Market regulator Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are expected to issue relevant circulars to operationalise the scheme allowing QFIs to directly invest in Indian equities by 15th January.

The RBI would grant general permission to QFIs for investment under the Portfolio Investment Scheme (PIS) route, similar to FIIs.

“The individual and aggregate investment limit for QFIs shall be 5% and 10%, respectively, of the paid-up capital of an Indian company,” the statement said.

These limits shall be over-and-above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, it added.

“Foreign capital inflows to India have significantly grown in importance over the years. These flows have been influenced by strong domestic fundamentals and buoyant yields reflecting robust corporate sector performance,” the statement said.

As a result, a large number of QFIs, especially a large set of diversified individual foreign nationals who are desirous of investing, do not have direct access to the Indian equity market, the statement said.

“In the absence of availability of a direct route, many QFIs find difficulties in investing in the Indian equity market,” it noted.

Furthermore, QFIs would be allowed to invest through SEBI-registered Qualified Depository Participants (DP). A QFI shall open only one demat account and a trading account with any of the qualified DPs and will carry out purchases and sales of equities through that DP only.

The DP should ensure that QFIs are compliant with all KYC (Know Your Customer) and regulatory norms. It would also be responsible for deduction of applicable tax at source out of the redemption proceeds before making redemption payments to QFIs.

“QFIs shall remit money through normal banking channels in any permitted currency (freely convertible) directly to the single rupee pool bank account of the DP maintained with a designated AD category-I bank,” the statement said.


Making comparisons


This is with regard to “S&P says one-in-three chance of India’s rating downgrade in...
Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Lokpal sunk. So what, the Force is with us

The Force is with us, the people of India. Our overpowering hunger for an end to corruption is our greatest strength and, supported by the Force, we can only win in the end

It would be worth everybody’s while to revisit the first three movies of the ‘Star Wars’ series made in the late seventies and early eighties—Star Wars, The Empire Strikes Back and The Return of the Jedi.

The Force (the Life Force that pervades the Universe) is with us, as ObiwanKenobie and Luke Skywalker and other heroes in the films keep repeating to their followers. The Force is with us, the people of India. Our overpowering hunger for an end to corruption is our greatest strength and, supported by the Force, we can only win in the end.

And the politicians have made the hazy battle lines clear. They have lined themselves with and identified themselves as the people on the Dark Side of the Force, which supports and buoys up the villains in the Star Wars series.

Our friend Ricken Patel, founder of Avaaz, the worldwide organization, sent me an email today, an email which also went to hundreds of thousands of activists all over the world. Mr Patel said in the email:

“Something big is happening. From Tahrir Square to Wall Street, from staggeringly brave Avaaz citizen journalists in Syria to millions of citizens winning campaign after campaign online, democracy is stirring. Not the media circus, corrupt, vote-every-five-years democracy of the past. Something much, much deeper. Deep within ourselves, we are realizing our own power to build the world we all dream of.”

“We don’t have a lot of time to do it. Our planet is threatened by multiple crises—a climate crisis, food crisis, financial crisis, proliferation crisis... These crises could split us apart like never before, or bring us together like never before. It’s the challenge of our time, and the outcome will determine whether our children face a darker world or one thriving in greater human harmony.”

Ricken Patel did not mention the endemic, epidemic corruption that has crept into the body of India like the viruses that weaken, maim and even kill people. Corruption is our prime concern, though the other crises that Ricken mentions are equally important.

So, people of India, let us prepare ourselves for a long battle against corruption. The Mahabharata war ended in 18 days; our war might last 18 decades and our children’s children and their grandchildren will be fighting it long after we are gone. But the Force is with us. The people of India will win.

I must admit I was one of those cynics who thought nothing much would come of the Congress promise to introduce a strong Lokpal Bill, giving life the “sense of the house” which emerged when Parliament discussed the Lokpal idea.

But even I am appalled at the transparent plots and conspiracies that torpedoed the already weakened Lokpal Bill.

I now throw a gauntlet to all political parties. The ruling coalition ducked voting in the RajyaSabha since the Lokpal Bill had been scuttled by poor floor management and the stabs in the back by coalition partners and the opposition.

Though I am not sure what the technical position is, this amounts to a moral defeat of the government. If he is an honest man, and he is touted all over as being one, prime minister Manmohan Singh has no choice but to submit the resignation of his government to the president and call for a mid-term general election, with the main issue being corruption.

The politicians will be against a mid-term election on the excuse that there isn’t enough money to fund an election within three years of the previous election.
If money were the only hurdle to a mid-term election, there is no problem: Let them bring out all the black money earned through bribes and kickbacks, the money stashed away in foreign bank accounts and use it for the elections.

At least, part of the money squeezed out of an unwilling people will go back to some of the people.



Prakash Bhate

6 years ago

It is possible to ensure that very few MPs get re-elected in the next general election. It will send a strong message. All we need is to register as voters, get out of our homes on election day and vote.


nagesh kini

In Reply to Prakash Bhate 6 years ago

Entirely agree. The higher the voter turn out, the better is the chance of getting the 'best of the worst' or else resort to "None of the above."

Gyan Mitra

6 years ago

The safety, security and dignity of ordinary people in this world is controlled by delivery of the basic needs such as water, food, fuel, energy and health. Solutions now exists for these ordinary folk to take them for granted. It will then be impossible to manipulate people.


6 years ago

Congress seems to have a lot to hide as indicated by their wishywashy approach to Jan Lokpal ideas. Their dirty tricks, name calling, and prevarications clearly show their predicament.

Nagesh Kini FCA

6 years ago

If Manmohan's position is untenable, worse is Anna's surrounded as he is by an unscrupulous Team with political ambitions.
Let both of them face the aam janata in a straight contest and we'll see who the people have confidence in.
Let there be a mid-term poll whether the parties want it or not.

a v moorthi besides TIHAR

6 years ago

commonsense tells Govt was put on mat by Anna movement. So Congress would have been the gainer if Lokpal bill was passed ( howsoever weak it may be - which actually it is not), whereas BJP and Left wanted to show the Congress in bad light so they had opposed it ( had they been sincere they should have voted in favour at RS when it was clear that without their support the bill could not have been passed in RS) SP and BSP realised that if bill is passed again Congress would claim credit for the Lokpal bill. Mamta was repeatedly shown running Govt for development is not an easy task as in 7 months she had not done anything spectacular so till June 2012 she can continue with her role as strret fighter after that voters in Bengal will show their appirisal of her Govt whenever any bye elections in Bengal.Lastly many MPs felt that by passing the bill they would be signing their own arrest warrants. Also one thing which has come out in open clearly is that certain members of Anna movement like Kejriwal and Dr. Kiran Bedi IPS has certain scores to settle with Cong and for this they will not hesitate to use IAC movement which one cannot complain much.
In light of these circumstances Congress did the right thing because when RS meets again the polls in 5 states would be over if Congress does well then their numbers in RS will increase and if Opposition win the State polls we can see their earnestness in passing Lokpal. in 100 days we will know true colors of all party.



In Reply to a v moorthi besides TIHAR 6 years ago

a v moorthi: it seems that you need to open your eyes. Do you know work done by Mr. Kejriwal? do you know that he is the Rachnakar of RTI bill? Do you know how much he has taken for his family by going opposite all political class? I dont this that someone would just do this for political benefit, only the person who love his country more than self can only do this. Jai Hind and fully have faith in Anna and all part of his team.

Vaibhav Dhoka

6 years ago

The geographical vastness laden with poverty and illiteracy the government of time is always at ease and calm for any type of storm in form of corruption.Lokpal or be it BLACK-MONEY. Citizen will and always be at receiving end.But TEAM ANNA should not give up in fact everyone should educate his niebhour


6 years ago

The proof of the pudding is in its eating.
Right from the start the UPA had no inclination of passing JAN LOKPAL. Only the swelling opposition in the form of crowd attendance had compulled it to come out with one dud Lokpal bill fully conscious of its fated failure. Hence our public should make corruption as the central point in future election and vote accordingly. It is the only solution to correct the present politics.

Rambabu Shastri

6 years ago

The hunger of corruption is 2 sides of the same coin. Corrupt business use it as a shortcut to further their profits. Ordinary people end up paying to get govt. work done. To curb this menace, human values in India need a rethink. You cannot be on a greed 'ride' forever to further monetary interests. End of day, all must realize they come empty-handed, and go empty-handed. What they leave behind is a legacy. What that legacy is, is up to the values you lived by. The govt. is the one that can get rid of this evil. They need to augment govt. salaries to ensure that govt. employees do not need to resort to corrupt means and also augment fines for offenses to such levels that it becomes unattractive to give bribes to resolve matters.

S H Subrahmanian

6 years ago

Ashwini Kumar yesterday said that the last amendment received at 6 00 pm only. Why did they not inform the house earlier about their inability to reply to the debate and have the proceeding adjourned for today with due permission from the President?
With a full House of 543, 2/3 majority will require 361 MPs voting for> Doesn't it mean the Congress knew clearly that without the BJP support (by voting with it), thereby, making it a co-target of Anna!
Let's hope, it's easy for the BJP to just insist on giving autonomy to CBI in Rajya Sabha which it may get passed! The ball will be back in Congress Court! Any simple sympathiser MP will just play the one card of CBI autonomy to corner the Congress as many of the undecided (There are 12 of them) would vote for this. BJP will get into good books of Team Anna and the Congress will face all the fury of enraged intellegentia in the forthcoming mini general election, for sure.

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)