“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.
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.