SEBI tweaks QFI definition to include investors from Gulf nations


SEBI relaxed investment norms for overseas individual investors that would allow investors from Gulf countries to invest in Indian stock markets
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has allowed investors from Gulf countries to invest in stock markets, thereby relaxing investment norms for overseas individual investors, reports PTI.
The government had earlier in January allowed Qualified Foreign Investors (QFIs) from 34 Financial Action Task Force (FATF) member countries to invest in the equity market.
As per the SEBI circular, countries which are part of International Organisation of Securities Commissions' (IOSCO) and Multilateral Memorandum of Understanding (MMOU), but are not part of the FATF, would be allowed to invest in India.
The QFI would now also include "residents in a country that is a signatory to IOSCO's MMOU or a signatory of a bilateral MOU with SEBI", it said in the circular.
SEBI further said that in case a person invests in the same company through both QFI route and FDI route, the aggregate holding of the person in such company shall not exceed 5% of paid up equity capital of the company.
SEBI also decided to extend the option of appointment of custodian of securities by the QFI.
"The QFI may appoint a custodian of securities, who would be obligated to perform clearing and settlement of securities on behalf of the QFI client," SEBI said. The custodians would have to be mandatorily registered with SEBI.
"It has been decided to allow QFIs to make fresh purchases of eligible securities, out of the sale/redemption/ dividend proceeds of any of the eligible securities," SEBI said.
Further, it said that all the eligible securities shall be held in a single demat account of the QFI.
In another important move, SEBI decided to do away with the restriction on number of days a QFIs can keep fund in their bank accounts in India, a move to ease norms for such investments.
Earlier money was to be kept Depository Participants in a pooled account and within 5 days the QFIs had to take the investment decision.
Besides, every QFI will have separate bank account and they can retain money in bank accounts in India.
With an aim to attract QFI, the Finance Ministry is conducting road shows in five Gulf nations, including Kuwait and the UAE, during June 10-14.
A QFI is an individual, group or association resident in a foreign country. QFIs do not include FIIs/sub accounts.
Last year, the government had created QFI category and allowed them to invest in MF debt schemes initially.
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