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Friday, January 6, 2012

Direct Investment in Indian Equity Market by QFIs

Qualified Foreign Investors (QFIS) Allowed to Directly Invest in Indian Equity Market; Scheme to Help Increase the Depth of the Indian Market and in Combating Volatility Beside Increasing Foreign Inflows into the Country. 

Ministry of Finance 01-January, 2012 16:19 IST

Qualified Foreign Investors (QFIS) Allowed to Directly Invest in Indian Equity Market; Scheme to Help Increase the Depth of the Indian Market and in Combating Volatility Beside Increasing Foreign Inflows into the County

In a major policy decision, the Central Government has decided to allow Qualified Foreign Investors (QFIs)to directly invest in Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market. QFIs have been already permitted to have direct access to Indian Mutual Funds schemes pursuant to the Budget announcement 2011-12. Today’s decision is a next logical step in the direction.
                                                     
  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.
               
   In the present arrangement relating to foreign portfolio investments, only FIIs/sub-accounts and NRIs are allowed to directly invest in Indian equity market.  In this arrangement, a large number of Qualified Foreign Investors (QFIs), in particular, a large set of diversified individual foreign nationals who are desirous of investing in Indian equity marketdo not have direct access to Indian equity market. In the absence of availability of direct route, many QFIs find difficulties in investing in Indian equity market.
               
  As a first step in this direction, QFIs have been permitted direct access to Indian Mutual Funds schemes pursuant tothe Budget announcement 2011-12. As a next logical step, it has now been decided to allow QFIs to directly invest in Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market.
           
  The QFIs shall include individuals, groups or associations, resident in a foreign country which is compliant with FATF and that is a signatory to IOSCO’s multilateral MoU. QFIs do not include FII/sub-accounts.
           
 Salient Features of the Scheme:

· RBI would grant general permission to QFIs for investment under 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 Indian company. These limits shall be over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India.

· QFIs shall be allowed to invest through SEBI registered Qualified Depository Participant (DP). A QFI shall open only one demat account and a trading account with any of the qualified DP. The QFI shall make purchase and sale of equities through that DP only.

· DP shall ensure that QFIs meet all KYC and other regulatory requirements, as per the relevant regulations issued by SEBI from time to time.  QFIs shall remit money through normal banking channel 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. Upon receipt of instructions from QFI, DP shall carry out the transactions (purchase/sale of equity).

· DP shall be responsible for deduction of applicable tax at source out of the redemption proceeds before making redemption payments to QFIs.

· Risk management, margins and taxation on such trades by QFIs may be on lines similar to the facility available to the other investors.
               
  The scheme is expected to help increase the depth of the Indian market and in combating volatility beside increasing foreign inflows into the county.
           
SEBI and RBI are expected to issue relevant circulars to operationalise the scheme by January 15, 2012.

DSM

(Release ID :79306)

Thursday, January 5, 2012

INDIA AND GERMANY CAN BE PARTNERS IN GROWTH BY INVESTING IN EACH OTHER


INDIA AND GERMANY CAN BE PARTNERS IN GROWTH BY INVESTING IN EACH OTHER


Deutsche Börse AG which operates the Frankfurt Stock Exchange has taken 5% stake in Bombay Stock exchange.

Deutsche Börse AG has also signed an agreement with BSE for dual listing at both stock exchanges.

Listing at Frankfurt Stock Exchange is an exciting offer but currently, EURO as a currency is going through turmoil and for Indian companies to list at Frankfurt in euro currency seems like a difficult task as investors have a very low RISK APPETITE, so investing in equity as an asset class is at its lowest but once Euro zone comes out from its sovereign debt crisis, EURO as currency and Euro zone as a whole will be the best asset classes to invest because once you learn the lesson the hard way than it’s not difficult to rise and all this is a part of the Normal Economic Cycle.

Today Euro zone is growing at and around 1% levels while India is growing above 7%+ while rupee to euro is at 70 rupee so it makes sense for an EURO ZONE INVESTOR to invest in India for next 3 to 5 years until Euro zone is ready for growth for a new economic cycle because you cant discount group of countries forming Euro zone.


Today Euro zone an investor is getting 70 Rupee for a Euro and are investing in country with a billion opportunity (population of over a billion people).

Today a single Euro here can buy you 2 Mac veggie burgers which is available around 2 to 3 Euro each in most of the Euro zone which makes living in India at one fifth the cost of Euro zone.

So before you take investment decisions do visit us and let us showcase to you the Indian fertile civilization where adversity and opportunities co exist and the beauty is in the eye of the beholder, what he or she wants to see.

Similarly several COUNTRIES are partnering INDIA and participating in India’s growth story by investing in India while Indian companies are investing globally.

Let’s turn the every downturn into an Opportunity to Invest Internationally and de risk our FINANCIAL PLAN to benefit from the buzz word “GLOBALIZATION”.

DISCLAIMER:
Investing In Emerging Market Comes With A Risk

Kindly Consult Your Financial Advisor Before You Invest