QFI rule tweak to allow Gulf investorshttps://indianexpress.com/article/news-archive/web/qfi-rule-tweak-to-allow-gulf-investors/

QFI rule tweak to allow Gulf investors

Investors from Gulf countries may be allowed to invest in Indian capital market as QFI.

Investors from the Gulf countries may be allowed to invest in Indian capital market as Qualified Foreign Investors (QFI).

The finance ministry is working on amending its rules that will allow countries,which are not a part of anti-money laundering and terror financing body Financial Action Task Force (FATF),to invest in the country,a move that will facilitate investments from the Gulf Cooperation Council (GCC).

According to sources,even those countries which are a part of the International Organization of Securities Commissions’ (IOSCO) Multilateral Memorandum of Understanding (MMOU),but are not part of the FATF,may be allowed to invest in India.

Earlier,when the government had allowed QFIs to invest in the equity market,it had put a condition that only FATF complaint countries would be able to participate in the Indian capital market.

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Even though GCC countries are a member of FATF,its members nations — Bahrain,Oman,Kuwait,the UAE and Saudi Arabia,Qatar — are not. However,Saudi Arabia and Bahrain are signatory to IOSCO MMOU.

The IOSCO MMOU is a global information-sharing arrangement among securities regulators. It has been adopted by the IOSCO that sets international benchmark for cross-border co-operation for combating violations of securities and derivatives laws.

Given the immense interest of GCC nations in the Indian equity market,the finance ministry wants to tap the potential. It is also planning road shows beginning June 10-15 to promote India as an attractive destination for the oil-rich countries.

A QFI is an individual,group or association resident in a foreign country. QFIs do not include FIIs/sub-accounts. The country allowed QFIs to invest in January but the response has been lukewarm due to market conditions.

The government is also working on ways to attract foreign investment into corporate bonds. The foreign institutional investors (FIIs) can invest up to $20 billion in corporate bonds and $15 billion in government securities (G-secs).

In Budget 2012-13,Finance Minister Pranab Mukherjee had announced opening up of corporate bond market for QFIs.

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