The Securities & Exchange Board of India (Sebi), on Friday, notified a detailed guidelines for the Qualified Foreign Investors (QFIs) to directly invest in Indian stocks.
Sebi’s guideline follows the Centre’s nod on January 1, 2012 allowing QFIs to directly invest in Indian equity market in order to widen the class of investors, attract more foreign funds, reduce market volatility and to deepen the Indian capital market.
Sebi specified that QFI’s will have to invest in demat form through Sebi-registered depository participants (DPs) who will have to fulfill the Know Your Customer (KYC) norms.
A QFI shall mean a person resident in a country (other than India) that is compliant with Financial Action Task Force (FATF) standards and that is a signatory to International Organization of Securities Commission's (IOSCO’s) Multilateral Memorandum of Understanding (MMOU). It also specified that a QFI is not a Foreign Institutional Investor (FII) or a sub-account holder.
To facilitate buying and selling of shares a DP shall have appropriate arrangements for receipt and remittance of money with an authorised bank.
To purchase shares a QFI shall place a purchase order with the DP mentioning the name of the company and number of equity shares, name of the stock broker and remit foreign inward remittances from the designated overseas bank account of QFI through normal banking channel in any permitted currency directly to the single rupee pool bank account of the DP.
The DP in turn shall forward the purchase order to the Sebi registered stock broker with whom QFI has opened trading account.
Investment curbs
The Sebi guideline also said that the QFI shall transact in Indian equity shares only on the basis of taking and giving delivery of shares purchased or sold and it shall not issue offshore derivatives instruments/ participatory notes.
The DP shall provide on a daily basis, QFI wise, ISIN wise and company wise buy/ sell information and any other transaction or any related information to their respective depositories on the day of transaction.
The stock exchanges shall provide the details of paid up equity capital of all the listed companies to the depositories once in six months, periodically and also provide information regarding change in paid up equity capital in any listed company immediately.
The QFI and DP shall also ensure that the total shareholding held by a QFI shall not exceed five percent of paid up equity capital of the company at any point of time and this investment limit shall be applicable to each class of equity shares.
Sebi’s guideline follows the Centre’s nod on January 1, 2012 allowing QFIs to directly invest in Indian equity market in order to widen the class of investors, attract more foreign funds, reduce market volatility and to deepen the Indian capital market.
Sebi specified that QFI’s will have to invest in demat form through Sebi-registered depository participants (DPs) who will have to fulfill the Know Your Customer (KYC) norms.
A QFI shall mean a person resident in a country (other than India) that is compliant with Financial Action Task Force (FATF) standards and that is a signatory to International Organization of Securities Commission's (IOSCO’s) Multilateral Memorandum of Understanding (MMOU). It also specified that a QFI is not a Foreign Institutional Investor (FII) or a sub-account holder.
To facilitate buying and selling of shares a DP shall have appropriate arrangements for receipt and remittance of money with an authorised bank.
To purchase shares a QFI shall place a purchase order with the DP mentioning the name of the company and number of equity shares, name of the stock broker and remit foreign inward remittances from the designated overseas bank account of QFI through normal banking channel in any permitted currency directly to the single rupee pool bank account of the DP.
The DP in turn shall forward the purchase order to the Sebi registered stock broker with whom QFI has opened trading account.
Investment curbs
The Sebi guideline also said that the QFI shall transact in Indian equity shares only on the basis of taking and giving delivery of shares purchased or sold and it shall not issue offshore derivatives instruments/ participatory notes.
The DP shall provide on a daily basis, QFI wise, ISIN wise and company wise buy/ sell information and any other transaction or any related information to their respective depositories on the day of transaction.
The stock exchanges shall provide the details of paid up equity capital of all the listed companies to the depositories once in six months, periodically and also provide information regarding change in paid up equity capital in any listed company immediately.
The QFI and DP shall also ensure that the total shareholding held by a QFI shall not exceed five percent of paid up equity capital of the company at any point of time and this investment limit shall be applicable to each class of equity shares.
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