Qualified Foreign Investors (QFIS) Allowed to Access Mutual Funds’ Equity Schemes and Debt Schemes in the Infrastructure Sector

As of now, it has been decided that the aggregate investments by QFIs in equity schemes of MFs under both the routes shall be subject to a ceiling of USD 10 billion. Similarly, QFIs can invest up to an additional amount of USD 3 billion under both the routes in the units of MF debt schemes which invest in infrastructure debt of minimum residual maturity of 5 years in corporate bonds issued by infrastructure companies.

The investment under both the routes by the QFIs will be in the units which are directly issued by the domestic MFs and no secondary market purchases would be allowed. Only QFIs from jurisdictions which are compliant with the FATF standards and are signatories to the IOSCO’s Multilateral Memorandum of Understanding will be eligible to invest in domestic MFs under this Scheme.

DPs will ensure KYC of the QFIs as per the norms prescribed by SEBI. Domestic MFs would also undertake KYC of the QFIs. Units and UCRs issued under this scheme to QFIs, would be non-tradable and non-transferable

The scheme would enable QFIs to have direct access to the Indian Mutual Funds. It would widen the class of investors participating in the Indian capital market, help increase depth and reduce volatility in the market. As the scheme has now been expanded to include debt schemes investing in the infrastructure sector, it is expected to give a new momentum to the debt instruments in this priority sector.

The QFI scheme opens another avenue for global investors to participate in the equity markets and the infrastructure debt markets in India through Mutual Funds. This would increase the global investor interest in the Indian economy. The QFI scheme will make it easier for overseas investors to participate in the infrastructure sector projects in India, and therefore would provide an additional source of overseas long term debt funding.



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