| New Investment Scheme for QFIs
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| With a view to promoting further investment in India by Qualified Foreign Investors (QFIs), Reserve Bank of India has come out with a Scheme for Investment for QFIs in Indian Corporate Debt Securities vide its A. P. (DIR Series) Circular No. 7 dated 16.07.2012. QFIs can invest in these securities subject to certain terms and conditions enumerated herein after:
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| The term, Indian Corporate Debt Securities shall mean listed Non-Convertible Debentures(NCDs), listed bonds of Indian companies, listed units of Mutual Fund debt Schemes and “to be listed†corporate bonds.
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Terms and Conditions
- QFIs are required to open a single non-interest bearing Rupee Account for routing the receipt and payment for transactions relating to purchase and sale of securities.
- The funds in this account shall be utilized for purchase of eligible securities for QFIs or for remittance (net of taxes) outside India.
- Sale of eligible debt securities can also be done through a registered stock broker on a recognized stock exchange in India.
- QFIs would be allowed to open a single DEMAT account with a QDP in India for investment in all eligible debt securities.
- Total overall ceiling of investment is USD 1 billion. This limit shall be over and above USD 20 billion for FII investment in corporate debt.
- Foreign inward remittance shall be through normal banking channel in any permitted currency (freely convertible) directly into the single non-interest bearing Rupee account.
- QDPs will ensure KYC of the QFIs as per the norms prescribed by SEBI. AD Category-I banks will also ensure KYC of the QFIs for opening and maintenance of the single non- interest bearing Rupee accounts as per the extant norms.
- The pricing of all eligible transactions and investment in all eligible securities by QFIs under this scheme shall be in accordance with the relevant and applicable guidelines issued from time to time.
- In addition to the reporting to SEBI as may be prescribed by them, QDPs and AD Category-I banks (maintaining QFI accounts) will also ensure reporting to the Reserve Bank of India in a manner and format as prescribed by the Reserve Bank of India from time to time.
- QFIs would be permitted to hedge their currency risk on account of their permissible investments (in equity and debt instruments) in terms of the guidelines issued by the Reserve Bank from time to time.
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Relaxation:
- No more requirements for opening and maintenance of a single rupee pool bank account by the QDP and QFIs can henceforth invest in all ‘eligible securities for QFIs’ through a single non- interest bearing Rupee Account.
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