Millennium Post

QFIs allowed to invest up to $1 bn in debts

In order to attract foreign funds, the government on Tuesday allowed individual overseas investors also called Qualified Foreign Investors (QFIs) to invest up to $1 billion in debts and corporate bond market.

The government also expanded the ambit of QFIs to include residents of FATF (financial action task force) member countries and those from Gulf Cooperation Council (GCC) and European Commission (EC).

'A separate sub-limit of $1 billion has been created for QFI investment in corporate bonds and mutual fund debt schemes,' a finance ministry official said.

As of now, foreign investors were allowed to invest $20 billion in the country's corporate bond market. With this the ceiling will increase to $21 billion.

'We are looking at 6-14 months to see the optimisation of QFI inflows,' Thomas Mathew, joint secretary (Capital Market Division) in the ministry said.

The finance ministry also decided to do away with the restiction on number of days a QFIs can keep fund in their bank accounts in India, a move to ease norms for such investments. Earlier they had to give money to depository participants in a pooled account and within 5 days the QFIs had to take investment decision.

This restriction of 5 days was 'proving to be a dampener for genuine investors in view of high cost of transfer of funds', the ministry said.

Therefore, it said, the restriction on the number days that funds could be kept in individual accounts of QFIs has been 'dispensed with'.

Besides, every QFI will have separate bank account and they can retain money in bank accounts in India. Earlier, only residents of the 34 FATF member countries were eligible to qualify as QFIs.

The decision to allow investments under QFI from EC and Gulf Corporation Council was taken after receiving requests from investors there, Mathew said.

'Several enquiries were received from EC and GCC requesting for inclusion of their residents as QFI,' he said.
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