Benefits of Qualified Foreign Investors Scheme

alankituaealankituae DubaiRegistered Users
edited July 2017 in India
It is an institutional investor such a hedge funds, insurance companies pension funds and mutual funds that are registered out of India would be called Qualified Foreign Institutional Investor.


  • govindrajputgovindrajput ahmedabadRegistered Users
    The Qualified Foreign Investor (QFI) is sub-category of Foreign Portfolio Investor and refers to any foreign individuals, groups or associations, or resident, however, restricted to those from a country that is a member of Financial Action Task Force (FATF) or a country that is a member of a group which is a member of FATF and a country that is a signatory to International Organization of Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding (MMOU).

    QFI scheme was introduced by Government of India in consultation with RBI and SEBI in the year 2011, through a Union Budget announcement.

    The objective of enabling QFIs is to deepen and infuse more foreign funds in the Indian capital market and to reduce market volatility as individuals are considered to be long term investors, as compared to institutional investors.

    QFIs are allowed to make investments in the following instruments by opening a demat account in any of the SEBI approved Qualified Depository Participant (QDP):

    .Equity and Debt schemes of Indian mutual funds,
    .Equity shares listed on recognized stock exchanges,
    .Equity shares offered through public offers
    .Corporate bonds listed/to be listed on recognized stock exchanges
    .G-Securities, T-Bills and Commercial Papers

    Benefits of QFI Scheme

    QFIs access to equity market is expected to broad base the market while enhancing the capital flows into India. More importantly, since QFIs are the diversified set of heterogeneous investors, QFIs participation is expected to help dampen the volatility in Indian equity market that arises due to sudden inflows or off-loading done by FIIs. The direct participation route offered through the QFI scheme was expected to reduce the transaction cost and complexity hitherto persisting due to large number of intermediaries. It would also bring in better transparency while reducing the need for using participatory notes route. QFIs access to Equity market is also expected to help harnessing the investment potential remaining untapped in various sectors.
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