SEBI allows QFIs from Gulf nations to invest in local stock markets

Relaxing investment norms for foreign individual investors, market regulator Securities Exchange Board of India (SEBI) permitted investors from Gulf nations to invest in the domestic stock markets. Countries, which are part of International Organization of Securities Commissions' (IOSCO) and Multilateral Memorandum of Understanding (MMOU), but are not part of the Financial Action Task Force (FATF), would be allowed to invest in India.

As per the circular, qualified foreign investors (QFI) now also include residents in a country, who is a signatory to IOSCO's MMOU or a signatory of a bilateral MOU with SEBI. Further, the total holding of an individual in the company, shall not go beyond 5% of paid up equity capital of the company, in case the person invests in the same company via both FDI and QFI route.

The QFIs are now allowed to make fresh purchases of eligible securities, out of the sale/redemption/ dividend proceeds of any of the eligible securities, which shall be held in a single demat account of the QFI. The market regulator has also extended the option of appointment of custodian of securities by the QFI, who has to be compulsorily registered with SEBI. Further, the market regulator has also removed the limit on number of days QFIs can hold funds in their respective bank accounts in India.

In January 2012, the government had allowed QFIs from 34 FATF member nations to invest in the equity market. The government, last year, created QFI category and permitted them to invest in mutual fund debt schemes initially. Further, the finance ministry with an aim to overseas investments is also organizing road shows in five Gulf nations, including Kuwait and the UAE, in June 10-14, 2012.