INDIA: Rationalization Measures in the India Qualified Foreign Investors Scheme

Wednesday May 30 2012

In its Budget for 2012-13, the Indian Government announced its intention to permit India Qualified Foreign investors (QFIs) to invest in corporate bonds in India. When implemented, the QFI framework would stand extended to all three important segments of the Indian Capital markets, i.e., Mutual Funds, Equity Market and Corporate Bond Market.

The Government has held wide consultations with RBI, SEBI and various market participants to make the India QFI scheme more attractive to potential investors. Accordingly, the following changes are being made in the scheme:

• Widening the definition of QFIs;

• Creating a separate limit for investment in Corporate Bond     for QFIs;

• Easing of the Norms for QFIs;

These measures are expected to make the QFI scheme more attractive to potential investors and to enhance the flow of foreign capital into India.

RBI & SEBI are expected to issue relevant circulars incorporating the above changes, and for operationalizing the budget announcement relating to QFI investment in corporate bonds and MF debt schemes within 7 days.

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