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Scheme for Investment by Qualified Foreign Investors (QFIs) in Indian corporate debt securities.
Presently, QFI are permitted to invest only in rupee denominated units of domestic Mutual Funds and listed equity shares.
This circular has revised the definition of QFI and permitted them to also invest on repatriation basis debt securities subject to certain terms and conditions. QFI can now invest up to $ 1 billion in corporate debt securities (without any lock-in or residual maturity clause) and Mutual Fund debt schemes. This limit shall be over and above $ 20 billion for FII investment in corporate debt. For this purpose, QFI must open a single non-interest bearing Rupee Account with a bank in India for investment in all ‘eligible securities for QFI’. As per the revised definition, QFI shall mean a person who fulfills the following criteria:
(a) Resident in a country that is a member of Financial Action Task Force (FATF) or a member of a group which is a member of FATF; and
(b) Resident in a country that is a signatory to IOSCO’s MMoU (Appendix A Signatories) or a signatory of a bilateral MoU with SEBI.
PROVIDED that the person is not resident in a country listed in the public statements issued by FATF, from time to time, on jurisdictions having a strategic AML/ CFT deficiencies to which counter measures apply or that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies;
PROVIDED that such person is not resident in India;
PROVIDED FURTHER that such person is not registered with SEBI as a Foreign Institutional Investor (FII) or Sub-Account of an FII or Foreign Venture Capital Investor (FVCI).
Explanation – For the purposes of this clause:
(1) “Bilateral MoU with SEBI” shall mean a bilateral MoU between SEBI and the overseas regulator that, inter alia, provides for information sharing arrangements.
(2) Member of FATF shall not mean an associate member of FATF.
