QFIs shall mean a person who fulfils the following criteria:
- Resident in a country that is a member of the Financial Action Task Force (FATF) or a country that is a member of a group which is a member of FATF and
- Resident in a country that is a signatory to IOSCO's MMOU (Appendix A Signatories) - or a signatory of a bilateral MOU with Securities and Exchange Board of India (SEBI).
Provided that the person is not resident in a country listed in the public statements issued by FATF from time to time on (i) jurisdictions having a strategic Anti-money laundering /Combating the financing of Terrorism deficiencies to which counter measures apply, (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with FATF to address such deficiencies.
Residents of the following countries shall be eligible to invest as a QFI as per the definition mentioned above*.
|Canada||Republic Of Korea||Slovakia|
*Please note that this list is subject to change.
- A QFI should neither be a person resident in India nor should be registered with the SEBI as a Foreign Institutional Investor, sub-account or Foreign Venture Capital Investor
- A QFI should be set up with a SEBI registered Qualified Depository Participant to commence activities. The QDP shall provide inter alia custody services
As a one-time requirement, a QFI shall:
- open a depository account with a Qualified Depository Participant(QDP).( Kotak Mahindra Bank is India's 1st SEBI registered QDP)
- open a trading account with a brokerage firm.
- open a single non-interest bearing rupee account with an Authorised Dealer Category-1 bank (e.g. Kotak Mahindra Bank Ltd.) subject to terms and conditions specified under Foreign Exchange Management Act, 1999 (FEMA) from time to time. The said bank will operate this single non-interest bearing rupee account for all investments made by the QFI in India.
- obtain a separate and distinct Permanent Account Number (PAN) for Income Tax purposes from the Tax Authorities in India. (Kotak Mahindra Bank can facilitate the process of procuring a PAN)
Given below are permissible transactions for QFIs investing in India
- Purchase of Indian equity shares in public issues, to be listed on recognised stock exchange(s).
- Purchase of listed equity shares through SEBI registered stock brokers, on recognized stock exchanges in India.
- Sale of equity shares which are held in their demat account through SEBI registered stock brokers.
- Subscription of equity shares against rights issues.
- Receipt of bonus shares or receipt of shares on stock split/consolidation.
- Receipt of equity shares due to amalgamation, demerger or such other corporate actions, subject to the investment limits.
- Purchase/subscription of Indian mutual fund units through demat account mode (Direct Route) and unit confirmation receipt (Indirect Route).
- Redemption of mutual fund units purchased/subscribed through direct and indirect route.
- Receipt of dividends and interest payments.
- Tender equity shares in an open offer in accordance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
- Tender equity shares in an open offer in accordance with SEBI (Delisting of Equity Shares) Regulations, 2009.
- Tender equity shares in case of buy-back by listed companies in accordance with SEBI (Buyback of Securities) Regulations, 1998
QFI transactions shall be limited to the following debt securities:
- Purchase and sale of corporate debt securities listed on recognized stock exchange(s);
- Purchase of corporate debt securities through public issues, if the listing on recognized stock exchange(s) is committed to be done as per the extant provisions of the Indian Companies Act, 1956;
- Sale of corporate debt securities by way of buyback or redemption by the issuer;
- Purchase and sale of units of debt schemes of Indian mutual funds.
- Investments in mutual fund schemes which invest in infrastructure debt
Mutual Funds (MF) Investments
- QFIs can also invest in the equity and debt schemes of Indian Mutual Funds.
The aforesaid investments in equity, debt and mutual funds by the QFI are subject to certain limits and restrictions imposed by the RBI and SEBI.
- KYC documentation of the QFI
- FOREX conversions
- Receipt and transmission of purchase/sale orders
- Securities and fund settlements
- Tax deductions on sale proceeds
- Regulatory limit monitoring of the QFI's investments
Other services & responsibilities:
- Ensuring smooth transaction flows - inward bound investments and repatriation/remittances of sale proceeds
- Easy accessibility of bank account statements and demat account statements via email & internet banking portals.
- Guiding / informing the QFI about the changing regulations from time to time.
- Record-keeping of transaction trails for audit purposes as per regulations.
- Timely reporting of buy/sell information to the depositories on a daily basis, as per SEBI guidelines.
- Ensuring the QFI's holding / investments does not exceed the regulatory limit
- Keeping the QFI updated on the list of companies that are on caution list due to their investment reaching the prescribed cap, as and when notified by NSDL
- Informing the QFI on upcoming rights issues, buybacks etc.
- Documentation required for PAN application
- Documentation required for opening of bank account, custody and depository account including documents as may be required under the Prevention of Money laundering Act, 2002
- Estimated timelines for the documentation
- Form 49AA / PAN Card : 2-3 weeks
- Opening of bank account : 2-3 days
- Opening of the demat account : 2-3 days
The documentation list is an indicative list and not an exhaustive one. The timelines indicated are approximate ones and will vary on a case to case basis