Individual US citizens or investor associations cannot invest in India as ‘Qualified Foreign Investors’ at least for now. This is even when US figures in the list of Financial Action Task Force (FATF) compliant countries.
This is because the QFI scheme has yet to be approved by the US market regulator. Now, the Finance Ministry has decided to approach US India Business Council (USIBC) to get the issue resolved.
First account
Meanwhile, the first QFI account has been opened. But the identity of the account holder is not known. It may be recalled that the on the conclusion of roadshows for QFIs in five Gulf Countries, the Finance Ministry had said it is expecting at least one account from the Gulf region to be opened within a month.
Mr Thomas Mathew, Joint Secretary (Capital Market) in the Finance Ministry, at an Assocham event, said that India cannot sell QFI products in the US, but hoped the matter would be resolved soon. The Government opened equity markets for QFIs on January 1.
Mr Thomas also admitted that there were certain ‘teething troubles.’ One such problem is the attestation of documents. To solve this, all the Indian and foreign banks having branches here and overseas have been roped in for attestation.
“Besides, attestation is the sole responsibility of the qualified depository participants (QDPs) and they shall be responsible for any violation of the KYC (know your customer) norms. QDPs will be the focal point of interaction with the QFIs and thus have a larger share of responsibility in this regard,” said Mr Mathew.
A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. These investors can invest in all the three segments of capital market i.e. equity, debt and mutual funds. QFIs do not include FIIs/sub-accounts.
QFIs can come from 45 countries including from the Gulf. According to an estimate, individual foreign investors could bring in about $90 billion to India within two years.