Following the Finance Ministry's directive on May 29, SEBI has eased norms to attract investments from qualified foreign investors.
SEBI said that residents of FATF (Financial Action Task Force) member countries, IOSCO's (International Organisation of Securities Commissions) MMOU signatories, and countries with bilateral MoU with SEBI are eligible.
This includes 34 FATF-compliant countries, six Gulf Cooperation Council countries and 27 European commission countries.
FATF is an inter-governmental body combating money laundering and financial terrorism.
IOSCO is the association of securities market regulators which has signed a multilateral memorandum of understanding to enhance cross border cooperation for better enforcement of securities laws.
SEBI also said that combined investment by a person in a company through the QFI and FDI route should not exceed five per cent of total equity capital.
“Clarification on taxation and in person verification for KYC of a qualified foreign investor is still awaited,” said Mr Atul Gupta, MD-Orbis Financial, a qualified depository participant.
Experts said that it is cumbersome for a QFI to get in-person verification for KYC at either an Indian consulate or a notary public.
Instead if attestation of identity document by regulated intermediaries in other jurisdictions (brokers and banks) is allowed, it would make the task easier.
SEBI has also waived the five-day rule for repatriation or redeployment of investment proceeds for QFI transactions.
The new norms also enable QFIs to open rupee accounts with Indian banks and appoint their own custodian (who has to be a qualified depository participant). QFIs have been allowed to invest in equity, debt and mutual funds.