Qualified Foreign Investors
Relevant extract from various circulars and FAQs

What is the meaning of Qualified Foreign Investor (QFI)?
QFI shall mean a person who fulfills the following criteria:
  • 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
  • Resident in a country that is a signatory to IOSCO's MMOU or a signatory of a bilateral MOU with Securities and Exchange Board of India (SEBI)

The list of the country is available at the following link:
FATF Member link:

http://www.fatf-gafi.org/pages/aboutus/membersandobservers/#d.en.3147

IOSCO MMOU Signatories link:

http://www.iosco.org/library/index.cfm?section=mou_siglist

What are the investment avenues for a QFI in India?
QFI can invest directly into

  • Listed equity shares or to be listed on a recognised stock exchange;
  • Listed Corporate Debt securities market or to be listed on a recognised stock exchange
  • Mutual Funds Units (including debt schemes)

What are the investment limits and ceilings?

  • The ceiling for investing in Mutual funds is USD 1billion for debt market and USD 10billion for Equity schemes.
  • For Equity Investment, the individual and aggregate investment limits for the QFIs is 5% and 10% respectively of the paid up capital of an Indian company
  • For Debt market, the individual and aggregate investment limit for the QFIs is USD 1billion

Further, it may be noted that there is no restriction on the minimum volume of investment by QFIs.

What are the rules for bank, demat, and trading accountsfor QFI in India?
A QFI can open a single non-interest bearing Rupee account with an AD Category –I bank in India subject to terms and conditions specified under FEMA Regulations from time to time. The QDP shall operate this single non-interest bearing Rupee account for all investments made by QFI in India. Funds should be received in the single non-interest bearing rupee account of the QFI before execution of the purchase order.

At any point of time a QFI can open only one demat account with any of the qualified DPs. Further, purchase and sale of all eligible securities should be transacted through that demat account only.

 A QFI can open trading account with more than one stockbroker. However, all the transactions of the QFI need to be routed through the qualified DP.

How does an eligible person initiate the process to make investment through QFI route?
An eligible person intending to make investment through QFI route may contact any of the qualified DP registered with SEBI. The qualified DPs are mandated to perform the prescribed KYC and ensure fulfillment of the requisite conditions before allowing the applicant to open a demat account as QFI.

Can a Non-Resident Indians (NRI) make investments by opening a demat account through QFI Route?
An NRI can not make investments simultaneously through the QFI route and portfolio investment scheme (PIS) route. However, a NRI can open demat accounts QFI and make investments through this route provided he has closed all his demat account(s) opened as an NRI.

Is the investment made through QFI route is freely repatriable?
Yes, the funds are freely repatriable after payment of applicable taxes. Further, there is no need to repatriate the funds lying in its non-interest bearing Rupee Account within any stipulated time.

Is there any minimum lock-in period for investment made by QFI?
There is no minimum lock-in period for investment made by QFI.

Can a Person invest in a same company via both QFI and FDI?
A person can invests in the same company through both QFI route and FDI route, but the total holding of the person in such company shall not exceed five per cent of paid up equity capital of the company, at any point of time. All the invested securities shall be held in a single demat account of the QFI.

Can QFIs issue Offshore Derivative Instruments (ODI) or Participatory Notes(PNs)?
No. QFIs cannot issue Offshore Derivative Instruments or Participatory Notes.

Will QFI be categorised as Qualified Institutional Buyers (QIB) in a public offer?
No.  QFI will be considered as non-institutional investors for the purpose of public offer of equity shares.

QFI Presentation
  Qualified Foreign Investors
Custodian & Banker
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