QFI Regime: Will It Work?
The Qualified Financial Investor route was opened up last year to facilitate foreign investment in Indian mutual funds schemes. Since then, the QFI has been widened, tweaked and guideline and today foreign non-institutional investors or QFIs can, for the first time, invest in Indian mutual funds, equity and listed debt. That’s sounds nice; doesn’t it? A whole new class of investors to help companies raise funds, deepen our equity and debt markets, give mutual fund performance- a much-needed! But is it as simple as it sounds? Today we examine the QFI concept and process design for ease of use and attractiveness - to do that I have with me Anand Rengarajan, Director & Head of Direct Securities Services India at Deutsche Bank. Anand accompanied the government on QFI roadshows in the Middle East last week- so hopefully he has all the answers to our many questions. Also with me Bobby Parikh, Managing Partner at BMR and he manages its financial services industry practice. In Delhi - Pratibha Jain, Head of Nishith Desai Associates’ Delhi practice and from London, Martin Hattrell, Partner, Slaughter & May.
Doshi: This opens up a doorway for individual foreign investors, for companies who want to invest in India to come and directly invest in India’s secondary markets, equity and listed corporate debt and through mutual funds as well. Can you tell me the broad categories of investors that you are hoping India will attract through the QFI scheme and do you see those investors, erstwhile P-Note investors, those coming through the FII sub-account route, those investing on the Singapore stock exchange trying to get some India exposure, all of them wanting to come through this route?
Rengarajan: We already have four existing routes for investors to get into India. The one very common everybody knows is the FIIs, the FDI and we can look at ECB as well as part of it but we will leave that for the moment and we now have the new one which is the QFI. This is meant to compliment those three, it’s not meant to replace either of them because the objective is to get fresh new flows into India, not change existing flows. So with that objective in mind those who are outside of those who are currently invested in India- so if you talk about those who do not qualify for FIIs today - individuals for sure and again I normally would like to break them into two categories because there is a bit of an analysis on that as well. You talk about pure retail individuals an