(a) whether the Government has allowed foreign investors to cumulatively buy Indian
shares through domestic mutual funds (MFs) recently;
(b) if so, the details of this scheme and the foreign exchange that is likely to be
invested in mutual funds;
(c) whether the Government has assessed its impact on national economy; and
(d) if so, the details thereof?
MINISTER OF STATE FOR FINANCE (SHRI NAMO NARAIN MEENA)
(a) Yes Sir. As announced in the 2011-12 budget, Qualified Foreign Investors (QFIs)
have been permitted to access Indian Mutual Funds equity and debt schemes in infrastructure
sector.
(b) QFIs may invest in Mutual Funds (MF) schemes through the direct route or indirect
route. Under the former route, QFIs can hold MF units in demat account of SEBI registered
depository participants (DPs) under certain conditions. Under the latter route, QFIs could
hold MF units through Unit Confirmation Receipts (UCRs). Upon receipt and transfer of
funds to India, MFs shall issue units to the custodian which in turn shall confirm to
the UCR issuer to issue UCR to the QFIs.
Under both routes, QFIs can invest up to a total of US $ 10 billion in MF equity schemes
and US$ 3 billion in MF debt schemes investing in infrastructure.
Further details relating to the scheme are at:
http://www.sebi.gov.in/circulars/2011/cirimddf14-2011.pdf
http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6664&Mode=0
(c) & (d): It is expected that the above policy would help to enhance the flow of
foreign funds into India. It would also widen the class of investors, help increase
depth and reduce volatility in the capital market.