Amendment to definition of Qualified Foreign Investor (QFI) and QFI investment in debt mutual fund schemes which invest in infrastructure
Summary
This circular amends the definition of Qualified Foreign Investor (QFI) by aligning terms with the Income Tax Act, 1961. It permits QFIs to invest in debt mutual fund schemes investing in infrastructure up to a USD 3 billion limit. The document outlines specific eligibility criteria and monitoring procedures for these investments.
Text
In consultation with Government of India and Reserve Bank of India it has been decided that the term "person" and the phrase "resident in India" shall carry the same meaning as defined under the Income Tax Act, 1961.
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 (Appendix A Signatories) or a signatory of a bilateral MOU with SEBI:
Provided that the person is not resident in a country listed in the public statements issued by FATF from time to time on-(i) jurisdictions having a strategic Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) deficiencies to which counter measures apply, (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies:
Provided further such person is not resident in India:
Provided further that such person is not registered with SEBI as Foreign Institutional Investor or Sub-account or Foreign Venture Capital Investor.
(1)The term "Person" shall carry the same meaning under section 2(31) of the Income Tax Act, 1961; (2) The phrase “resident in India” shall carry the same meaning as in the Income Tax Act, 1961; (3) “Resident" in a country, other than India, shall mean resident as per the direct tax laws of that country.
(4) “Bilateral MoU with SEBI” shall mean a bilateral MoU between SEBI and the overseas regulator that inter alia provides for information sharing arrangements.
(5) Member of FATF shall not mean an Associate member of FATF.
Accordingly, QFIs can now invest in those debt mutual fund schemes that hold atleast 25 percent of their assets (either in debt or equity or both) in the infrastructure sector under the USD 3 billion investment limit of debt mutual fund schemes which invest in infrastructure.
In partial amendment to SEBI circular IMD/DF/14/2011 dated August 09, 2011 QFI can invest without obtaining approval until the overall QFI investments reaches 90% (ninety percent) of USD 3 billion i.e. USD 2.7 billion.
Terms and conditions related to monitoring, allocation, requirement of obtaining prior approval (after reaching 90% of investment limit) and reporting shall be as prescribed in circular CIR/IMD/FII&C/17/2012 dated July 18, 2012.
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Source: SecMarx — Amendment to definition of Qualified Foreign Investor (QFI) and QFI investment in debt mutual fund schemes which invest in infrastructure. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.