QFI can now directly invest in the Indian stock markets. Views, Process, Advantage & Disadvantage

A QFI (Qualified Foreign Investor) is a KYC-compliant foreign investor who is a  resident in a country complaint with FATF ( financial action task force) standards, a signatory to the International Organisation of Securities Commission's multilateral memorandum of understanding. QFIs should not be resident in India or registered with Sebi as a foreign institutional investor or sub-account. 

This is a very good news for the markets as well as to the QFI. First advantage is a QFI doesn't have to worry about all the paper work & compliance in opening an account with an FII and then investing in the Indian market. Going forward a QFI will only need to open a DP account and a bank account and can use the advisor/broker to help in executing transactions. (More details on the process is still awaited). Secondly the limits on how much maximum amount a FII and a group of QFI can invest into a company has been increased to 10%. This is good as QFI's are mostly long term palyers unlike the FII and this will feed our market growth. Thirdly, a QFI will be allowed to invest into IPO's. There are discussions going on which states that they might even get voting rights, but details are awaited. 

The present FII outflow this year stands at Rs 2,700 crore which has also impacted the rupee and its believed that once the QFI's start investing the outflows as a percentage of total inflow will go down helping the market. 

This is one of the positive development in an other wise dull market, which reiterate the fact that investing in India for the long term today at the cheap valuations will add value to an investors long term portfolio. Keep Investing



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