Following the deal struck by Kotak Mahindra Bank worth $5 million
India received its first investment through the qualified framework
investor (QFI) route. The deal formally put an end to speculation that
India’s attempt to get investors to buy shares directly will go kaput.
Kotak Mahindra Bank has concluded the deal worth $5 million for a
US-based client, said a finance ministry official. The scheme to attract
investment through the Qualified Framework Investor route is expected
to attract investment worth about $30 billion in 2012-13 period thereby
helping the country fund a chunk of the current account deficit pegged
at 4.2% of GDP in 2011-12.
The finance ministry had in the recent past conducted road shows in
five countries in the Gulf region--Riyadh, Dubai, Muscat, Kuwait and
Bahrain - to project India as the incredible investment destination for
wealthy investors.
Qualified Foreign Investors (QFI): A person or a
trust resident in a country which is a member of the Financial Action
Task Force (FATF) can invest directly in India. Such a person or trust
is termed as Qualified Foreign Investors.
Investment Regime for QFI (QFI): QFIs have been
permitted to invest in all the three segments of the Indian Capital
Market namely- Mutual Funds (MFs), Equity and Corporate Debt.
Reason why Government is promoting QFI route: The
wealthy investors, the finance ministry felt should be encouraged to
invest directly so that the stable in-flows could fund the current
account deficits
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