Tuesday 3 January 2012
Sebi, RBI work on QFI nitty-gritty
Market regulator Sebi and banking watchdog RBI are working out the nitty-gritty of the likely entry of qualified foreign investors (QFIs) into India so that the just-announced scheme for other nationals besides pension funds and similar entities from abroad could be operationalised by January 15.
The idea now is rather sketchy. For instance, it is yet to be decided whether equity that QFIs purchase will have voting rights. Yes, say finance ministry officials, but the finer points have not been cemented.
Now, if QFIs are given voting rights, what will happen to the foreign investment limit in various other sectors? “These specific details are being worked out,” according to Thomas Mathew, joint secretary in the Capital Markets Division of the Finance Ministry. Again, which category will QFI come under in the allocation of initial public offer? “Retail investors, most probably,” says an official. Pension funds too? “These points are yet to be explained,” shrugs another.
Many experts doubt if QFIs will rush to buy shares in Indian markets, but Mathew says the move will open a floodgate for foreign investment in equity markets. Unlike FIIs, they will be a long-term investors, he adds. Reason: Unlike FIIs armed with expert advice, retail investors from overseas will wait longer to decide on selling shares. Pension funds are “anyway called” long-term investors. All the same, there has to be a marketing of various stocks to foreign investors, who may not know much about players.
The idea now is rather sketchy. For instance, it is yet to be decided whether equity that QFIs purchase will have voting rights. Yes, say finance ministry officials, but the finer points have not been cemented.
Now, if QFIs are given voting rights, what will happen to the foreign investment limit in various other sectors? “These specific details are being worked out,” according to Thomas Mathew, joint secretary in the Capital Markets Division of the Finance Ministry. Again, which category will QFI come under in the allocation of initial public offer? “Retail investors, most probably,” says an official. Pension funds too? “These points are yet to be explained,” shrugs another.
Many experts doubt if QFIs will rush to buy shares in Indian markets, but Mathew says the move will open a floodgate for foreign investment in equity markets. Unlike FIIs, they will be a long-term investors, he adds. Reason: Unlike FIIs armed with expert advice, retail investors from overseas will wait longer to decide on selling shares. Pension funds are “anyway called” long-term investors. All the same, there has to be a marketing of various stocks to foreign investors, who may not know much about players.
