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TMI BlogInvestment by Foreign Investors in Mutual Fund SchemesX X X X Extracts X X X X X X X X Extracts X X X X ..... ds (MF) through the following two routes: 2.1. Direct route - Holding MF units in demat account through a SEBI registered depository participant (DP). 2.2. Indirect route- Holding MF units via Unit Confirmation Receipt (UCR). 3. The investment through the above mentioned routes shall be subject to the following conditions : 3.1. Qualified Foreign Investor (QFI) shall mean a person resident in a country that is compliant with Financial Action Task Force (FATF) standards and that is a signatory to International Organization of Securities Commission's (IOSCO s ) Multilateral Memorandum of Understanding, Provided that such person is not resident in India, Provided further that such person is not registered with SEBI as Foreign Institutional Investor or Sub-account. Explanation- For the purposes of this clause: (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. 3.2. MF shall ensure that only QFIs who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose is based in countries which are compliant with FATF standards and are signatory to MMOU of IOSCO. 3.10. In case of subscription, MF shall allot units based on the NAV of the day on which funds are realized in the MF s scheme bank account in India and in case of redemption, units shall be redeemed on the day on which transaction slip/instruction is received and time stamped by MF, as per the applicable cut off time. The Scheme information documents of the MF shall clearly mention the applicable cut off time for QFIs and the other requirements / applicable guidelines for QFIs. 3.11. MF shall ensure that Systematic Investments/ transfer/ withdrawals and switches are not available to the QFIs. QFIs can only subscribe or redeem. 3.12. MF/ DP shall ensure that units/ UCRs held by QFIs are free from all encumbrances i.e. pledge or lien cannot be created for such units. 3.13. MF shall comply with all the requirements as per the PMLA, FATF standards and SEBI circulars issued in this regard on an ongoing basis. 3.14. MF shall ensure that all the investor related documents/ records of the QFIs are available with them. 3.15. MF shall ensure compliance with laws (rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments from the DP and ensure compliance with para 3.14. However, MF shall comply with PMLA, FATF standards and SEBI circulars issued in this regard from time to time on an ongoing basis. 4.6. The qualified DP shall open a separate single rupee pool bank account with a designated AD Category -I bank, exclusively for the purpose of investments by QFIs in India. 4.7. Process flow Subscription 4.7.1. The QFIs shall place a purchase/ subscription order mentioning the name of the scheme/MF with its DP and remit foreign inward remittances through normal banking channel in any permitted currency (freely convertible) directly to the single rupee pool bank account of the DP maintained with a designated AD category - I bank. 4.7.2. DP in turn shall forward the purchase order to the concerned MF and remits the money to the MF s scheme account on the same day as the receipt of funds from QFIs. In case of receipt of money after business hours, DP shall remit the funds to MF scheme account by next business day. 4.7.3. If for any reasons, the DP is not able to remit the money to the MF scheme account within the stipulated timeframe as mentioned in 4.7.2, the DP shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpertise and technology in the business of issuance of global depository receipts/ global custody agency. 5.5.2. The entity is registered with an overseas securities market / banking regulator. 5.6. MF shall seek no objection from SEBI before appointing any UCR issuer and furnish the details and information sought by SEBI about the UCR issuer. SEBI reserves the right to seek additional information / clarification and direct action, including non appointment / revocation of appointment of that UCR Issuing Agent. 5.7. MF shall comply with all the requirements as per the PMLA, FATF standards and SEBI circulars issued in this regard on an ongoing basis. 5.8. Custodians appointed by the MF shall comply with the SEBI (Custodian of Securities) Regulations, 1996, circulars and guidelines issued by SEBI. 5.9. The rupee denominated units of the MF would be held as underlying by the custodian in India in demat mode against which the UCR issuer would issue UCR to be held by QFIs. 5.10. MF shall ensure that for every UCR issued by UCR issuer, Custodian in India shall hold corresponding number of units against it i.e., there shall be one unit of MF scheme for every unit of UCR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignated bank account of the QFIs. 5.15.7. In case of dividend payout, the MF shall remit the dividend amount proceeds to the UCR issuer which in turn shall remit the dividend amount to the designated bank account of the QFIs. 6. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 7. The investment by the QFIs in MF equity and debt schemes under this scheme shall also be subject to the relevant and extant FEMA regulations and guidelines issued by the Reserve Bank of India under FEMA, 1999 from time to time. Yours faithfully ASHA SHETTY DEPUTY GENERAL MANAGER Tel no. 022-26449258 [email protected] Annexure 1 (Refer paras 3.4, 3.5, 3.6 and 3.7 of the circular) Daily data on QFI Investment in Mutual Funds A) QFI investments in equity schemes Date Name of the Mutual Fund Net Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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