The much publicised Qualified Foreign Investors (QFI) route announced by the Indian Government last year to attract individual Non-Resident Indians (NRIs) and foreign nationals into Indian stock market has received a lukewarm response as potential investors have faced a number of hurdles in using the new facility.
IBMC Group CEO Sajith Kumr with the officials from the Bombay Stock Exchange, Bombay Stock Exchange Institute and others. (SUPPLIED)
Speaking on the sidelines of an Ambassadors meet organised in Abu Dhabi by the IBMC Financial Professional Groups, Ashishkumar Chauhan, CEO, Bombay Stock Exchange (BSE), told Emirates24|7 that there has been worldwide interest in the new QFI investment options, but some investors are facing undue delay in getting a Permanent Account Number (PAN), from the Indian tax authorities due to stringent rules with NRIs and foreign individual investors.
The QFI route was opened up by the government of India last year, with an optimism to attract over $10 billion investments into the Indian capital markets in the next two years.
“We are getting serious inquiries from NRIs and foreign investors from many parts of the world. Even the Chinese investors want to invest money in the Indian stock market through the QFI route. But for taking a PAN for NRIs, there is undue delay and that is keeping away some potential investors from the Indian stock markets,” Chauhan said, while initiating a major media campaign and awareness campaign to improve awareness about the scheme.
The BSE Institute, which trains financial professionals and ordinary investors, has signed an agreement with the IBMC Group to form IBMC Knowledge Centre to provide training and certification programmes in the UAE and other Middle Eastern countries.
Chauhan said a Chinese investor approached him with $29 billion to invest only in Indian entertainment and movie companies, after the movie Three Idiots became a hit in China.
“QFIs hold a lot of potential for Indian markets. There is keen global interest in the resilience of our economy. Traditionally, driven by Foreign Institutional Investors (FIIs) and Non-Resident Indians, foreign capital inflows have gained significant importance and impact local market sentiment,” said Chauhan, adding that the recent investment by the Abu Dhabi based Etihad Airline to pick up shares in the Indian carrier Jet Airways has caused a sharp increase in the share price of the BSE listed company.
Recently, the number of countries covered under the QFI route has been increased to 52 countries and the Ambassadors meet in Abu Dhabi is endorsed by Ambassadors from 45 countries.
Notwithstanding the fact that the UAE based Etisalat had to write off $1 billion following problems with its India investment plans, new investment by Etihad airlines has boosted foreign investor sentiment. Whenever there is a major foreign investor supporting an Indian company, there is more confidence in such stocks, Chauhan said in response to media queries.
He claimed that despite recent reports of corruption plaguing India, the performance of the stock market has been encouraging due to improved performance of the corporate sector. He added that QFIs would broaden the capital flow and further deepen liquidity for Indian markets. Under QFI foreign nationals can invest directly in the Indian stock market.
Earlier only pension funds, Foreign Institutional Investors (FIIs) and other similar entities were allowed direct access to India’s bourses. QFIs can buy up to five per cent of the paid up capital of a company, with the overall limit capped at 10 per cent of the company.
Another hurdle that dampens the QFI route is the complex process involved in getting a Power of Attorney from the NRI investors, which needs to be attested through local courts. “Giving a Power of Attorney is a simple process in India. However, in the UAE, it is a very complex process and each investor needs to be physically present in the UAE courts to attest the same. We have consulted the Central Bank of the UAE to consider it as a normal banking process and a solution is likely to come soon,” said Sajith Kumar P K, CEO and Director, IBMC Financial Professionals Group. There are also apprehensions about the possible misuse of a power of attorney issued to an Indian agent.
Hazza Mohammed Al Dhaheri, Chairman and Managing Director, IBMC Financial Professionals Group, said the group organised the first Ambassadors meet in Abu Dhabi in line with its expansion plans from the UAE, the world’s financial hub.
People from 180 countries are present in the UAE and the initiative is part of IBMC Group’s commitment to serve the UAE based investors.
The Ambassadors meet held at the UAE Armed Forces Officers Club, Abu Dhabi was addressed among others by Cyrus Khambata, Executive Vice President, Central Depository Services (India) Ltd, India, Ambarish Datta, Managing Director and CEO, BSE Institute, Sajith Kumar P K CEO and Director, IBMC Financial Professionals Group, Anoop P S, Chief Marketing Officer, IBMC Financial Professionals Group and other investment bankers and NRI businessmen.
“IBMC Financial Professionals Group has already set up a centralized infrastructure in the UAE to provide professional QFI service to the investors located in UAE and other GCC countries. Our global expansion plans with exclusive branch network covers major countries for QFI services. In the first phase, we will cover GCC countries, US, UK, and Canada. Second phase will include North African continent and the rest will be covered in the third phase,” said Sajith Kumar P K CEO and Director, IBMC Financial Professionals Group.
The joint initiative of BSE Institute and IBMC Financial Group to start training programmes in the UAE will start soon, offering directly or through prominent universities and educational institutions in the UAE.