India has decided to allow foreign investors to invest up to $10 billion in domestic mutual funds and the market regulator will issue the necessary guidelines for such investments by August 1, the finance ministry said in a statement on Monday.
The move to allow foreign investors, known as qualified foreign investors, was first proposed by finance minister Pranab Mukherjee in the budget for the fiscal year that started on April 1."Currently, only FIIs and the sub-account registered with the SEBI and NRIs are allowed to invest in the mutual fund schemes. To liberalise the portfolio investment route it has been decided to permit SEBI registered mutual funds to accept subscriptions from foreign investors who meet the KYC requirements for equity schemes," Mukherjee had said in the Budget speech.
“This would enable Indian mutual funds to have direct access to foreign investors and widen the class of foreign investors in India equity market,” the finance minister had said.
The average assets managed by the 40-player MF industry was Rs 7,00,538 cr as of March 31.