Mutual funds in India can accept subscriptions from qualified foreign investors (QFIs) who meet `Know Your Customer' (KYC) requirements, in their equity and debt schemes, through both the direct and indirect routes.
The Securities and Exchange Board of India (SEBI) announced the decision in consultation with the government and the Reserve Bank of India (RBI).
These investments would be subject to a ceiling of $10 billion under both the routes.
QFIs will also be allowed to invest (under both direct and indirect routes) up to an additional amount of $3 billion in debt funds of Indian mutual funds, which invest in infrastructure debt of a minimum residual maturity of five years.
Non-resident investors can thus purchase on repatriation basis rupee denominated units of equity schemes of Indian mutual funds, subject to a ceiling of $13 billion.
The investment under both the routes by the QFIs will be in the units which are directly issued by the domestic MFs and no secondary market purchases would be allowed.