Foreign Portfolio Investor (FPI) - Opportunity

Opportunity
India is one of the fastest growing economies in the world with a young demographic profile and innovative minds at work. India has made considerable progress in the last decade. A series of Economic reforms such as deregulations, opening Indian markets for foreign investors etc has made India a favourite amongst the global investing community. FPIs should not miss this opportunity of Investing in India today to gain from potential benefits while Indian economy grows further

The country's macroeconomic fundamentals have improved and external vulnerability has also reduced sharply Government is laying emphasis on increasing investments for accelerating growth and employment generation The Indian Economy is a high growth, low inflation economy and one in which there is increase in foreign investments. During the last decade, there has been a broadening and deepening of Indian financial markets

Who is a Foreign Portfolio Investor (FPI)?
An FPI means a person who satisfies the prescribed eligibility criteria and has been registered under the FPI Regulations. All existing Foreign Institutional Investors (FIIs ) and Qualified Foreign Investors (QFIs), holding a valid certification of Registration are deemed to be FPIs, till the expiry of the block of three years for which they have paid fees as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.

Eligibility Criteria
The Applicant:

• Should not be a person resident in India
• Should be a resident of a country which is a signatory to bilateral Memorandum of Understanding with SEBI or should be a resident of a country whose securities market regulator is a signatory to International Organisation of Securities Commission's Multilateral Memorandum of Understanding
• Should not be resident of a country identified in the public statement of Financial Action Task Force ( FATF) as 
  a) A jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply, or
  b) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies
• If the applicant is a Bank, it should be resident of a country whose Central Bank is a member of the Bank for International Settlements (BIS)
• Should not be a Non Resident Indian (NRI)
• Should be legally permitted to invest in Securities outside his country
• In case of a corporate, trust, etc (i.e any person which is not an individual) should be authorized by its Memorandum of Association (MOA) & Articles of Association (AoA), or equivalent document
• Should have sufficient experience, good track record, be professionally competent, be financially sound, and generally good reputation of fairness and integrity.
• Should not have a "opaque" structure (protected / segregated cell company or similar where ultimate Beneficial owners are ring fenced from each another)
• Should be a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.

FPI Categories

Category I

• Government and Government related foreign investors such as Foreign Central Banks, Governmental Agencies, Sovereign Wealth Funds
• International/ Multilateral Organizations/ Agencies

Category II

• Regulated broad based funds such as Mutual Funds, Investment Trusts, Insurance
• Regulated entities such as Banks, Asset Management Companies, Investment Managers/Advisors, Portfolio Managers etc.
• Broad based funds whose investment manager is appropriately regulated
• University Funds and Pension Funds

Category III

• All other eligible foreign investors not eligible under Category I and II such as Endowments, Charitable Societies/Trust, Foundations
• Corporate Bodies
• Trusts
• Individuals
• Family Offices

 

• "Broad Based Fund" implies established or incorporated outside India, having at least 20 investors, with no investor holding > 49% shares or units of the fund.
• In case of an Institutional Investor holding more than 49%, then this investor must itself be a Broad Based Fund
• For ascertaining number of investors, both Direct and underlying Investors to be considered
• Only investors of entities set up for the sole purpose of pooling funds and making investments shall be considered for the purpose of determining underlying investors

FPI Regime Features

• SEBI Registration, Fees -  Mandatory due-diligence and registration to be done by Custodian (DDP)
• Custody A/c - Mandatory
• PAN Number / CA - Mandatory to obtain PAN Card, file Tax returns in India
• Bank A/c - Foreign currency + INR account allowed
• Depositary A/c - One Depository allowed per Person / Entity
• Broker - Order placement directly with Broker
• Investments Types

Listed securities only permitted; Infra bonds allowed in unlisted also

• Equity, Mutual Funds
• Debt (Government, Corporate)
• Equity, Currency and Interest Rate Derivatives

Investment Limits

• Investment in the Equity Shares of a Company by a Single FPI or a Group of FPIs shall be < 10% of the Issued Capital of the Company.
• Government Debt: USD 31 Bn, Corporate Debt USD 50 Bn
• Separate position limits in the Derivatives

Taxation - Standard tax rates for all categories, no Tax Deduction at Source (TDS)

ODI/P-notes - Categories I and II FPIs may issue, subscribe to or otherwise deal in ODIs

Registration Process Flow
Step 1: Apply to a Designated Depository Participant for registration

• Appoint your DDP/ Custodian
• Submit Form "A" and KYC Form along with supporting documents to your DDP
• Register as Foreign Portfolio Investor (FPI)

Step 2: Obtain Tax Registrations

• Appoint CPA
• Submit requisite forms and supporting documents

Step 3: Open Bank Accounts in India

• Open Rupee Bank account with a designated bank
• Submit requisite forms and supporting documents

Step 4: DDP opens Custody & Depository Accounts; Obtains UCC & CP Code from Exchanges

Step 5: Open Trading Account with your Broker

• Appoint a Broker
• Submit requisite forms and supporting documents for Registration

For making Investments in India

• Remitting Funds from Overseas Bank Account to Bank Account opened in India
• Place Orders with Broker

# All the formalities regarding Account Opening will be completed by the DDP/custodian

KYC Requirements
Individuals

• Proof of Identity (Passport) 
• Proof of Address 
• Bank Proof 
• Bank Letter 
• PAN 

Non-Individuals

• Constitutive Documents (MoA, Trust Deed, Partnership Deed)
• Certificate of Incorporation
• Proof of Address
• Bank Account Details
• Bank Letter stating satisfactory relationship (Category III only)
• Board Resolution stating that entity is allowed to invest
• Shareholding details and Ultimate Beneficiaries'# Details
• Financials
• Senior Management Credentials / Photo
• Authorized Signatories Details
• PAN

Natural person or persons who ultimately own, control or influence a client and / or persons on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement (>25% in case of Companies & > 15% in case of other entities) 

For PAN card application: In case of non-individual entities, the certificate of incorporation must be attested from Indian Embassy. Rest all supporting documents are to be notarized / attested by Banks

Products available for Investment by FPIs

Equity

• Shares, Debentures and Warrants, listed or to be listed (both Primary / Secondary)
• Units of domestic Mutual Fund Schemes, whether listed or not
• Units of schemes floated by a Collective Investment Scheme
• Derivatives traded on a recognized Stock Exchange
• Indian Depository Receipts (IDRs)
• Other instruments as permitted from time to time

Debt

• Dated Government Securities
• Commercial Papers issued by an Indian Company
• Rupee denominated Credit Enhanced Bonds
• Security Receipts issued by Asset Reconstruction Companies
• Perpetual Debt instruments and debt capital instruments, as specified by RBI from time to time
• Non Convertible Debentures / Bonds issued by an Indian Company in the infrastructure Sector
• Non Convertible Debentures / Bonds issued by NBFCs categorized as Infrastructure Finance Company' by RBI
• Rupee denominated bonds or units issued by Infrastructure Debt Funds
• Such other instruments specified by SEBI from time to time

Derivatives

• Equity
• Interest Rate
• Currency

Advantage of opening AIF account with DHANAYOGA

• Equity Cash, Equity Derivatives, Debt market as well as Mutual Funds –segment participation
• Efficient Trade Execution with minimal impact cost
• Tailored products for International investors - FPI
• Goal based financial and Investment planning and execution 
• Efficient Asset Allocation and Portfolio Advisory services
• Wide range of investment options available under one roof, eligible for FPIs
• Personalised solutions and service taking your needs into consideration. We strive to give investors a better investing experience with an array of investment products and services
• Dedicated Relationship Manager to assist you will all your investment needs
• Web access for your Accounts services on 24 x 7 basis

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