Harmonising entry routes will make markets more accessible for foreign investors: Andrew Duffin

Interview with Head of Emerging Markets of Societe Generale Securities Services

Andrew Duffin – the head of Emerging markets of Societe Generale Securities Services (SGSS) was recently on his first India visit after he took over the new role last year. Duffin is responsible for the Europes’s second largest custodian’s business activities in the emerging markets.

Having recently won several large mandates such as BBH Luxembourg Funds, Pioneer Investments, Natixis International Funds. and BankMuscat Asset Management, SGSS sees a significant interest in India among its clients. Duffin spoke to N Sundaresha Subramanian on key developments in the Indian market and the business prospects of SG’s joint venture with State bank of India.

 
What is your view on recent budget announcements especially those related to foreign investors in India?
In the emerging markets we closely follow Indian Budget as this is where most of the action and development is taking place. I am specially enthused by the initiatives taken by the Indian authorities to attract Foreign Investments. Reforms in the capital market together with clarity and consistency in policies will surely strengthen India’s case as a key investment destination.

There is a proposal to classify all investments above 10% in a particular stock as FDI and those below this as FII. What are the pros and cons of this move?

I have learnt that such a proposal is getting discussed. Such classification will lead to harmonising of entry routes and which will make market more accessible...I am especially happy that SBISG Securities Services is on the “Committee on rationalization of investment routes and monitoring for foreign portfolio investments”.

What are your suggestions to improve the QFI (Qualified Foreign investor) regime? What are the key irritants?
The QFI regime has been an interesting development where in the entry of investor was made simple and straight through the QDPs. It’s the seamless execution of the empanelment process which will hold key to its success. I understand that now there is clarity on the taxation which was awaited.

What kind of operational concerns foreign investors face while trying to invest in India?
We see no issues on the operations side, things are good. What foreign investors expect from their investment destination is positive returns, where India has not disappointed, and consistency in the policies. In-fact the initiatives taken by SEBI, like common know your customer (KYC) are welcome. In fact it will be good if global custodians adopt and follow the KRA (KYC regulatory authority) making it simple for all the market players. Balancing the Regulatory requirements along with making markets accessible to larger audience will be a game changer for India.

 
Recently, some reputed foreign institutional investors have expressed concerns about the delay and difficulty in getting Sebi approvals. Are there any areas that need improvement?
I have heard this but from where SGSS looks at it we haven’t faced any such hindrance. I am quite sure that efforts by Indian authorities to simplify the regime will surely address such concern if they are for real.

What are the key growth areas for the SBI-SG business in India?
For SGSS, this JV (with State Bank of India) is unique and important as it’s the only JV of SGSS globally with a third party entity.  It is of strategic importance for SGSS. For a startup company in custodial segment, SBISG is already on the growth path and we expect the JV to be formidable custodian in years to come.