MF units held by non-residents in Mauritius and Singapore declines: RBI Survey

Net foreign liabilities of AMCs jump 68% in 2018-19 on account of equity valuation gains after stock exchange listing

The Reserve Bank of India has released the results of the 2018-19 round of the Survey of Foreign Liabilities and Assets of the Mutual Fund (MF) Companies. The survey covers 44 Indian MF companies and their Asset Management Companies (AMCs), which held/acquired foreign assets and/or liabilities during 2018-19 and/or in the preceding year.

Mutual Fund Companies

Foreign liabilities of MF companies (US$ 13.5 billion) in the form of non- residents' investments in the units substantially exceeded their foreign assets in the form of overseas equity investments (US$ 0.7 billion) in March 2019 with both foreign liabilities and foreign assets recording increases during 2018-19.

The UAE, the UK and the USA were the largest investors together accounting for one-third of the MF units held by non-residents.

MF units held by non-residents in Mauritius and Singapore declined after the amendment of Double Taxation Avoidance Agreement (DTAA) with these countries for withdrawal of capital gains exemption in a phased manner, effective April 2017.

The USA (44.6% share in total foreign assets) and Luxembourg (41.1%) remained the preferred investment destinations for MF companies.

Asset Management Companies

Foreign liabilities of AMCs (US$ 3.3 billion) exceeded foreign assets (US$ 0.1 billion) substantially in March 2019.

Net foreign liabilities of AMCs increased by 68% during the year, mainly on account of equity valuation gains after stock exchange listing.

Non-residents in the UK held over half of the foreign liabilities of AMCs in March 2019; AMCs' equity liabilities to non-residents in Japan, Mauritius and Hong Kong declined during the year due to capital repatriation and reduction in market value of their investment.

Overseas assets of AMCs were largely held in Guernsey, Mauritius and Singapore.

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