KYC norms relaxation, other proposals for FPIs to boost economy: Experts

The government's proposal to ease KYC norms for foreign investors and other measures aimed at promoting foreign investment in India will give a boost to job creation and the economy, experts said Friday.

Finance Minister Nirmala Sitharaman in the Budget for 2019-20 proposed easing KYC norms for foreign portfolio investors.

She also announced that investments by FIIs and FPIs in debt securities would be allowed to be transferred and sold to domestic investors in a timely manner and she also proposed FPI investment in debt securities issued by non-bank financial companies (NBFCs).

Reacting to the proposals, JMP Advisors Chairman Jairaj Purandare said, "In presenting the Budget, the government has taken due cognizance of the fact that FPI is a significant source of capital for the economy and hence, with a view to streamlining the KYC compliance process and to facilitate ease of doing business for FPIs, measures are being proposed to make the KYC process investor friendly."
He further said that these are welcome measures, "aimed at promoting the much-required foreign investment in India, which in turn, will give a boost to job creation and growth in the economy."
Dhaval Kapadia, director portfolio specialist, Morningstar India said, "NRIs required PIS (portfolio investment scheme) to invest into PMS (portfolio-managed service) and an NRI could hold only one such scheme thereby making it difficult to invest in multiple PMS. Doing away with the PI (portfolio investment) requirement would enable further investments from NRIs into capital markets."
According to Alok Agarwala, senior VP and head investment analytics at Bajaj Capital, "This issue assumes greater significance in view of fact that many large global institutional investors like pension funds prefer to invest in regular income yielding alternate instruments."