Foreign Institutional Investors on Monday met Economic Affairs Secretary Arvind Mayaram and discussed ways to improve inflows into the capital market.

“The FIIs gave their feedback on improving inflows into the debt and equity markets. They also sought some clarification on simplification of KYC,” a senior Finance Ministry official said.

Apart from the Finance Ministry officials, the meeting was also attended by representatives from the SEBI and the RBI. “FIIs made suggestions on reducing withholding taxes for wider array of instruments and also sought clarification on QFIs,” the official added.

The meeting comes within days of the Government raising the FII limit in debt instruments. On November 30, the Finance Ministry announced providing two new windows of $5 billion each for long-term foreign investors in Government securities and corporate bonds.

These new windows will hike the limit for FII in domestic debt instruments to $75 billion. These investments can be made in Government, corporate and infrastructure bonds. Besides, the meeting also discussed issues related to investment through the Qualified Foreign Investors route.

The QFI route allows a foreign individual, association or trust to invest in equity, debt and mutual funds. The meeting with foreign investors assumes significance in the backdrop of a host of reform initiatives, including relaxing FDI norms for retail, insurance and pension sectors, being undertaken by the Government to attract investment.

Besides, the government is also trying to address the problem with regard to implementation of General Anti-Avoidance Rules (GAAR).

(This article was published on December 10, 2012)
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