These are part of the recommendations made by a Sebi-appointed panel. The rupeehit a record low of 58.17 against the dollar on Monday, escalating worries about the country's current account deficit, which is estimated to be around 5% in the fiscal year ended March.
The panel, which is expected to submit its report in the next two days, has suggested a major overhaul of the entry norms and recommended allowing investors from countries that are compliant with the International Organisation of Securities Commissions, or whose stock market regulator has a memorandum of understanding with Sebi or the central bank with Bank of International Settlements.
According to the person quoted above, the panel, headed by former cabinet secretaryKM Chandrashekhar, has also suggested easing of KYC norms for sovereign funds. Private funds, however, would be subject to stringent risk-based norms and be registered with designated depository participants.
Foreign Investors would be permitted to open a separate demat account for portfolioinvestments and another one for foreign direct investment transactions, but with the same depository participant. The qualified foreign investor framework, which allows trusts, pensionfunds, sovereign funds and individuals to access Indian capital markets, is restricted to investors only from countries or groupings that are compliant with the Financial Action Task Force.
This watchdog has restricted investors from many jurisdictions from entering the Indian capital markets. However, investors from noncompliant jurisdictions, as per the list put out by the Financial Action Task Force that now includes countries such as Iran, will be barred from accessing the Indian markets.
It has also said the Indian intermediary may be allowed to place reliance on global custodian's declaration on compliance with financial action task force standard due diligence procedures.
The committee, tasked to prepare draft norms and regulatory framework for an integrated policy on investments, has recommended creating a single window for all types of portfolio investments, including FIIs and qualified foreign institutional framework, but favoured continuance of non-resident investor and person of Indian origin and foreign VC fund as separate categories.