The mutual fund industry is finally getting due recognition by opening up the industry for foreign investors to invest in
Mumbai: A Balasubramaniam, CEO, Birla Sun Life Mutual Fund, is happy that the finance ministry has proposed to allow foreign investors to directly invest in equity mutual fund schemes.
On mutual funds
The mutual fund industry is finally getting due recognition by opening up the industry for foreign investors to invest in the Indian growth story through domestic mutual fund equity schemes. This is a path breaking initiative. However, this will be subject to completion of KYC stipulated by the Indian regulator as well as local laws that are applicable in the home country of the investors.
Implications for equity market
The potential upside risk still remains for our market in the form of high inflation, fuel prices moving beyond acceptable levels and monsoon risk which the market and investors will start looking at in coming months. All three factors play an important role especially with the government stance of reduction in expenditure budget.
On corporate debt
Finally, the long pending proposal to reduce withholding tax for investment in Indian debt by FIIs is a very welcome move. On top of it, increasing the limit to $40 billion from $20 billion and also allowing them to invest in unlisted debt securities is a very welcome move. In our view, this is a big positive to attract global investors into Indian debt given the high interest rates.
