14.16 ndian onom
been uniformly kept at 15 months. The than other lenders, as they are usually investing in
five-year residual maturity requirement the person rather than the viability of the business).
for investments by QFIs within the $3 Other than investible capital, these investors
billion limit has been modified to three provide technical advices and also help the ‘start-
years original maturity. up’ business with their lucrative contacts.
SEBI has classified the FIIs into three broad They are focused on helping the business
categories, and they are allowed to issues PNs in succeed, rather than reaping a huge profit from
accordance with the provision announced by the their investment. Angel investors are essentially
SEBI: the exact opposite of a venture capitalist in their
Category I: The government entities/ ‘intention’ (who has high profit prospects as their
institutions investing in Indian security market prime focus). But in one sense both—an angel
on behalf of the Central Bank. investor and a venture investor—serve the same
Category II: The financial institutions, mutual purpose for the entrepreneur (who is in dire need
funds, etc., which duly regulated in the countries of investible capital).
of their origin.
Category III: The financial institutions which Qfis Scheme
do not fall either of the above-given categories. In the Budget 2011–12, the government, for the
first time, permitted qualified foreign investors
angel inveStor (QFIs), who meet the know-your-customer (KYC)
A new term in India’s financial market, introduced norms, to invest directly in Indian mutual funds.
in the Union Budget 2013–14 which announced In January 2012, the government expanded this
that SEBI will soon prescribe the provisions by scheme to allow QFIs to directly invest in Indian
which the angel investor can be recognised as equity markets. Taking the scheme forward,
Category I AIF 13 venture capital funds. as announced in Budget 2012–13, QFIs have
Angel investor is an investor who provides also been permitted to invest in corporate debt
financial backing to entrepreneurs for ‘starting securities (CDSs) and MF debt schemes subject
their business’. Angel investors are usually found to a total overall ceiling of US $ 1 billion.
among an entrepreneur’s family and friends but In May 2012, QFIs were allowed to open
they may be from outside also. The capital they individual non-interest-bearing rupee bank
provide can be a one-time injection of seed money accounts with authorised dealer banks in India
or ongoing support to carry the company through for receiving funds and making payment for
difficult times—in exchange they may like owning transactions in securities they are eligible to
share in the business or provide capital as loan (in invest in. In June 2012, the definition of QFI
case of a loan they lend at more favourable terms was expanded to include residents of the member
countries of the Gulf Cooperation Council (GCC)
13. As per the SEBI (Alternative Investment Funds) Regulations,
2012 (AIF Regulations), Category I AIF are: those AIFs and European Commission (EC) as the GCC and
with ‘positive spillover effects’ on the economy, for which EC are members of the Financial Action Task
certain incentives or concessions might be considered by
SEBI or the Government of India or other regulators in
India; and which shall include Venture Capital Funds, The speedier moves in the area of promoting
SME Funds, Social Venture Funds, Infrastructure Funds
and such other Alternative Investment Funds (AIFs) as may
higher foreign investment (FIs) in India should be
e specified. seen in the light of two broad perspectives, viz.,