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
                                                                         Force (FATF).
             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.,