QFI investments plan hits roadblock, PAN problem hovers

The government's plan to attract qualified foreign investors (QFI) into mutual funds has hit a roadblock. As QFIs need KYC requirements like PAN and tax return filings, these are believed to serve as hurdles to the scheme, reports CNBC-TV18's Neha Arora.

What seems to be the biggest apprehension is going through the complicated process of procuring a PAN in India and also filing tax returns. Now, the finance ministry officials are of the view that this will not be a huge problem, given that they will only be filing returns to claim refunds. The industry has been holding interactions with finance ministry officials at North Block and what is coming out of these interactions is that the QFIs have been expressing their discomfort about these issues. Tax compliance issues are very important given that they feel that there is no middle level management. As far as their investments are concerned, people in the mutual funds say that unless and until they are mandated by SEBI, they cannot make these procedural hurdles smooth for the QFIs, who are keen to invest into India. Hence, broadly these are the big issues. Meanwhile, the depository participants are in the process of getting their registration done from SEBI, which should take about a month or so.