India’s security market regulator, the Securities and Exchange Board of India has announces new norms for Qualified Foreign Investors (QFIs) that may allow foreign individuals to invest directly in Indian stock market.

The authorities have opened its stock market to the foreign investors in order to deepen financial markets and allow more investors to join the Indian markets from 1 January with a basic requirement of know-your-client (KYC) nroms. SEBI has now announced some norms that are to be followed.

SEBI said on Friday that QFIs an participate in transaction including purchase of shares of Indian firms either in a public issue or through the stock market, sale of such shares in the market, participation in rights issues, bonus shares, stock split, corporate amalgamations or demergers, receipts of dividends, open offer and buybacks in the Indian market.

The regulator allows QFIs to open only one demat account with a depository participant, who will be required to comply with norms and also complete KYC due diligence for QFIs. The regulator will not allow investors to participate if the ownership is not clear.

"The depository participant shall perform appropriate due diligence at the time of account opening and ensure that such entities are not allowed to open demat account. An express undertaking to this effect shall be obtained by DP from the QFI," SEBI said in a statement.