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[RBI] Survey Of Foreign Liabilities & Assets Of Mutual Fund Companies – 2016-17

On 05-Sep-2017, the Reserve Bank released the results of the 2016-17 round of the Survey of Foreign Liabilities and Assets of the Mutual Fund (MF) Companies on its website. The survey covers 44 Indian MF companies and their Asset Management Companies (AMCs), which held/acquired foreign assets and/or liabilities during the reference year 2016-17 and/or in the preceding year (See Annex for list of companies). The financial year-end position was collected from MFs through Schedule 4 in respect of units issued to non-residents, unpaid dividend, redemption of units issued to non-residents and MFs’ overseas investments. Information on the stock of external assets and liabilities of the AMCs were collected through the Annual Return on Foreign Liabilities and Assets (FLA).

Highlights:

I. Mutual Fund Companies:
  • Foreign liabilities of MF companies stood at INR 719.8 billion in March 2017 of which units issued to non-residents accounted for 99.8 per cent. The remaining liabilities included unpaid income/dividends to non-residents and sale proceeds pending repatriation.
  • Large valuation changes caused a surge in foreign liabilities of MFs during 2016-17, with the rise in the market value of units (23.6 per cent) far exceeding the growth in their face value (4.0 per cent). As a result, the ratio of market value to face value of liabilities increased to 2.66 in March 2017 from 2.24 a year ago, indicating valuation gains during 2016-17 (Tables 1 & 2).
  • Foreign assets of MF companies (mainly equity securities) amounted to INR 38.7 billion in March 2017, which was only 5.4 per cent of their foreign liabilities, indicating that they held most of their assets within the country. The net foreign liabilities of MF companies stood at INR 681.1 billion (US$ 10.5 billion) in March 2017 (Tables 1 & 3).
  • UAE, Singapore, UK, USA and Mauritius together accounted for nearly half of the MF Units held by non-residents in March 2017. Units held in Mauritius recorded a 48 per cent decline, coinciding with the signing of the Protocol to amend the India-Mauritius Double Taxation Avoidance Agreement (DTAA) during 2016-17 (Tables 4 & 5).
  • USA and Luxembourg remained the major overseas investment destinations for MFs companies (Table 6).

II. Asset Management Companies:
  • AMCs associated with MFs had net foreign liabilities of INR 52.4 billion (US$ 0.8 billion) in March 2017 (liabilities of INR 56.8 billion and assets of INR 4.4 billion). Foreign liabilities of AMCs were largely owed to non-residents in Mauritius, UK and Japan whereas Guernsey was the main destination of their relatively small overseas assets (Tables 7, 8 & 9).
  • The reinvested earnings of foreign direct investors in the AMCs (estimated from their share in the difference between a company’s net profit and distributed dividends) stood at INR 5.3 billion in 2016-17 (INR 5.4 billion in the previous year).

The results of the previous survey round for the year 2015-16 was placed in the public domain vide press release dated August 4, 2016.

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