Module: | MODULE A: INTERNATIONAL BANKING
Q232: Consider the following statements regarding the activities of Portfolio Management Services operating within the smart city:
Statement 1: Registered portfolio managers operating in the centre are legally authorized to offer both discretionary portfolio management, where they make all investment decisions, and non-discretionary portfolio management to their global clients.
Statement 2: To strictly maintain a separation of markets, these offshore portfolio managers are legally prohibited from investing client funds into the domestic Indian stock markets, even through the recognized Foreign Portfolio Investor route.
Which of the statements given above is or are INCORRECT?
Statement 2: To strictly maintain a separation of markets, these offshore portfolio managers are legally prohibited from investing client funds into the domestic Indian stock markets, even through the recognized Foreign Portfolio Investor route.
Which of the statements given above is or are INCORRECT?
✅ Correct Answer: B
The question requires identifying the incorrect statement.
Statement 1 is a correct statement.
Portfolio managers officially licensed in the offshore centre provide wealth management services to high-net-worth individuals and large corporate treasuries.
They are fully permitted to offer discretionary services, taking full control of all trading decisions, as well as non-discretionary and purely advisory services where the client retains the final decision.
Statement 2 is the incorrect statement.
A primary overarching objective of the offshore centre is to act as a highly efficient gateway for routing foreign capital into the domestic economy.
Therefore, offshore portfolio managers are absolutely permitted and actively encouraged to pool client funds in foreign currencies and systematically invest those funds into domestic Indian equities and debt.
They legally achieve this cross-border flow by registering themselves or their pooling vehicles under the domestic Foreign Portfolio Investor route.
Statement 1 is a correct statement.
Portfolio managers officially licensed in the offshore centre provide wealth management services to high-net-worth individuals and large corporate treasuries.
They are fully permitted to offer discretionary services, taking full control of all trading decisions, as well as non-discretionary and purely advisory services where the client retains the final decision.
Statement 2 is the incorrect statement.
A primary overarching objective of the offshore centre is to act as a highly efficient gateway for routing foreign capital into the domestic economy.
Therefore, offshore portfolio managers are absolutely permitted and actively encouraged to pool client funds in foreign currencies and systematically invest those funds into domestic Indian equities and debt.
They legally achieve this cross-border flow by registering themselves or their pooling vehicles under the domestic Foreign Portfolio Investor route.