What are Qualified Institutional Buyers (QIBs)?

  • In law, a Qualified Institutional Buyer is a purchaser of securities that is financially sophisticated and is legally recognized by security market regulators to need less protection from sellers than most members of the public. For mutual funds it is generally an investor that is investing a large amount of money and presumably also meets the legal conditions in the country where the fund is located.
  • Qualified Institutional Buyers are those institutional investors who are generally perceived to possess expertise and the financial muscle to evaluate and invest in the capital markets.
  • ¬†Qualified Institutional Buyer shall mean:
    • Public financial institution as defined in section 4A of the Companies Act, 1956;
    • Scheduled commercial banks;
    • Mutual funds;
    • Foreign institutional investor registered with SEBI;
    • Multilateral and bilateral development financial institutions;
    • Venture capital funds registered with SEBI.
    • Foreign Venture capital investors registered with SEBI.
    • ¬†State Industrial Development Corporations.
    • Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA).
    • Provident Funds with minimum corpus of Rs.25 crores
    • Pension Funds with minimum corpus of Rs. 25 crores
  • These entities are not required to be registered with SEBI as QIBs.
  • QIBs must be either domestic or foreign institutions. Individuals are not permitted to be QIBs, regardless of their level of wealth or financial sophistication.