Related Topics: Indian Economy, Foreign Portfolio Investor (FPI)
- Securities and Exchange Board of India (SEBI) has simplified the compliance and operational requirements for foreign portfolio investors (FPIs), to make the regulatory framework more investor friendly.
- The key focus of the proposed regulations is to simplify and rationalise the existing regulatory framework for foreign portfolio investors in terms of easing the operational constraints and compliance requirements.
SEBI decisions came at a time when the domestic market has been witnessing strong foreign outflows, which exceeded Rs 21,000 crore during July and August.
- To simplify the registration process and to bring about ease in compliance requirements for FPIs, the broad based eligibility criteria for institutional foreign investors has been done away with. At present, for a fund to be categorised as broad based, it needs to have at least 200 investors.
- FPIs will be classified into two categories instead of three, while the requirements for issuance and subscription of offshore derivative instruments (ODIs) will be rationalised.
- FPIs will be permitted off-market transfer of securities which are unlisted, suspended or illiquid, to a domestic or foreign investor.
- Central banks that are not members of BIS (Bank of International Settlement) will be eligible for FPI registration.
- Registration for Multiple Investment Manager (MIM) structures has been simplified.
- Know Your Client (KYC) requirements for foreign portfolio investors (FPIs) have been simplified.
- Entities established in the IFSC (International Financial Services Centre) would be deemed to have met the jurisdiction criteria for FPIs. This is expected to be a big booster for the financial centre in the GIFT City.
[Sources: The Hindu, Economic Times]