Monday August 26 2019

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: India

On 20th August 2019, the Securities and Exchange Board of India announced that the Board has considered the recommendations of the working group constituted for reviewing the SEBI (Foreign Portfolio Investors) Regulation 2014, and has approved the proposed new set of Regulations.

The key focus of the proposed Regulations is to simplify and rationalize the existing regulatory framework for foreign portfolio investors (FPIs) in terms of easing the operational constraints and compliance requirements. The 57 circulars and 183 FAQs pertaining to FPIs issued over the years have been merged into new regulations and a single circular.

Some of the key aspects of revised regulations include:

  • To simplify and expedite 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.
  • On reviewing the risk profiling of the FPIs, it is decided that the FPIs may be re-categorized into two categories – Category I and II, instead of the present requirement of three categories.
  • Registration for multiple investment manager (MIM) structures has been simplified.
  • Considering that the central banks are relatively long term, low risk investors directly/ indirectly managed by the Government, the central banks that are not the members of BIS (Bank for International Settlement) shall also be eligible for FPI registration.
  • The entities established in the international financial services center (IFSC) be deemed to have met the jurisdiction criteria for FPIs.
  • Documentation requirements for KYC have been simplified.
  • FPIs shall be permitted for off-market transfer of securities which are unlisted, suspended or illiquid, to a domestic or foreign investor.
  • Offshore funds floated by Indian Mutual Funds shall now be permitted to invest in India after obtaining registration as FPI.
  • The requirements for issuance and subscription of Offshore Derivative Instruments (ODIs) have been rationalized.

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