From simplified KYC process to re-categorisation, Sebi eases norms for FPIs

Topics Sebi | Sebi norms | FPI norms

Easing the regulatory framework for foreign portfolio investors, Sebi on Wednesday simplified KYC requirements for them and permitted them to carry out off-market transfer of securities.

The proposals were cleared by the Sebi's board during its meeting here as part of efforts to simplify and expedite the registration process for foreign portfolio investors (FPIs).

Apart from doing away with the broad-based eligibility criteria for institutional FPIs, under the new framework, FPIs would be classified into two categories instead of three.

"Documentation requirements for KYC have been simplified," Sebi said in a release after the board meeting.

FPI regulations have been redrafted based on the recommendation of a committee headed by former RBI deputy governor H R Khan.

The requirements for issuance and subscription of offshore derivative instruments (ODIs) have also been rationalised.

Offshore funds floated by mutual funds would be allowed to invest in the country after registration as FPIs.

Among others, entities established in the International Financial Services Centre (IFSC) would be deemed to have met the criteria for FPIs.

"FPIs shall be permitted for off-market transfer of securities which are unlisted, suspended or illiquid, to a domestic or foreign investor," the release said.
Besides, registration for multiple investment manager (MIM) structures has been simplified.

To attract more overseas funds into the market, central banks that are not members of the Bank for International Settlements would be eligible for registration as FPIs. 

Five key takeaways from the Sebi meet

  • Documentation requirement for KYC simplified
  • Broad-based eligibility criterias for FIIs has been done away with 
  • Sebi to ease compliance, registration process for FPI
  • FPIs to be re-categorised from 3 classes to 2
  • Central banks of other countries also eligible for FPI registration

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