MUMBAI: In an out-of-turn move, markets regulator SEBI on Tuesday strongly dismissed concerns raised by a section of asset managers over massive foreign fund outflow as ‘preposterous and highly irresponsible.’
On Monday, the Asset Manager’s Roundtable of India (AMRI) said incoming ownership norms for foreign funds could lead to outflows as massive as $75 billion. According to AMRI, funds managed by Overseas Citizens of India, Persons of Indian Origin and Non-Resident Indians will be disqualified from investing in India and they will have to be withdrawn and liquidated within a short time frame. AMRI also warned that it would have severe impact on stocks and rupee.
In an early morning statement, SEBI on Tuesday said, “It is preposterous and highly irresponsible to claim that 75 billion dollars of FPI investment will move out of the country because of SEBI’s circular issued in April 2018.”
In April, SEBI had asked Category 2 and 3 FPIs to provide a list of their beneficial owner in a prescribed format within six months. The deadline was later extended by two months till December and assured that issues raised will be looked into by an expert panel.
NRIs can invest in Indian equities directly or via the FPI route. They need to register with SEBI, which categorises them into three, based on the risk profile. Category 1 includes government entities, 2 includes regulated broad-based funds – the traditional route that NRIs use to invest funds – and 3 comprises endowments, charitable societies, foundations and family offices.