MUMBAI: The Securities and Exchange Board of India (SEBI) has simplified the registration process for Foreign Portfolio Investors (FPI) and categorised entities established in the International Financial Services Center as FPIs. The proposals for the same were cleared by the SEBI Board on Wednesday, based on the recommendations made by the HR Khan Committee aimed at simplifying the Know-Your-Customer and documentation requirements.
SEBI said the “key focus of the proposed regulations is to simplify and rationalise the existing regulatory framework for FPIs in terms of easing the operational constraints and compliance requirements”.
The regulator’s 2014 norms for FPIs have been virtually redrafted, and 57 circulars and 183 FAQs issued over the years have been merged into new regulations and a single circular, said SEBI chairman Ajay Tyagi.
SEBI has also brought down the number of categories of FPIs from three to two, and simplified the Multiple Investment Manager (MIM) structure. Asked if the easing of FPI regulations at this juncture was being done to provide relief to the segment, which was hit by the tax regulations stipulated by the Union Budget, Tyagi pointed out that the process of new FPI regulations has been in the works for more than a year and the final report was received in March 2019.
All central banks, including those who are not members of the Bank for International Settlements, will now be eligible to register as FPIs. FPIs will also be permitted to transfer unlisted securities in off-market transactions.
Offshore funds floated by Indian mutual funds will also be eligible to invest in India after registering as FPI. SEBI also said requirements for issuance and subscription of Offshore Derivative Instruments have been rationalised.
On the Budget proposal to consider a hike in minimum public shareholding in companies from 25 per cent at present to 35 per cent, Tyagi said a higher level of public shareholding is always good. However, the level that should be mandated would be done after due consultations, and after considering the level globally followed, he said.