MUMBAI: The capital markets watchdog Sebi on Tuesday allowed up to 100% higher participation by non-resident Indians (NRIs), overseas citizens of India (OCIs) and resident Indians (RIs) to the corpus of those foreign portfolio investors (FPIs) based in the International Financial Services Centres and regulated by the International Financial Services Centres Authority (IFSCA).
The relaxed FPI participation includes 100% contribution limits to those FPIs submitting PAN card details of all their NRI/OCI/RIs constituents, along with their economic interest in the FPI, Sebi said.
On the other hand “if a constituent does not have a PAN, the FPI shall submit a suitable declaration along with copies of prescribed identity documents such as Indian passport, OCI card, Aadhaar, etc. Similar disclosure will also be required in case of indirect holding in the FPI through non-individual constituents that are majority contributed to/owned/controlled by NRI/OCI/RI individuals on a look-through basis, the regulator said.
Alternatively, funds set up in IFSCs and regulated by the IFSCA, desirous of having up to 100% aggregate contribution in their corpus from NRIs/OCIs/RI individuals, will not be required to submit the above mentioned documents, provided the contribution of all investors in to the FPI are pooled into one investment vehicle that is registered as an FPI, with no side-vehicles; if the corpus of the fund is a blind pool (common portfolio) with no segregated portfolios and all investors shall have pari-passu and pro-rata rights in the fund and if the fund has a minimum 20 investors with each contributing not more than 25% to the corpus of the fund.
But these relaxations are not applicable if an FPI holds over 33% of their Indian equity AUM in a single Indian corporate group; or such FPI along with its investor group holds more than Rs 25,000 crore of equity AUM in the Indian markets.
The board also lowered the face value of privately placed NCDs to Rs 10,000 to enhance participation of non-institutional investors in the bond market while safeguarding the interest of such investors. Such instruments shall be plain vanilla, interest/ dividend bearing instruments. However, credit enhancements shall be permitted in such instruments.
Sebi also allowed registered venture capital funds to migrate into alternative investment funds regulations of 2012 (AIF regulations) upon expiry of the tenure to help deal with unliquidated investments of their schemes. The option to migrate will be available for 12 months from the date of notification of amendment to AIF regulations in this regard, Sebi said.
To create a level playing field for all AMCs, the board approved amendment to mutual funds regulations to allow equity passive schemes to take exposure up to the weighting of the constituents in the underlying index provided it is under 35%.