SEBI Plans Further Relaxations for Foreign Portfolio Investors (FPIs)

Context:

The Securities and Exchange Board of India (SEBI) is planning additional relaxations to simplify the registration process for Foreign Portfolio Investors (FPIs), including a common know-your-client (KYC) framework and wider adoption of India Digital Signature. These moves build on recent measures aimed at making India a more attractive investment destination.

Key Highlights:

• Digital Ease:
  • SEBI to integrate India Digital Signature with the Common Application Form (CAF) for FPIs.
  • Expected to reduce paperwork and streamline documentation.
• Common KYC:
  • Discussions underway with the Reserve Bank of India (RBI) for a common KYC requirement across banks and FPIs.
  • Aimed at reducing duplication and easing compliance for low-risk FPIs.
• Swagat-FI Framework:
  • Applies to trusted FPIs (sovereign wealth funds, pension funds, government-related entities).
  • Registration renewal cycle extended to 10 years (earlier 3 years).
  • One-time KYC fee of $2,500 for a 10-year block instead of the three-year cycle.
  • Exemptions from the 50% aggregate contribution cap for NRIs and OCIs.
• Boost to Investments:
  • Combination of FVCI (Foreign Venture Capital Investor) and FPI registration expected to boost unlisted investments.
  • SEBI now reaches out directly to FPIs/custodians if application processing exceeds a month.
  • Surge seen in FPI registrations; the US, Singapore, Luxembourg, and Ireland dominate assets under custody.
• New Platform:
  • SEBI to launch India Market Access, a platform for FPIs to seek regulatory information.