Source: TOI
Context:
Since March 2025, Tuhin Kanta Pandey, Sebi Chairman, has been engaging with Foreign Portfolio Investors (FPIs), offshore strategic investors, and PE funds to encourage capital inflows critical for India’s balance of payments and currency stability. This comes amid choppy equity markets, cautious corporate capex, volatile bond prices, and US tariff pressures affecting the current account deficit.
Key Investor Proposals Under Consideration:
- FPI License Tenure
- Proposal: Extend tenure from 3 years to 5 years.
- Current SEBI Norm: As per SEBI (FPI) Regulations, 2019, FPI registration is valid for 3 years (renewable).
- KYC Reforms
- Proposal: Simplify onboarding.
- Current Norm: FPIs must comply with KYC norms under SEBI Master Circular on KYC (April 2023), including PAN, beneficial ownership disclosure, and FATF compliance.
- Disclosure Norms
- Proposal:
- Exempt large private funds from granular disclosures.
- Review the rule mandating disclosure of all natural persons owning >10% in FPIs.
- Current Norm: Under SEBI (FPI) Regulations, 2019 & August 2023 circular, FPIs must disclose all beneficial owners (BOs) per Prevention of Money Laundering (PMLA) rules.
- Proposal:
- Primary Market Measures
- Proposal:
- Shorten approval time for IPOs.
- Allow low-risk FPIs to raise funds from NRIs.
- Permit domestic institutions to act as sponsors/managers for FPIs in GIFT City.
- Current Norm:
- IPO approval follows SEBI (ICDR) Regulations, 2018—minimum public shareholding (MPS) of 25% within 3 years.
- FPIs are barred from pooling NRI money unless through regulated routes.
- Proposal:
- Mega IPOs
- Proposal: Allow longer timelines to meet MPS of 25%.
- Current Norm: Under SEBI (LODR) & ICDR Regulations, companies must achieve 25% public shareholding within 3 years of listing (exceptions possible for large issues).
