Sebi eases norms for registration of FPIS

Markets regulator Sebi has issued a notification for easing the process for on-boarding overseas investors. The notification says foreign portfolio investors (FPIS) are no longer required to meet the ‘broadbasing’ criteria, under which at least 20 investors were required to establish a fund.

However, in order to ensure the money coming in is clean, the FPI or underlying investors — contributing a minimum of 25 per cent or identified on the basis of control — should not be part of the Sanctions List notified by the UN Security Council, or reside in any country identified in the public statement of the Financial Action Task Force (FATF) as delinquent.

Central banks not members of the Bank for International Settlements (BIS) will be allowed to register as FPIS. This will enable central banks from over 60 countries, including those of Mauritius, Cyprus, and West Asian ones such as Abu Dhabi, Dubai, Kuwait, Oman, and Qatar, to invest as FPIS.

The erstwhile three categories of FPIS have been merged into two. Category I will include central banks, sovereign wealth funds, pension funds, banks, asset management companies, portfolio managers, and entities from FATF member countries.

Category III has now been converted into category II, comprising corporate bodies, charitable organisations, family offices, individuals and unregulated funds in the form of limited partnerships and trusts.

Offshore funds floated by Indian fund houses will be permitted to invest in domestic markets under the FPI route, and be required to obtain registration as an FPI within 180 days from the date of notification of the norms.