CIR­CU­LAR SPOOKS FPIs

Business Today - - THE BUZZ - – Apra­jita Sharma

Mar­ket reg­u­la­tor Sebi did well to promptly ad­dress con­cerns around its ear­lier cir­cu­lar that barred NRIs and Per­sons of In­dian Ori­gin from be­ing Ben­e­fi­cial Own­ers (BO) in FPI funds in­vest­ing in In­dia. If the Sebi ac­cepts the HR Khan panel’s pro­pos­als, the con­cept of BO will only be ap­plied to KYC norms while NRIs will be al­lowed to in­vest up to 25 per cent sin­gle-hand­edly and 50 per cent in con­cert in FPI funds. If mis­use of the FPI route is to be tack­led, the BO dec­la­ra­tion should take care of it, but a blan­ket ban would re­sult in huge fi­nan­cial losses. Lobby group AMRI (As­set Man­age­ment Roundtable of In­dia) es­ti­mated $75-bil­lion funds could move out from In­dian shores if the Sebi cir­cu­lar was en­forced. At a time when the ru­pee and the stock mar­ket are al­ready jit­tery, invit­ing fresh trou­ble is in­ad­vis­able.

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