Private, merchant banks can invest on behalf of FPIs

Private banks and merchant banks can now invest on behalf of their foreign clients, provided these banks do not have any secrecy laws with the investors, the Securities and Exchange Board of India (Sebi) said in a notification late on Thursday.

The investment by private and merchant banks on behalf of their clients will also depend on details of investors provided as and when required by the regulator, the circular said. Under earlier Sebi regulations, private and merchant banks were prohibited from making investments on behalf of their clients and were only allowed to make propriety investments or their own investments.

The capital markets regulator notified seven other changes in its existing norms to further ease of access for foreign portfolio investors to the Indian equity market. Sebi has also relaxed norms pertaining to free-ofcost transfer of shares between foreign investors operating under multiple investment managers’ structure.

The request for free-of-cost transfer of assets between FPIs having same permanent account number and registered with Sebi may be processed by local custodians at their end, the regulator said. Earlier, FPIs had to forward the request for such share transfers to Sebi for its considerations. In another step, the regulator has done away with the need for its prior approval by individual foreign investors before changing their local custodian of shares.