India: SEBI to review FPI regulations after backlash

  • Amid concerns from FPI (foreign portfolio investor) groups, capital markets regulator Securities and Exchange Board of India (Sebi) on 5 Sep 18 said it will review the proposed new norms for foreign portfolio investors and take a holistic view after taking into account views of all stakeholders, including the government.
  • The regulator has already constituted a working group headed by former Reserve Bank of India (RBI) deputy governor H.R. Khan to look into the various issues raised by foreign portfolio investors, including those about ‘know your client’ (KYC) requirements and disclosures about beneficial ownership.
  • The ministry of finance has also been consulted on this. “Based on these inputs, Sebi would review the matter and shortly take a holistic view,” it added. People familiar with the matter said that the Khan committee met on 5 Sep 18 with various stakeholders.
  • The proposed regulatory move, for which Sebi recently extended the deadline till Dec 18, aims to check any possible re-routing of funds of Indians and non-resident Indians (NRIs) through overseas locations such as Mauritius, Singapore and Dubai, the people cited above added.
  • Some FPIs are believed to have earlier expressed concerns over the proposed changes in rules, for which Sebi has already granted more time. However, a lobby group named AMRI (Asset Management Roundtable of India) said on 3 Sep 18 that the immediate impact of the new norms, if not amended, would be that USD75bn investment managed by overseas citizens of India (OCIs), persons of Indian origin (PIOs) and non-resident Indians (NRIs) will be disqualified from investing into India, and the funds will have to be withdrawn and liquidated within a short time-frame.

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