Mumbai, Oct. 5: The Securities and Exchange Board of India (Sebi) today announced new foreign portfolio investor (FPI) regulations to put in place an easier registration process and operating framework for such entities.
The move is expected to encourage dollar flows into the country.
The new class of investors, FPIs, will encompass all foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs), and will be divided into three categories, according to their risk profile.
The know-your-client (KYC) requirements and other registration procedures will be much simpler for FPIs against the current practices.
At a board meeting held today, the market regulator approved the draft Sebi (Foreign Portfolio Investors) Regulation, 2013, to bring about these changes.
The Category I FPIs, which will be the lowest risk entities, will include foreign governments and government related foreign investors.
The Category II FPIs will include “appropriately regulated broad-based funds, appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc”. The Category III FPIs will include all others not eligible under the first two categories.
All existing FIIs and sub-accounts may continue to buy, sell or otherwise deal in securities under the FPI regime.
Sebi also approved setting up designated depository participants, which will register FPIs on behalf of the market regulator, subject to KYC compliance.
Foreign investors will also be given permanent registration against the current practice of granting approvals for one year or five years.