Sebi on Friday announced a series of measures aimed at easing foreign investor access, lowering operational costs, simplifying client onboarding and enhancing transparency in the mutual fund industry.
Sebi has further streamlined the operational framework for onboarding foreign portfolio investors (FPIs) and foreign venture capital investors (FVCIs) under its recently introduced single-window system, SWAGAT-FI (Single Window Automatic & Generalised Access for Trusted Foreign Investors).
Eligible SWAGAT-FI applicants can now seek FPI and FVCI registrations through a single application, without submitting separate documents, provided the same custodian and designated depository participant (DDP) are appointed for both. Existing FVCIs that meet the eligibility criteria may also convert to SWAGAT-FI status through their DDP.
The regulator has extended the registration validity for SWAGAT-FI FPIs and FVCIs to 10 years, from five years earlier, and aligned the periodic KYC review cycle to once every 10 years. Renewal requirements for FVCIs have been simplified.
The framework covers government and government-related investors, regulated retail mutual funds, insurance companies investing proprietary funds and pension funds, subject to safeguards. The new provisions will take effect from June 1, 2026.
Separately, Sebi has proposed allowing FPIs to ‘net’ funds for same-day equity cash market trades instead of settling transactions on a gross basis. The proposal, outlined in a consultation paper, aims to reduce funding costs, particularly during index rebalancing.
Under the proposal, proceeds from outright sales can be used to fund outright purchases on the same day, though intra-day buy-sell transactions in the same security will continue to be settled on a gross basis. Sebi has sought public comments on this proposal until February 6.
In another consultation paper, Sebi proposed easing client onboarding and strengthening risk management at KYC Registration Agencies (KRAs). Measures include centralising supplementary client information at the KRA level, reducing repetitive verification, simplifying documentation for Aadhaar-linked mobile numbers and PAN-Aadhaar name changes, and easing address requirements for OCI cardholders residing in India. Public comments have been invited until January 31.
Sebi has notified a comprehensive overhaul of mutual fund regulations to enhance transparency. A new Base Expense Ratio has been introduced, while overall expense caps have been lowered. Brokerage limits have been cut, investor communication digitised and compliance rationalised. The new rules will come into force from April 1.