Can SEBI's Key Proposals Bolster Resident Indians Participation In FPIs?
SEBI has proposed changed to make it simpler for resident Indians to participate in Foreign Portfolio Investors (FPIs). Check it out.
- Republic Business
- 2 min read
Market regulator Securities and Exchange Board of India (SEBI) has proposed changed to make it simpler for resident Indians to participate in Foreign Portfolio Investors (FPIs). It has outlined key proposals and requested public comments by August 29 in a consultation paper released recently.
SEBI's Key Proposals Focused On Inclusive Investment
Retail schemes in IFSCs allowed to register as FPIs: SEBI has proposed that retail schemes based in International Financial Services Centres (IFSCs) in India, with resident Indian non-individuals as sponsors or managers, should be allowed to register as FPIs.
Retail schemes are offered to a broad set of investors without a cap on the number of investors.
They should have at least 20 investors, with no single investor holding more than 25 per cent of the scheme and cannot invest more than 10 per cent of assets in a single company.
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Contribution limits in sync with IFSCA rules: Currently, FPI rules cap resident Indian non-individual contributions at 2.5 per cent for Category I & II Alternative Investment Funds (AIFs) and 5 per cent for Category III AIFs.
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The securities regulator SEBI has now proposed to align the aforementioned limits with International Financial Services Centres Authority (IFSCA) regulations, which set the cap at 10 per cent of the corpus (or assets under management for retail schemes).
The alteration would also replace the requirement for sponsor/manager with a "Fund Management Entity or its associate” for its IFSC-based FPIs to match IFSCA's terminology.
Allow Indian mutual funds to be part of FPIs: SEBI also proposes to allow Indian mutual funds to be constituents of overseas mutual funds or unit trusts registering as FPIs, provided they meet conditions outlined in SEBI’s November 4, 2024, circular. This aims to help Indian mutual funds diversify globally, even in funds that invest in Indian securities.