press trust of india
MUMBAI, 5 OCT: Ushering in a new regime for overseas investments in Indian capital markets, Sebi today announced new Foreign Portfolio Investor (FPI) regulations to put in place easier registration process and operating framework for such entities.
The new class of investors, FPIs, would encompass all FIIs (foreign institutional investors), their sub-accounts and qualified foreign investors (QFIs), and would be divided in three categories as per their risk profile.
The KYC (Know Your Client) requirements and other registration procedures would be much simpler for FPIs compared to current practices. Sebi also decided to grant them permanent registration, as against the current practice of granting approvals for one year or five years.
At a meeting held here today, the Sebi board approved the new Sebi (Foreign Portfolio Investors) Regulations, 2013 to bring about these wide-ranging changes.
Under the new norms, all existing FIIs, Sub Accounts and QFIs will be eventually merged into this new investor class to be known as FPIs. Sebi also approved setting up ‘Designated Depository Participants (DDPs)’, which would register FPIs on behalf of the market regulator.
The Category I FPIs, which would be the lowest risk entities, would include foreign governments and government-related foreign investors, “Category II’ FPIs would 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”. Category III FPIs would include all others not eligible under the first two categories.
FPIs will be allowed to invest in all those securities wherein FIIs are allowed to invest. ‘Category I’ and ‘Category II’ FPIs will be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. FPIs would be allowed to invest in securities in the primary and secondary markets.
These measures come at a time when concerns are being raised about outflows of foreign capital and weakening of the rupee against the dollar and other foreign currencies.